Executive Summary
The Kelsey Group believes the wireless voice search market is poised for a major explosion in growth. This growth will in large part be catalyzed not by existing free directory assistance players such as 1-800-411FREE, but rather by the inevitable entry of Google, MSN, Yahoo! and other search heavyweights.
TKG predicts that portals, with their immense credibility and marketing clout, will jump into the voice search market, starting with simple DA products, by mid-2007. Their entry will have a profound impact on numerous markets.
Portals are not interested in replicating traditional DA services or their business models, which generate billions of dollars. Instead, they view the DA market as an opportunity to build a permission-based mobile marketing business. Eventually, the mobile marketing business will eclipse DA in terms of revenues. Wireless voice search will be the most successful foray into mobile marketing business to date.
To execute the opportunity profitably, voice search will become the front-end application that allows DA queries to be served at a reasonable cost. When consumers call a DA service and make the decision to have their request sent to a mobile device via SMS, they have “opted in” to the permission-based marketing opportunity.
As the heavyweights enter their space, the free DA services that lack local sales efforts will be pressed to the wall. Yellow Pages publishers could see a sizable portion of their consumer lookups migrate to a voice interface, while traditional paid DA services will face margin compression as they are forced to add enhanced services to stay ahead of innovation.
The portal players are being drawn into the DA/wireless search market by a number of factors, including the following:
- There are 2 billion mobile devices worldwide, which creates a platform for a permission-based marketing business.
- Free DA services like 1-800-FREE411, and in a local example 1-800-SAN-DIEGO, are experiencing viral growth in call volume and in corresponding advertiser conversion rates.
- The 118 118 service, owned and operated by INFONXX, and MIVA in the U.K. have proved that the wireless SMS model is financially sound, scalable, and attractive to advertisers and consumers.
- Voice search costs, on a per-query basis, have fallen below the average revenue per search of both Google and Yahoo! Search Marketing. Breaching this threshold is a critical development, and current Internet revenue models and voice query costs have crossed an inflection point.
- Pay-per-call will ramp up much faster among small and medium-sized enterprises in a voice environment because telephony penetration is universal, while PC and Web site penetration is not. Further, SMEs are more oriented to phone calls than clickthroughs. DA is the business to drive pay-per-call.
As this new market develops, TKG believes the simplicity of “voice in” for consumers will drive adoption while keeping costs low.
This White Paper, viewable in its entirety in PDF format, outlines our arguments for why portals will jump into the wireless voice search space and why their entrance will have such magnitude. In making this case, we will explore the free DA business model in its current and past forms. We will also frame how we see the volume and relative share of DA calls evolving over the coming years.
