Live Operators: Soon to Be a Memory?

Summary

Jingle Networks’ free DA service 1-800-FREE411 has discontinued live operators in some locations. Operator expenses in these markets have significantly cut into margins as the overall cost of providing these calls isn’t being offset by the advertising volumes. Free DA services built on automated voice search are also growing in number (see yesterday’s post), which has no doubt provided new perspective to Jingle and others on the financial attractiveness of this model. This move was predicted in The Kelsey Group report Wireless Voice Search: The Multi-Modal Revolution.

Analysis

In the Q&A section of 1-800-FREE411‘s Web site, under “Why Can’t I Reach an Operator?”, it states:

1-800-FREE411 is no longer supporting live operator services from certain localities: In some markets, the cost of providing a free call is not being adequately offset by the number of advertisers available in that area today. 1-800-FREE411 is dedicated to providing a free 411 service in your area, and you can continue to call and our automated attendant will help you access the number you are requesting.

The cost issue is clear. The chart below is taken from the aforementioned White Paper and illustrates the cost per query of an operator-assisted DA call versus that of an automated voice search call. Google’s revenue per search is likewise overlayed to show that, on average, operator-assisted calls aren’t sustainable under a free DA model.

This of course is an average so there are exceptions. 1-800-SanDiego’s cost per query is 8 cents for operator-assisted DA calls, according to the company. Jingle has meanwhile told The Kelsey Group that its cost per query is lower than this average, at 12 cents. But it should be noted that this is a blended rate because it uses both operators and voice search. Finally it must be noted that the 16 cent per call average quoted here is a U.S. wholesale rate, meaning that it’s the cost at which companies like MetroOne or Verizon’s LiveSource could field calls.

Regardless, voice automated DA is clearly economically attractive over operator-assisted DA. Though the financial incentives are clear, Jingle’s pulling the plug on operator assistance can also be viewed partially as a play to get users to sign up for its MyFREE411 program, which maintains access to live operators.

… by signing up for the MyFREE411 program you will still have access to live operator services. In addition to live operators, you will also have access to a Web-based account management area where you can access maps & directions to your recent business lookups, estimate your total “411 savings,” and manage your preferences.

In this case the operator assistance cost is offset by the whatever value Jingle has assigned to the retention benefits of such a personalized service, and the user data it will gain to assist in both ad targeting and strategy development. Either way, it’s clear that the DA world is slowly but surely moving toward near-complete automation.