There is an article today in techcrunch about SMS based answering service Cha Cha in US , able to generate revenue

ChaCha Makes Its Crazy Business Model…Profitable.  The post explains how Cha Cha is able to make revenues by sending ads in the sms when a user asks questions and through adsense on their website.

There has been a interesting discussion in which a user pointed to SMS based answering service 63336 in UK which had explored this option but decide not to do it. Read this Why 63336 doesn’t include adverts in its texts.

There is another SMS based service in India SMS GupShup , which sends you SMS and generate revenue through  ads. Here is a post on techcrunch about it .

SMSGupShup (India’s “Twitter”) Grows To 20 million Users, $150,000/month Revenue

This post was nothing but crap about Gupshup making $150,000 a year but again brings back to question SMS  services driven by Ad – Good or bad idea

I tend to agree that SMS based services would not work only on advertising alone and do not find much logic in Cha Cha’s business model. In countries like US you have to pay for even reading a SMS , until and unless you are in some kind of plan so you also do not want to be spammed with multiple SMS for one question you asked. Companies like AskmeKnow in US failed badly . Look at their numbers In the 12 months to 31 December 2007, its last full year of trading, AskMeNow managed to generate an income of USD60,000 whilst incurring expenses of USD20,980,000.

And do not forget that location based services in smart phones answers a lot of your queries. So one side prices are going down for Cha Cha and other providers but the competition is also heating up.

It is a matter of time before we find out whose business model works out best and are consumers willing to pay for such services.

I am picking this from 6336 blog “It is quite easy to get a lot of customers by giving everything away for free. The real test is making money”