Using a mobile device and SMS, or Short Message Service, wireless customers can now get directions to nearby restaurants and other information from the curb. Analysts say that's a potent combination, not only for consumers, but for the fast-growing Web search business.
"The next killer app on the phone is going to be local search," said Stephen Baker, head of emerging applications at Fast Search & Transfer, an enterprise search company.
Mobile search has been around for several years, largely through WAP (Wireless Application Protocol) or browser-enabled devices. But those services have yet to take off with consumers, largely because of technology limitations, fees or lack of widespread adoption of enhanced phones.
Using a mobile device and SMS, wireless customers can now get directions to nearby restaurants and other information on the fly, a potent combination, not only for consumers, but for the fast-growing Web search business.
Players big and small are racing to provide local search on mobile phones via text messaging--a concept that could drive major changes in search advertising.
Many executives believe the time is now right to strike with new search services for wireless devices, specifically text. That's because wireless usage is soaring--more than 200 million people in the United States own a cell phone. And as many as 50 billion text messages will be sent this year--making it a $2 billion industry, according to IDC.
Google, Fast Search, Yahoo, America Online and UpSnap.com are among those eyeing various pieces of the market., for example, are examining and testing mobile devices as a way to extend their search franchises and potentially boost revenues.
In the opposite corner, yellow pages and directory services companies are angling to protect their businesses and advertiser relationships as more people grow accustomed to using new technologies for search. Cell phone carriers also are assessing Internet directory and search services as potential new revenue drivers.
In the latest sign of growing interest in mobile search, upstart 4Info is expected to announce a $7.5 million funding round from U.S. Ventures.
San Mateo, Calif.-based 4Info lets cell phone subscribers use a so-called U.S. short code--a string of five numbers sanctioned by major wireless carriers--to send a text message to its information directory. A text message sent to the code 4Info (or 44636) with a search query will return results of up to 160 characters less than a minute later.
For example, subscribers can key in a text message with the terms "wine bar San Francisco" and receive a list of specialty watering holes, typically within 30 seconds. Think of it as a kind of instant chat with the yellow pages.
4Info will also serve up text messages of sport scores, weather and flight information, movie times and stock quotes to SMS-enabled cell phones. It works with all the major phone carriers, save Virgin Mobile and Metro PCS.
"When people realize they can get answers fast, cheap and accurately, they will," said Pankaj Shah, founder and CEO of 4Info.
4Info is free to cell phone customers, except for the data costs they pay to cell phone carriers. Data fees can range from zero to 10 cents for each message, depending on a subscriber's cellular package.
Because of its speed and low cost, SMS could prove a viable competitor to "411" directory assistance and to browser-enabled mobile Web search. People have not yet widely adopted browser-enabled search over mobile phones, in part because those services aren't available on all handsets. Ease of use is also a big factor, given that it can take awhile to boot up the Internet via a cell phone, and navigation can be awkward.
It can take seconds to initiate a search via text message, as opposed to more than 15 seconds to start up a mobile browser, for instance.
"The issue is, people haven't figured out how to make mobile information delivery work," said George Harik, director of Google's entrepreneurial division Googlettes.
"If you fix those issues, it makes the delivery of advertising possible," Harik said. "Monetization always follows use, and the stage we're in is perfecting usage."
Many companies in the industry, including Google, are working to perfect usage so they can define and capture a potentially lucrative new advertising business.
Late last year, Google introduced an SMS search service that delivers driving directions and business listings that supplant the need to dial "411." Google does not disclose usage numbers, but Harik said that the SMS product is getting favorable uptake from customers.
4Info initially plans to make money by reselling third-party services over the phone. For example, it has a deal with Fandango so that people who call up for movie times can hit "Reply 1" to immediately buy tickets from the online service. It similarly has a deal with Stubhub to sell tickets to sporting events. Eventually, 4Info would like to partner with companies like Starbucks or Peet's for placement in local searches for coffee, for example. A searcher might see a command to hit Reply 1 for the nearest Peet's.
"The advertising world on the Internet somehow needs to be ported to mobile devices--and that's what we're doing for local directory and real-time information sources," Shah said.
In many ways, mobile search faces tougher demands than conventional Web search, however. Providers have much smaller real estate to deliver results so they have to be exact, with consideration of immediacy and the user's location.
For this reason, advertising is a black diamond. A future scenario would be to take a cell phone user's personal information--where a person lives, search history, income, current location--and use it to deliver targeted promotions. A New Jersey resident who searches for movie times in Manhattan could receive a coupon for the nearest parking garage and an ad for a local restaurant.
Still, this kind of service would have to be delivered with the consumer's permission, given current laws against wireless advertising. For this reason, the industry is still figuring out how best to approach the advertising equation.
"There is a type of ad model for the cell phone, just not the type thrown up without the consumer's permission," said John Styers, Sprint's director of data communication services.
"We have to be very careful on how we do this so it's not abused, so when you're paying for something you're getting what you want," he added.
Premium fees are the lowest hanging fruit immediately for cell phone carriers like Sprint. Styers said Google likely will charge a small premium to consumers for its SMS service once out of beta and those fees will be split with the carrier. Google denied any plans to charge, however.
Other wireless carriers see a bigger opportunity in a new mobile advertising business on the order of commercial search for the Internet.
"Carriers are treading cautiously with respect to Google and Yahoo, because they could own the relationship with the advertiser," said Fast's Baker. "The companies that recognize that Yahoo built Google's brand, they want complete control of the economic environment of their mobile portal."