Cheap calls – doing the math
Posted by talkster on January 18, 2008
By James Wanless
COO of Talkster
An interesting post this week from our friend Luca Filigheddu comparing Talkster to a number of other (VoIP) services prompted me to put on my blogging hat. The services Luca compared were categorized as VoIP services but to a user of these services it’s not VoIP that makes it as interesting, rather it’s the cheap price.
Luca wrote a very good subjective piece that leads into a broader discussion about the cost of a call and the attempts to make it ever cheaper.
I have often heard it said that quality counts and at a certain point, trying to shave off a cent here and there on the cost of the call substantially reduces the quality. If you can’t shave the cost then how does a business create margin? If they give away calls between their users (calls that costs one of these businesses money) how do they in the long term make any money? We can all wait for the Skype/eBay acquisition fairy to come and visit us one night, but let’s face it, that’s not likely to happen.
In our experience (even long before starting Talkster) there’s nothing like free to acquire customers. Don’t get me wrong; you still have to give an acceptable level of quality, but free definitely “sells.” But at the end of the day, it doesn’t matter if something is free if its quality is sketchy.
Also, adding value (e.g. convenience, new features) to the call allows a voice service to differentiate its “free” service over the next company’s “more free” offer. Talkster has some things up our sleeve in this regard as well, but I am going to save that for another day. :-)
I’ve written it many times here and discussed at length in interviews and at industry speaking opportunities – – Someone has to pay for free calls. Talkster believes that when we balance the issues of credit control (especially outside North America) with the minimal margins that cheap calls generate, our ad-supported model is the way forward for consumers. Advertisers pay for calls on the Talkster service. Because they pay for the call, we can ensure we are delivering the quality people expect when they place calls.
JaJah made an announcement about an ad-supported beta offering well after we launched our service at the CTIA show, and it certainly seems to be a bandwagon that a number of other companies are jumping on.
Advertising seems like an easy play but recognize that beyond the technical issues there are some fundamentals that need consideration. For example, advertising becomes annoying if it’s not relevant. Do I really want to listen to a commercial for discount car insurance for seniors if I am a 20 year old university student with nothing but a public transit pass? The answer is no.
If it’s targeted and relevant an ad becomes an offer. When an ad is regarded as an offer by the consumer on the receiving end, they no longer view it as obnoxious and are more likely to engage with it.
Equally, the advertisers need to reach the right audience in order to increase brand awareness, inquiries and ultimately sales of their products or services. Beyond targeting, to maximize the effectiveness of a campaign there can be “calls to action” within the advertising channel that allow callers to interact with an ad and bring immediacy to an offer.
At Talkster, our team has individuals with more than 30 years (yes, some of us – not me — are that old) of direct marketing experience and know how to make this work. Being able to effectively communicate the offer and deliver the mechanism to close the sale is at the core of what we have developed for advertisers.
For now we are satisfied to be recognized in the same pool as a number of VoIP players. But in the near future, we will be viewed in another light as we build on our Ad Supported Communications Platform and extend our reputation as more than just another cheap or free phone call.