VoodooVox: Building a Voice 2.0 Ad Network

picture-189.pngAs if we didn’t have enough advertising in our lives, now we can look forward to listening to ads while on hold during a phone call, or while using a free Web telephony service. One startup trying to make that happen is VoodoVox out of New York City. Backed by Softbank Capital, Apax Partners, and Steamboat Ventures (Disney), VoodooVox has raised a total of $13 million so far. CEO J. Scott Hamilton wants to make VoodooVox the DoubleClick of what is known as “in-call” advertising. “It’s 1994 again” he says, “and I’m selling banners to people who don’t even know what a banner is.” What he is really selling is a relatively new form of audio advertising.

VoodooVox started out five years ago building automated systems to handle incoming calls to radio stations, but in the past year-and-a-half it’s expanded to delivering targeted audio ads over the phone and elsewhere. Radio shows like Howard Stern’s or request shows on MTV can generate hundreds of thousands of calls per day. VoodooVox’s software handles those calls, records the incoming messages, and can collect the demographic information from callers as well. Adding advertising was a no-brainer. For instance, here is one ad for MSN Music that ran on NYC hip-hop station Hot97’s call-in line. (Listener’s were prompted to “press 9” to get an offer from MSN Music sent to their mobile phones).

The 400 or so radio stations that already use VoodooVox for call management, and 200 other “voice publishers” like calling card companies, receive 300 million calls a month. Currently, VoodooVox is serving audio ads in about 10 percent of those and getting average CPMs of $10 to $15, which it splits 50/50 with the companies receiving the calls. That gives VoodooVox the critical mass to become an audio ad network. It just struck an undisclosed $2.3 million deal with Jones MediaAmerica (a radio ad sales rep firm) for Jones to resell VoodooVox ads to radio and TV stations.

But radio is the just the start. “We happen to be serving them into phone calls but there is no reason why we cannot serve them into other media,” says Hamilton. These ads could just as easily be inserted into Web-based telephony services or even online music services. In fact, VoodooVox powers ads on Web-based voicemail services MyVox and SayNow, and is in talks with audio app Blabberize . In a way, this is like radio ads all over again, except these tend to be 10 to 15 seconds long and work best when placed in spots that don’t interrupt actual calls or entertainment experiences.

Ad-supported Voice 2.0 apps like free 411 calls are nothing new, but Hamilton has higher ambitions. “We feel cell services and even your landline will be supported by ads,” he predicts. Maybe some day. But for now, just look at all the VOIP calls being generated over the Web. It’s easier for startups to come up with new Voice 2.0 apps than with a way to make money from them. Hamilton sees all of those calls as inventory to fill with his ads. It is not difficult to imagine how online music services could benefit as well. Most experiments with ad-supported calls or music on the Web today still stick with visual banner ads on the Webpage serving the audio. But who looks at those pages? When I am streaming music from an online music site, for instance, I usually have it in an open tab in the background. I am consuming the service through my speakers instead. Same with telephony apps. The experience is through the headset.

An audio ad is something I wouldn’t be able to avoid so easily. On the other hand, it could be much more annoying if it wasn’t opt-in because listening to something I don’t want to actually wastes my time and would be more likely to drive me away from a service forever. But the idea of a DoubleClick for audio ads is still very intriguing.