Jaxtr Adds Free SMS to Telco-Busting Mix

VoIP provider sees ad model aiding customer adds

Alternative VoIP service provider Jaxtr today added advertising-supported, free SMS service to its offering, ahead of its planned for-fee premium service to be launched this summer.

Jaxtr (along with the other “Js” Jajah and Jangl and a handful of other players) are delivering versions of VoIP-based call-back services, most often with a major Web component as well.

For Jaxtr, run by LinkedIn founder Konstantin Guericke, the mix focuses on Web-based call widgets, links to landline/wireless phones and its latest effort, Café Jaxtr, an attempt to build a voice/messaging-based social network site. Guericke claims 10 million customers for the service, half of which are active, registered users. He declined to give page views for Café Jaxtr.

To continue building its user base, Jaxtr today added the ability for members to send free text messages from their Jaxtr home page to anyone in the world, whether or not the recipient is a Jaxtr user. The service is subsidized with short, 40-character text ads appended to the message and on-page Web advertising. International SMS initiated from the US can cost as much as twenty five cents, noted Guericke.

With advertising on Café Jaxtr and the new SMS ads, Jaxtr is demonstrating its belief that Web and text advertising is preferable to in-call audio ads (rival Jangl, for instance, recently turned on in-call audio ads, and VoodooVox is focused specifically on in-call ads).

“We prefer to stick to more traditional advertising [types] that have already proven out,” Guericke said in an interview. “If you’ve got a page [impression], Google will find an advertiser for you.”

On the page view/advertising side of its business, Jaxtr is content to essentially to break even, Guericke said. But while advertising isn’t viewed as a revenue-stream, creating a viral Web widget/SMS ad-supported network effect does give Jaxtr a no-cost customer acquisition strategy that is crucial to its business model and long-term health, Guericke said. By comparison, marketing and customer acquisition can total more than 25 percent of costs in a typical calling card business, including advertising and retail placement.

So where’s Jaxtr’s revenue? Jaxtr’s path to monetizing its users, said Guericke, will be to charge traditional per-minute rates. Today, Jaxtr users get 100 “Jax” minutes for free each month to use for international calling (users are given a local number to dial; Jaxtr patches call through, including international calls, via VoIP termination). Beginning later this summer, Jaxtr users will be able to move onto a for-fee premium plan that will give them extra minutes, Guericke said, declining to disclose planned rates.

Overall, Jaxtr has two basic customer targets – users wanting to make low-cost international calls (here they compete with calling cards) and Web-based users wanting to add voice to their social media efforts (a newer, more speculative market). The problem with the latter target is that widget-based calling on social networks hasn’t seemingly taken off. Jaxtr’s Guericke admitted social calling is taking longer to take hold of his company’s two target markets.

On the network side, Jaxtr works with a variety of vendors to put its service together. For termination, it works with iBasis and other partners; for inbound calling Voxbone is its most notable partner. On the SMS side, Jaxtr is working with a handful of partners that Guericke declined to name, noting that choice was limited because not all SMS providers are able to provide in-message advertising.