ChaCha Cofounder Describes How the Company Is Making Money

He defends a pay cut for many of the "guides" who answer called-in questions.

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I've learned more about how ChaCha plans to make money. As with other search engines, the mobile service plans to plug ads into the results. The ads will show up as a line or two of text at the bottom of the text-message answer that ChaCha sends to a mobile phone in answer to a called-in question.

The ads will be relevant to the question, says Brad Bostic, ChaCha's cofounder. He described the recent campaign with Coca-Cola, one of ChaCha's first paying customers. Coke wanted to reach consumers interested in NASCAR racing.

ChaCha answers to questions about NASCAR and racing came with a plug for the MyCoke rewards program, which targets racing fans, among others. The message gave recipients a chance to learn more through a quick text response. Coke saw responses higher than in other campaigns, Bostic says. "It's an effective way to target consumers and to let brands interact with them," he says.

I asked to talk with Bostic after our friends at TechCrunch predicted the service's demise. Bostic wouldn't get too specific about the company's finances but said ChaCha had the money to operate until it's profitable.

The question arose after ChaCha said it would change its pay plan for the thousands of human "guides" who answer queries called or texted to the service. The changes have met with a huge outcry from guides, many of whom won't qualify as "top guides" and will see their pay cut in half, to 10 cents an answer. Message boards, including the comments about my earlier posting, are filled with angry posts from guides.

Bostic wouldn't say much about the change in pay scale, other than that "the focus is on ways to improve the quality" of answers. But several guides I spoke with say they'll quit working for the service and expect the same of many thousands of other guides.

I was too generous, by the way, in suggesting that guides can make $12 an hour. That's a rare hour, guides say. ChaCha tells potential guides that the average pay is $3 to $9 an hour.