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A Telemarketer You Can Talk To

Until now, the cell phone has been a rare commercial-free zone, making it unique in the world of modern media. TV and radio are built on advertising, and it didn't take marketers long to figure out how to use regular phones and e-mail to make their pitches. Movie theaters mix advertising with trailers and reminders not to smoke or talk during the show. Ads are even embedded into the movies themselves. Filmmakers generate millions of dollars in fees by agreeing to have Vin Diesel hold a can of Coke or Pepsi in his hand as he falls off the roof of that skyscraper.

But one Silicon Valley entrepreneur thinks his company, Tellme Networks, could help transform the cell phone into a powerful tool for sales and marketing. Tellme uses a combination of Internet and voice-recognition technology to replace human operators and traditional automated attendants. Instead of requiring people to enter data by pushing numbers on the keypad, Tellme allows them to issue commands to a computer by speaking in a natural voice over the phone. And the digital attendant can speak back to the caller as well.

Mike McCue, president of the Mountain View (Calif.) company, thinks the system will allow companies to craft audio commercials, complete with sound tracks, that are tailored to the individuals. "I think the marketing potential of the cell phone is huge. It's very intimate. It allows you to literally whisper in someone's ear," McCue says.

TellMe CEO Mike McCue

AUDIO BRANDING. A number of Tellme customers already use the service for sales and marketing. Movie-ticket seller Fandango allows callers to order tickets by speaking into the phone, instead of pushing buttons. It also can identify a caller's location, based on the area code and the first three digits of the phone number. This allows Fandango to target callers with personalized menus and options that reflect local movie theaters.

And Delta Air Lines' (DAL) idiosyncratic Song brand, which combines budget travel with a focus on fun, makes unusual use of Tellme technology. If a caller from a cold clime inquires about a plane ticket to West Palm Beach, Fla., in the middle of winter, a computerized voice generated by Tellme might say "I bet you can't wait to get there." When people call the online broker E*Trade (ET), a computerized voice generated by Tellme may suggest that they try one of the company's new banking or mortgage services.

McCue believes Tellme technology will develop a new field of audio branding. "When you call a company with a cool or hip brand, it shouldn't sound like every other company. It should sound cool or hip," McCue says. He says he's amazed that the customer-service line at Apple Computer (AAPL), which has one of the hippest brands in the world, sounds just like everyone else's. In the next year or two, he believes companies like Apple will start to pay more attention to what they sound like on the phone.

IPO READY? Privately held Tellme is growing quickly. McCue declines to disclose revenues, but he says they're doubling every year, and that he expects to achieve a revenue run rate of $100 million by yearend. Tellme is profitable, too, he says. That means it's well-positioned for an initial public offering, although it hasn't filed documents with the Securities & Exchange Commission.

Tellme's major customers include AT&T (T), AT&T Wireless (AWE), and Verizon Communications (VZ). Verizon uses the technology to run its directory assistance in nine states, and it's about to expand the use of Tellme nationwide, BusinessWeek Online has learned. The deal could be worth $50 million to $100 million for the startup over the next four or five years, people familiar with the matter say.

Verizon says the technology is a great marketing tool. If a caller asks for the number of a local restaurant or movie theater, Verizon can use Tellme technology to ask the caller if they want a map e-mailed to their cell phone. "It will help us serve our customers better," says Joel Horton, executive director of technology of Verizon Live Source, the telecom's directory-assistance business.

As Tellme takes off, the commercial-free era of cell phone service is likely to end. At this rate, it won't be long before lots of companies are whispering into callers' ears.

Tellme Is Taking Off

Silicon Valley upstart Tellme Networks is carving a niche for itself in the telecom market. Here's a look at some of the services that use its technology, which is based on a combination of voice recognition and the Internet:

Verizon The largest U.S. phone company already uses Tellme to provide directory assistance in nine states. Callers speak to an automated attendant just as they would to a real person. Now, Verizon is about to expand the service nationwide, in a deal worth $50 million to $100 million for Tellme, BusinessWeek Online has learned.

AT&T The long-distance giant uses Tellme to run 1 800 555-1212, the national toll-free directory. That allows AT&T to cut costs by reducing the number of human operators.

AT&T Wireless The cell-phone company uses Tellme for its #121 service, which allows customers to obtain stock quotes and traffic reports simply by speaking into their wireless phone.

FedEx The package deliverer uses Tellme to run its customer service line, 1 800 GO-FEDEX. Callers can simply tell an automated attendant what the tracking number of their package is. That's faster and easier than entering the data by pressing numbers on a keypad.

Data:BusinessWeek Online, Company Reports

By Steve Rosenbush in New York

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