Question and Answer

As UK premium text trivia service AQA63336 celebrates its fifth birthday, and launches a new offering, Mike Hibberd talks to founding CEO Colly Myers, formerly managing director at Psion and CEO of Symbian Ltd.

It’s a business model dismissed by some as simply “paying somebody else to use Google for you” but AQA63336 has proven itself rather popular. Known to most of its customers simply as AQA (Any Question Answered), the firm’s representatives are at pains to include the five-digit short code in the name when discussing the company, given that it is through this number that users access the service. They worry that  repeat business might be hampered by customers simply forgetting the number.

AQA offers a simple service: A user texts any question they have to the short code and receives a response within a couple of minutes. At £0.98 it’s not cheap-and yet the firm is currently answering 14,500 questions a day. Peak hours, unsurprisingly, coincide with the times laid down in the UK’s licensing laws; the service is most popular between nine and eleven in the evening, the last two hours of drinking time.

Anecdotally the service is used to cheat at quizzes, or to settle trivial conversational disputes, although CEO Colly Myers reveals that some users seem simply to be looking for some attention. Five people each day are prepared to spend the best part of a pound sending proposals of marriage, 30 simply send kisses (in ‘x’ form) and a proportion of questions cannot be reasonably answered, simply because the agent in charge of responding to the question has no idea what colour underwear the customer is wearing-and neither does Google.

“The reason for these kinds of questions is that people like to talk to us,” says Myers. “Questions are about communication.”

Like all others in the industry, AQA has been hit by the financial crisis. At its best it was serving up answers to 17,500 questions each day, which translates into monthly revenues of more than half a million pounds. The firm was profitable 18 months after it launched in April 2004 and, in the past five years, some two million people have used the service.

Costs are kept to a bare minimum; AQA only has 17 full time employees and 11 of those are senior researchers tasked with looking after the more than 1,000 freelances who sit at home answering the questions as they come in. These people are paid £0.30 for each question they answer and they are free to work as little or as long as they like. There are a small number of these freelance researchers stationed in the US and the Antipodes to cover the UK’s nocturnal hours.

Of the £0.98 that AQA charges for each question, says Myers, the UK Government takes £0.14. The network operators take a share of their own, leaving an average of £0.62p. Once the researchers have been paid, and a three pence delivery cost for each response has been taken into account, AQA clears £0.29 per message. And yet, says Myers, the greatest challenge isn’t operating on a thrifty margin, it is managing to ensure that every one of the 1,000 or more researchers answers questions in a manner consistent with the firm’s ethos; punchy, fun, friendly and, crucially, reliable.

“We reckon we answer around 95 per cent of questions correctly,” says Myers, listing some unanswerable examples by way of mitigation. The firm is helped by the fact that many questions are recurrent. “We have a database of 18 million questions and answers,” he says. “When a researcher is given a question they also get given the top ten most likely answers by our software. We will already have the answer for roughly one in three questions and the top 2,000 answers that we give out probably account for 20 per cent of all questions.”

While Myers argues that the firm is in a strong financial position – by the end of this financial year (September 2009), he says, the company will have repaid the founding loans he made to it and will be “freestanding with net profitability” – he concedes that the company has to drive growth. Given his concerns that customers make visits on average only a little more often than once a month because they can’t remember the number, does this mean a mobile marketing drive?

Myers says not. “If you look at the premium text industry it’s been pretty badly behaved,” he says. “Not just the ringtone people, the TV companies have also behaved atrociously. They haven’t put their customers at the forefront of the experience.

“We don’t spam our customers or market to them under any circumstances because texting is too important thing to people. Getting an advert by text would be bad news. We market to our customers through the service itself and the quality of our answers. We’ve done inserts in to magazines but it’s difficult to market a number.”

This difficulty has provided part of the motivation for the launch of the firm’s latest service, AQA2U. This is a commercial micro-blogging tool that Myers believes will allow publishers of all types of content to generate revenues by sending SMS updates to an opt-in audience. In turn, he believes, his own revenues will grow.

Publishers – and AQA expects a range of users, from brands, charities and musicians, to consumers with niche interest content to deliver – will be restricted to 14 text updates each month, with a maximum daily allowance of three posts. As the service is text based, each post must be no more than 160 characters in length.

Subscribers will pay £0.25 per message received, limiting their outlay for each topic they follow to £3.25/month. After the network operators have taken their cut, and the UK Government claimed its VAT, £0.12 will remain for each text delivered. Between seven and nine pence will be given to the publisher, depending on the number of subscribers they have and AQA will keep the rest. If the publisher is a charity, it receives the full £0.12.

A publisher with 25 subscribers could generate annual revenues of £235, says Myers, while 250 subscribers could create revenues of £3,000 a year.

AQA’s revenues from the service – between five and seven pence per text – will be supplemented by a ten pence charge to publishers for each post, which will cover one of the AQA researchers vetting that post (regardless of subscriber numbers) to ensure it meets the firm’s levels of acceptability, offering protection to users from offensive material.

Myers says the firm is targeting 800 publishers by the end of September this year delivering content to 25,000 customers. A year from launch, he predicts that half a million AQA2U texts will be delivered each month. He believes that publishers will have existing relationships with their subscribers, and so the firm itself will not be required to generate interest among recipients. The firm’s 63336 number will appear in all emails sent as part of the service.

But with the rise of social networking sites like Myspace and Facebook, and especially  the rocketing popularity of Twitter, many opportunities already exist for those wishing to publish special interest content to limited subscriber groups. Myers dismisses the suggestion that these sites, and Twitter in particular, could offer a comparable service to AQA2U: “What you get on Twitter is not focused; it’s much more than you bargained for. Content is difficult to find and chaotic, and it’s not protected. And, for the publisher, there’s no incentive because they don’t make any money.”

Clearly Myers views the model as publisher-oriented; he pitches the appeal to these people as being able to make their content available at no cost, and possibly even at a small profit. But the subscribers will be greater in number than the publishers, and it remains to be seen how willing this crucial audience will be to start spending £3.50/month, to gain access to this kind of information. Especially if, as Myers hopes, they have alternative communications relationships with the publisher in place already. And if the subscribers don’t buy into it then the marketing upside for the more lucrative AQA63336 service will be very limited.

This new offering is different in some fundamental ways from the service on which AQA was founded. From a subscriber point of view it’s passive rather than active and it lacks the element of spontaneity that moves 63336 users to dismiss the cost in favour of satisfying an urge. Users of AQA2U will effectively have to budget for this service, not use it on impulse.

There were plenty of people around who thought the business model for the firm’s original service was flawed. But sufficiently large numbers of people are prepared to spend one pound a time to access information that would be free to them, probably even if they used their mobile account to search for the answer through Google or Wikipedia.

Myers is gambling that his latest hunch about user behaviour – his belief that people are drawn to communication for its own sake – will prove equally sharp.