ChasNote

Today’s NYT reports the launch of a new ad-supported, free Internet phone service from San Jose-based Pudding Media. The company says it will work like Gmail, where an algorithm (not humans) will listen to phone conversations and deliver relevant ads based the topics being discussed. Coverage by the Times and others suggest that fear of privacy violations is the primary obstacle to the company’s success. I think the bigger challenge will come from the advertisers.

Given that algorithms from established engineering powerhouses like Google still have a tough time understanding context in natural conversation (Google is great at understanding intent when you type a keyword into a searchbox, but much less so when they need to guess intent based on words on the page of other sites, and the former generates click-through rates that are something like 17 times those for the latter, see ChasNote 3/17/07), and given that computers are better at identifying typed words over spoken words, I just can’t imagine this will work well enough to deliver a satisfactory experience for advertisers. Especially since Pudding Media will initially sell ad space on a cost-per-action basis.