Ringo has launched a model that attempts to combine two different ones - ZagMe meets Zingo. It’s not auspicious that neither predecessor worked terribly well, though both sounded damn fine ideas on paper.

Ringo allows you to order a Taxi based on your location. You dial “*TAXI” on your mobile. Ringo then tracks where you are, identifies the nearest free Taxi to you and sends it round to collect you. Great idea!

Then while you’re in your cab, it sends you advertising for businesses in the immediate location. This is based on the frankly rather gimmicky “Cost per Radius” concept ie the closer your taxi’s drop off point to the advertiser, the more the advertiser gets charged. So if you’re within 351 feet or more of the advertiser, you get charged 5c, ranging up to 25c for within 50 feet. Advertisers can specify both the maximum cost per ad they want to pay and a daily budget (like Google’s AdWords, which they invite comparison to).

Ads can be sent to the phone or printed out in the taxi, if the advertiser wants a paper-based fulfillment option.

As I say, all this sounds terribly logical. Except that Zingo - another service that allowed you to order a location-based cabs - essentially failed, being sold off for £1 after millions were spent developing the system. You can read my analysis, subsequently validated by the founder here. But the basic problem was failure to sign up enough drivers, leading to serial disappointments on behalf of the users. Once users have been let down a few times, they simply give up.

For this sort of model to work, simultaneous critical mass of users and suppliers is crucial. Users need to know that when they order a cab, it arrives. Cabbies need to know that it’s worth their while doing, as there’s lots of users gagging for the service. This simultaneousness is incredibly difficult to achieve.

ZagMe (which I was involved in founding) was a location based marketing play, that did achieve much success before running out of funding. It didn’t help that we ran out very soon after the 9/11 thing either. Having said that, we recruited 85,000 users and ran 1500 campaigns for some blue chip and independents and learned a lot about location based marketing. Sorry, if you’re sick of me writing about it, but if it has escaped your notice, ask for my free white paper on the whole story.

The main trouble with ZagMe was that it was far, far too early - it’s still too early in my view, which if I’m right doesn’t bode well for Ringo’s secondary business model.

But, the key issue here is recruiting enough paying advertisers to make the business model work. Where the Ringo model does make sense is that the users are primarily travelling in a Taxi, as opposed to waiting with baited breath for an ad to arrive. Therefore, user acquisition isn’t such an issue. Although, presumably, they will have to get users to agree to accept the ads and offer some kind of targeting over and above the location.

As an example, if I agree to get an ad and it’s for women’s shoes, it’s going to piss me off for wasting my time, more than encourage me to rush into the store. Result; pissed off customer who won’t use the service in the future and pissed off advertiser who has just wasted the cost of the ad and pissed off Taxi driver who won’t be sharing the thousands of dollars of commission she was promised.

Edward DeFeudis, is the President and CEO of Ringo, and has been dreaming of boundless wealth being delivered by the Ringo model. Here’s his calculations:

“Our revenue estimates project that our vehicles will each print one coupon per trip with 10 trips per day at an average of $0.15 per coupon. Assuming that we achieve our goal of 100,000 vehicles, our CBR ad model will generate an extra $150,000 per day or $54.75 million per year in addition to our basic taxi and tow transportation services increasing our total projected annual revenues to over $127 million.”

As any wet-behind-the-ears VC knows, this is not a remotely feasible way of calculating revenues. There are four HUMONGOUS hurdles to this;

Finding enough advertisers - it’s going to be unbelievably difficult to find local businesses who understand enough about marketing to get this concept. Based on my experience, it simply won’t happen.

Cost - even if you find advertisers, they won’t pay this kind of cost to start with.

Location - even if they have a raft of advertisers, if you factor in time and location, the chances of the taxi dropping off someone within 350 feet anywhere in the US, that has an advertiser signed up on the correct tariff and who wants the traffic at that time of day, must be millions to one against. The math is far too complicated for my humble brain, but I’d go so far to guess that it’s actually billions to one against.

Taxis - how are they going to get the 100,000 vehicles he blithely mentions? Zingo struggled to get 1,500 in a city the size of London.

So, I’d say likely revenues will be in the region of peanuts for the foreseeable future from the location element. Maybe they’ll have better luck with the Taxi-calling side of things, but unless they’ve worked out where Zingo went wrong, that doesn’t look too promising either.

Sorry, I can’t be more positive about Ringo. But shoving together one failed and one inconclusive business model just means a greater chance of failure as far as I’m concerned.