4Info surprises with SMS ad results — raises $10M more

4Info, the Palo Alto mobile search company we feared might become roadkill by Google and Yahoo, has surprised with solid progress in serving ads in text messages.

It’s on track to serve 50 million ad units for the next quarter, at a whopping $50 dollars per thousand messages (equivalent to $50 CPM in advertising parlance). This is remarkable since the service was only launched last month. Indeed, 4Info has sold out its entire inventory of messages. Do the math: This gives 4Info $2.5 million in revenue next quarter.

That’s good enough for its backers to provide more money for expansion. Gannett, the nation’s largest newspaper chain, led the $10 million fourth round of financing. Sand Hill Capital also participated, as did existing backers USVP and Draper Fisher Jurvetson.

We’re hearing the company was valued at just under $100 million after the round, giving it a higher valuation than its third round last year. It has now raised nearly $28 million. We’re also hearing 4Info may raise more money from a large strategic investor within the next month or two. Chief executive Zaw Thet declined comment.

4Info is different from Google and Yahoo because it relies on texting. It lets you text its code 44636, to inquire about things like sports, news, stock prices and weather, and lets you set up alerts for such information.

Last month, we reported 4Info’s move to create what it claimed is the first SMS ad marketplace. Ads in SMS, we asked? The format doesn’t exactly offer much artistic freedom for advertisers.

From Thet’s comments, advertisers are not only putting up with the plain ad format, they can’t get enough of it. Its partners include USA Today (Gannett), TV Guide, Tribune Company. It has 700 publishers using the platform to send out SMS messages.

Companies like Chevrolet, Citibank, 1800-flowers! exploit information 4Info collects on users — such as their location and interests — for better targeting. 4Info also gathers user information from publishers, such as age and gender. The publishers get this information from users through registration forms, and these are pegged to the phone number identities that 4Info tracks.

Because of 4Info’s bulk SMS usage, it doesn’t have to pay carriers for the service, meaning it is free for big companies like Evite to send out SMS alerts to users, containing ads. 4Info splits the revenue 50-50 with the publisher.

Thet says 4Info’s ads have a 15 to 20 percent reply rate, which is very high.

4Info will announce next week that it has signed a deal with a big payments vendor — PayPal, Obopay or Google Checkout.

4Info will also introduce video ads into text messages.

People can also use 4Info by visiting http://mobile.4info.net on their phone’s browser.