Ad-supported answer service ChaCha has closed a $7 million E round of funding, giving it the cash required to reach profitability.

ChaCha, the SMS answers service, lets users go online, call or text questions on mobile phones and receive answers within minutes for free.

?This round of funding takes us to cash-flow break-even and profitability, so we won?t need more cash unless we plan to expand further," said Scott Jones, chairman/CEO of ChaCha, Indianapolis. ?Our cost structure has gone down dramatically through automation and our huge database of questions and answers, so we?ve been able to step on the gas to get more traffic.

?Nielsen numbers show that we?ve jumped into a very interesting position for the under-25 demographic,? he said. ?We?re that smart friend that a lot of teens and young adults are using when they need to get a question answered, and we?re participating in the explosive growth of SMS.?

ChaCha?s mobile service now delivers more than 35 million impressions each month to 2 million mobile users.

ChaCha has served as an advertising venue for brands such as the CW Network, IKEA, Paramount Pictures, McDonald's, Palm, Coca-Cola, AT&T, J&J, P&G, Walmart, Best Buy and the Obama Campaign.

ChaCha-ching
In the past four years since its inception, ChaCha has raised approximately $52 million from technology companies, venture capitalists and angels, including Amazon.com?s Jeff Bezos, EDS and Perot Systems? Morton Meyerson, portable computer guru Rod Canion, Vanguard Ventures? Jack Gill, Gazelle TechVentures? Don Aquilano and members of the Simon Mall family.

ChaCha's text-messaging service recently passed Google in mobile text traffic in the third quarter of 2009, according to Nielsen Mobile.

When ChaCha's mobile service launched in January 2008, Google SMS had nearly 100 percent of the mobile text search market, but ChaCha claims that it now has more SMS traffic, which is coming from users predominantly under the age of 25.

Nielsen reported that, in the under-25 age bracket in the third quarter of 2009, ChaCha had more engagement from users than all other mobile text services, including Facebook, Twitter and Google.

Text-messaging traffic in general has exploded in the U.S. in the past two years, growing to around 2 trillion text messages in 2009.

Teens and young adults are sending nearly 3,000 text messages a month, compared to about 200 voice calls per month.

Even the 25-45 year-old demographic is texting more messages than making voice calls as of mid-2009.

?We think texting is continuing to climb?we saw a couple of trillion text messages sent this year, which was about double last year, and we?ll continue to see more, not less, texting,? Mr. Jones said.

?Text messaging will continue to grow as a medium and it?s a great way for brand advertisers to reach consumers,? he said.

Smart way to advertise
According to ChaCha, smartphones represent less than 20 percent of phones that are in users' hands today?the iPhone represents about 6 percent.

For the vast majority of mobile phone users, the common denominator of texting, which works on virtually all phones, is the more universal way to get answers, Mr. Jones said.

ChaCha claims that its new iPhone application gets more engagement from users than its mobile text service, and hinted that applications for RIM?s BlackBerry and Google?s Android platforms could be in the works.

Between its mobile and online services, ChaCha has answered more than 300 million questions in the past two years.

?If you?re a movie studio and you?re launching a movie this weekend, ChaCha is arguably the best place to advertise to reach the 18-25 and 13-17 age ranges, as we?ve significantly grown our audience in those demographics,? Mr. Jones said. ?In that moment when they get their answer and we?ve got their attention, we can insert an advertiser?s message.

?In October, Vampire Diaries bought out our inventory for a day, and there weren?t many young adults who didn?t see their message, which drove a lot of traffic to watch their show,? he said.