Profile: Marchex Inc (MCHX.O)
Marchex, Inc., incorporated on January 17, 2003, is a digital call advertising and small business solutions company. The Company offers products, services and technologies that enable advertisers to reach local consumers across online, mobile and offline sources. Its products and services primarily include digital call-based advertising, pay-per-click advertising, and its Website traffic sources. In addition, the Company provides performance marketing solutions, including private-label products for small businesses, to a network of reseller partners, including Yellow Pages publishers, media, telecommunications companies and vertical marketing service providers. It generates revenue from two primary sources: performance-based digital call advertising and its non-call driven sources. During the year ended December 31, 2011, revenue from its Website traffic sources accounted for approximately 14% of total revenues.
Digital Call Advertising Services
The Company delivers a variety of digital call advertising products and services to national advertisers, advertising agencies and small advertiser reseller partners. These services include Marchex Call Connect, where it provide pay-for-call advertisements through the Marchex Digital Call Marketplace, and Marchex Call Analytics, which include phone number and call tracking, call mining, keyword-level tracking, click-to-call, Website proxying, and other call-based products, which enable its customers to utilize mobile, online and offline advertising to drive calls, as well as clicks into their businesses and to measure the effectiveness of their advertising campaigns. Advertisers pay them a fee for each call they receive from call-based advertisement it distribute through its sources of call distribution or for each phone number tracked based on a pre-negotiated rate.
Small Business Solutions
The Company’s small business solutions enable reseller partners of small business advertisers, such as Yellow Pages providers and vertical marketing service providers, to sell digital call advertising and/or search marketing products through their existing sales channels, which are then fulfilled by it across its distribution network, including mobile sources, search engines and its own Website traffic sources. The lead services the Company offer to small business advertisers through its small business solutions include products typically available only to national advertisers, including pay-for-call, call tracking, presence management, ad creation, keyword selection, geo-targeting, advertising campaign management, reporting and analytics. Its small business solutions have the capacity to support tens of thousands of advertiser accounts. Reseller partners and publishers generally pay them account fees and also agency fees for its products in the form of a percentage of the cost of every call or click delivered to their advertisers.
The Company delivers pay-per-click advertisements to online users in response to their keyword search queries or on pages they visit throughout its distribution network of search engines, shopping engines, certain third party vertical and local Websites, mobile distribution and its own Website traffic sources. In addition to distributing their advertisements, Marchex, Inc. offers account management services. The pay-per-click advertisements are generally ordered based on the amount its advertisers choose to pay for a placement and the relevancy of their ads to the keyword search. Advertisers pay them when a user clicks on their advertisements in its distribution network and it pay publishers or distribution partners a percentage of the revenue generated by the click-throughs on their site. In addition, it generates revenue from cost-per-action events that take place on its distribution network. It also offers a private-label platform for publishers, separate and distinct from its small business solutions, which enable them to monetize their Websites with contextual advertising from their own customers or from its advertising relationships. It sells pay-per-click contextual advertising placements on specialized vertical and branded publisher Websites on a pay-per-click basis.
Proprietary Website Traffic
The Company’s Proprietary Website Traffic is a source of local information online and a source of calls within the Marchex Digital Call Marketplace. It includes more than 200,000 of its owned and operated Websites focused on helping users make informed decisions about where to get local products and services. The more than 200,000 Websites in its network include more than 75,000 United States ZIP code sites, including 98102.com and 90210.com, covering ZIP code areas nationwide, as well as tens of thousands of other locally focused sites, such as Yellow.com, OpenList.com and geo-targeted sites. Traffic to its Websites is primarily monetized with pay-for-call and pay-per-click listings that are relevant to the Websites, as well as other forms of advertising, including banner advertising.
The Company competes with Google, IAC/InterActiveCorp, Microsoft, Yahoo!, Yext! and ReachLocal.
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