Yahoo Paid-Inclusion Hurts Marchex — End of

Marchex takes a big hit from product change at Yahoo.

Back in August I wrote regarding potential exposure Marchex has to the Yahoo-Microsoft search deal, particularly around Yahoo’s paid inclusion service. Marchex grossed regarding $2 million from the product in the second quarter of this year, but the product’s future was up in the air with the search deal.

Now that Yahoo has disclosed the end of paid inclusion at the end of the year, look for Marchex’s revenue and earnings to take a hit.

Research firm Benchmark is lowering its 2010 revenue estimate for Marchex by $10 million due to the product cancellation. Benchmark questions Marchex’s sustainability.

The product was low margin for Marchex, but was a key component of packages it sold to modest businesses.
Shares of Marchex are up 22 cents to $4.97 in early trading today.

[Disclosure: I own shares in a number of domain name stocks, counting Marchex.]