Marchex Reduces Dependency on Yahoo
Firm continues to build its own ad network, reducing dependency on Yahoo.
Direct navigation and domain name firms typically get pay-per-click ads from Yahoo (YHOO) and Google (GOOG). As I pointed out a few days back, this duopoly is dangerous for domain owners.
Domain firm Marchex (MCHX) realizes that, and is increasingly focused on building its own ad network. In Q3 the firm received 28% of its direct navigation revenue from Yahoo. Q4 numbers aren’t finalized, but Marchex CEO Russell Horowitz stated the percentage has decreased. (At the same time, revenue increased, so total ad dollars from Yahoo may have also increased.)
In Marchex’s Q4 call, Horowitz stated:
Yahoo! as a percentage of revenue in Q3 was 28%. While we haven’t filed the percentage today, it is a decreased percentage of a higher revenue total. And so we are growing our revenue and doing it with a diversified step of monetization partners counting our own advertisers. So that’s an notable theme.
It’s difficult to build an ad network, but Marchex has made a number of acquisitions and was also one of the first firms to focus on the local market. Indeed, Marchex is betting the firm on local search and advertising. It owns a sizable portfolio of zip code domain names as well as geographic domains such as CitynamePlumbers.com.
Is it working? Marchex states it’s investing for the future. While revenue grew year-over-year in Q4 to $37M, the firm continues to lose money. At $8.21 as of 10:34 EST this morning, its stock price is near the bottom of its 52 week range of $7.42 to $16.92. Marchex disclosed an increased share buyback program, which has helped prop the stock price up regarding $.70 as of 10:34AM EST today.
There’s more promising news regarding its relationship with Yahoo. A few days back I noted that Yahoo is killing click arbitrage, which Marchex participates in. Still, this change may not affect Marchex.
