Dialing for dollars: Marchex reinvents itself
When the recession hit and advertisers scaled back their spending, Seattle-based Marchex saw a 36 percent, or $53 million, drop in sales.
The 2009 blow prompted the 7-year-old public company, which was selling online advertising, particularly “local search” advertising on its 200,000 domains, to take a hard look at its business.
What it found was sobering, says cofounder and CEO Russ Horowitz, who had spent $160 million buying domain names to which Marchex added content in hopes of making the sites a magnet for local advertisers. It discovered that it got the model wrong, that local search companies had no advantage over Google. “Online users don’t distinguish between general, category or local searches,” Horowitz says. “They pretty much just use Google.”
Marchex did learn, however, that its largest customer, AT&T, really wanted to know how many people who saw an ad took the next step to call the business that was advertising through AT&T’s phone book or online directory.
“We kind of woke up one day, and said, ‘If all AT&T cares about is phone calls, why are we just buying search?’” Horowitz says. “Shouldn’t we buy placements in online directories and look at emerging sources like mobile, and [at] situations where the more natural consumer action is calls rather than clicks?”
One acquisition, one overhaul of personnel and two years later, Marchex is back on track to surpass the $146 million revenue mark it hit before the recession, with a new strategy based on getting consumers to make that all-important phone call. The company recently added 40 new employees and has plans to add 60 more, bringing its total workforce close to 500.
It’s an astounding recovery in a tepid economy that hasn’t seen a huge return of advertising spending. While businesses have included telephone numbers in their advertisements for years, there has been no way to track calls to them other than by asking callers how they found out about a product or business.
Until now.
Using special telephone numbers and sophisticated call-tracking software, Marchex delivers call tracking and analytics—no matter where the ad was placed: online, offline, on a billboard, in a print magazine or in a flier—and no matter the device. Marchex’s revenue comes from selling phone calls directly to national and midsize advertisers and to resellers such as AT&T, which then sells call-based advertising to its small-business customers. It gets its revenue on a pay-for-call basis, which means it gets paid only when a
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