The 10Q Detective is attracted to Marchex because of its increasingly ability to monetize its own traffic with its own advertisers. For the fourth quarter, revenue attributable to proprietary traffic sources was $14.4 million, with $10.3 million arising from the Name Development and Pike Street Industries asset acquisitions.
The Company is focused on search marketing, local search, and direct navigation. Marchex's platform of integrated performance-based advertising and search-marketing services enables merchants to efficiently market and sell their products and services across multiple online distribution channels, including search engines, product shopping engines, directories and selected Web properties.
According to the comScore Media Metrix Search report for December 2004, Yahoo! Search accounted for 32% of the online searches in the United States and Google accounted for 35%. As a result, these larger distribution partners have greater control over determining the market terms of distribution, including placement of merchant advertisements and cost of placement.
Yahoo!, primarily through its subsidiaries, such as Yahoo!Shopping, is the Company’s largest distribution partner and delivers traffic to Marchex’s merchant listings, accounting for approximately 10% of total revenue for the most recent full-year December 31, 2005.
In looking at Marchex’s search marketing technology and expanded partner distribution network, corporate significantly expanded its future monetization platform.
According to management in its fourth quarter conference call, there are now thousands of local merchants utilizing the Company’s platform. Additionally corporate said that they were very pleased with its progress in this channel, for the signup and renewal rates of local merchants utilizing Marchex’s platform continues to track favorably.
As mentioned previously, revenue attributable to proprietary traffic sources, Name Development and Pike Street, contributed $10.3 million to top-line growth in the most recent quarter. Furthermore, the Company was successful in increasingly monetizing its own traffic with its direct Marchex advertisers. Prior to 2005, Marchex did not have a proprietary traffic source.
Management reminded listeners on the call, too, that the focus during the fourth quarter was not supporting its local super-aggregative partners to drive more local merchants online. This local search engine opportunity is viewed by corporate as a great growth driver that is relatively early in its lifecycle.
In our opinion, there is a strong need for technology providers to assist local merchants in creating, tracking, fulfilling and maintaining locally focused advertising campaigns. Today this channel is vastly underrepresented in online advertising spending.
According to another recent forecast by the Kelsey Group, the global online local search distribution channel—which includes Internet yellow pages, local search, and wireless—will grow to nearly $13 billion by 2010.
Marchex is tracking to be one of the largest, most targeted vertical networks online.