Marchex (MCHX)

Incorporated in January 2003, Marchex, Inc. is a search and media company focused on vertical and local online traffic through search marketing, local search, and direct navigation. The company's platform enables merchants to market and sell their products and services across multiple online distribution channels, including search engines, product shopping engines, directories and selected websites. Marchex breaks its segments into two reporting segments, Advertising Services, which contributed 64.0% of revenue, and Local Content Network, contributing 36.0% of 2007 revenue. Marchex market's its services in three areas of focus, Advertising Services, Local Services, and Local Content Network, which we discuss in more detail below. In 2007, the company generated 97% of its total revenue from the United States, 1% from Canada, and 2% from other countries.

Advertising Services also known as "performance-based advertising" connects national and local advertisers with consumers, and includes a number of MCHX's services, including: Pay-per-click campaign management offered through TrafficLeader allows its merchant advertiser customers to purchase keywords or keyword strings. When an Internet user clicks on a pay-per-click search result, they are redirected from a third party website (such as Yahoo!) or a MCHX owned website to a merchant advertiser website. The rank of pay-per-click advertisers is influenced by the amount that an advertiser pays for the click-through and the relevance of its advertisements. Contextual targeting, which is sold through Marchex s IndustryBrains service is "site specific advertising" and involves the selling of advertisements on specialized vertical and branded websites that relate to the advertisers product. Contextual results are prioritized by the amount the advertiser is willing to pay each time a user clicks on the ad and the relevance of the advertisement. Feed management enables merchants to deliver comprehensive and up-to-date product and service listings to major search engines, such as Google and Yahoo! Feed management uses MCHX's proprietary technology to crawl and extract relevant product content from merchant's database and websites to create highly targeted product and service listings. Bid management allows merchants to track, monitor and optimize the placement of performance-based search advertising campaigns across a number of search engines and pay-per-click networks. Bid management also helps merchants evaluate the effectiveness of online advertising campaigns using conversion tracking and detailed reporting services. SEO Consulting offered through MCHX's Traffic Leader division helps merchants improve their Web site's placement in the natural search results on leading search engines including Google, Yahoo! and MSN. Call-Based Marketing Services is a pay-per-phone-call and call tracking service that is offered through MCHX's VoiceStar, enabling advertisers to monitor ad performance, increase business, and grow revenue.

Local Services is focused on connecting local advertisers to consumers as the local search marketing platform provider for large local advertiser aggregators including AT&T, Yellowpages.com and The Berry Company. Offerings under Local Services include Marchex Connect, a private-label search fulfillment solution that enables Yellow Pages publishers, directories, newspapers and local media to drive local leads to their customers through search marketing and call-based services. Marchex Directory Services drives high-quality traffic from MCHX's online Yellow Pages and Directory sites in order to increase the number of localized searches on an advertiser's Web site. Also under Local Services, Marchex offers its Call-Based Marketing services to help advertisers track calls and monitor ad performance.

Local Content Network is included in the Local Services business, focused on advertisers trying to reach customers in their local region. This local network includes more than 200,000 websites, including more than 75,000 U.S. ZIP code sites such as 98102.com and 90210.com, as well as local sites such as Yellow.com, OpenList.com, and geo-targeted sites such as chicagodoctors.com, seattleautorepairs.com, bostonmortgage.com, and others. The network features listings from more than 15 million local businesses in the U.S. and more than 1.3 million user-generated reviews and ratings on local businesses across more than 20,000 categories. This focus area also includes Marchex's Open List Content Publishing Engine, which collects relevant sources on the Web for local information, organizes, refines and structures the information, and then publishes the information to hundreds of thousand of Web sites and updates them frequently with new information.

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