ReveNews
Marchex Invests $16MM More in URLs
As you may recall from their last acquisition,, Marchex is adding $16.5 million in cost to its run at buying up URLs that have strong traffic to them… mostly from Web users who mistakenly assume they know where they’re going when typing either correct or mis-spelled URLs into browsers.
And You Thought Affiliates Were Clever
Like a virus that keeps mutating, there’s a new typo-grabbing trick out there that’s harder to kill… and Marchex had better pay attention because in the end it translates to increased risk for its roll-up-the-traffic play (which relies, in part, on owning and re-directing users from mis-spelled URLs to advertising networks).
During our last round, Kowabunga’s Jeff Doak pointed out (in a private conversation which Revenews readers get the benefit of tapping into) an interesting company out of Reston Virginia. I’m referring to Paxfire, a startup headed by former USA Today tech reporter. Paxfire has figured out where to put the intercept system so nobody can pull the plug and it is first in line to make the re-direct (passing the user on to ad networks or advertisers direct). When consumers mis-spell URLs the user’s ISP (when partnered with Paxfire) catches the request and makes the re-direct, sharing in the resulting ad revenue with Paxfire. In other words, if a consumer’s ISP contracts with Paxfire, requests to non-existent or mis-spelled sites will send them to a Paxfire-powered page full of ads. Sorry, Salefish.com!
Marchex vs. Mega-Networks
Says Peter Christothoulou, Marchex chief strategy officer, of their recent acquisition, “The asset acquisition of Pike Street represents continued progress toward our goals of driving qualified leads to merchants and enabling local merchant transactions.”
Say that again? That’s a goal which would pit Marchex up against… well, just about everyone from AvenueA to ValueClick and everyone in between. The Marchex portfolio is increasingly leveraged into networks of inbound links that continue to funnel traffic to URLs, even if ownership has changed. In the short term, this seems remarkably profitable and smart but what about the long term? Where does growth come from?
Perhaps Marchex will rely on its other divisions such as search technology, search management, data feed management and search optimization services. Yet in each of these areas Marchex faces increasingly stiff competition and with behavioral advertising poising to take off (i.e. early successes from Revenue Science, ContextWeb et al) its core offering may struggle to earn share of advertisers’ wallets. Consider, also, what some say about the diluted value being found in search agencies in general.
Popular Play
This is becoming a popular tactic used by experienced executives… like those at Think Partnership who are executing the same roll-up play in the “tier two” online dating, search services and, lately, affiliate marketing companies. Again this is remarkably profitable in the short term but like any strategy that involves growth by acquisition investors need to consider a variety of risk factors.
**** UPDATE: APRIL 29 10:25 AM CT ****
This just in… TrafficLeader, the company’s search management arm, has partnered with RBOC-powered Yellowpages.com in a deal that will allow Marchex to sell search services directly to Bellsouth and SBC’s small business customers.
[[ The Marchex portfolio is increasingly leveraged into networks of inbound links that continue to funnel traffic to URLs, even if ownership has changed. ]]
Hmmm … I wonder how long those inbound links would last as the “linkers” start noticing that the site has changed significantly since they first linked to it? A competitor who was willing to spend some time pointing that out to linking sites could do a lot to devalue those URLs.