The Kelsey Group: “Seattle-based Marchex, which is the parent of TrafficLeader, the SEM/SEO firm behind several YP (and newspaper) simplified search marketing programs, has announced the roughly $30 million acquisition of IndustryBrains, which operates a vertical/contextual ad network.”
Relatively little press has been given to Seattle, Wash.-based Marchex’s acquisition of pay-per-click contextually-targeted advertising network IndustryBrains in the mainstream online media; however, The Kelsey Group equity research analyst Greg Stirling describes the rationale the best. As Stirling points out, the reason behind the $30.6 million cash-and-stock buyout is to increase the quality and vertical targeting of its proprietary search-distribution network. Marchex owns a collection of more than 100,000 domain names that it acquired when it purchased Name Development Ltd. for more than $160 million in March 2005, in which it sets up standard template-looking Web sites (like this one) full of vertically-targeted paid listings and sponsored search results. By adding contextually-targeted text-based ads to that network, it should be able to have higher relevancy and subsequently command a higher ad rate from advertisers. Name Development pioneered the so-called “direct navigation” business, buying up premium generic- and dictionary word-based domain names as well as common misspellings of popular words as domain names and then targeting the heck out of those assets through the aforementioned advertising methods.
Additionally, Marchex also owns paid and guaranteed inclusion search marketing network Enhance Interactive as well as the recently acquired assets of Pike Street Industries Inc., including the “yellow.com” and “whitepages.net” online people and business search Web sites.
So, all around, it’s an acquisition that makes sense and Marchex has a lot of synergy with which it can build upon – mixing all of its combined assets to create one, online marketing powerhouse.
Footnote: Name Development Ltd. reportedly made $20 million in ad sales in its most recent fiscal year prior to the Marchex buyout, with three employees and an 80% or greater profit margin. Marchex, which had been unprofitable until that buyout, instantly became profitable and is now reaping the rewards. So, it’s a very, very lucrative business.