About a year ago, Marchex placed a big bet on call advertising. And now the Seattle company is doubling down on those efforts. Today, Marchex is announcing plans to buy six-year-old Jingle Networks for as much as $62.5 million in cash and stock. It marks the first acquisition for Marchex in nearly four years.
With offices in New York and Massachusetts, Jingle is best known as the operator of the 1-800-Free411 directory service. But that’s not what attracted Marchex, with Chief Operating Officer Pete Christothoulou saying the free directory calling portion of the Jingle business is declining.
Instead, Christothoulou said that they were attracted to Jingle’s expertise in mobile voice search. That business is growing, with its mobile partner call volume on track to grow by more than 200 percent this year.
“… We wanted to combine their business into our Call Advertising Network and accelerate our strategy and increase our scale and effectiveness,” Christothoulou tells GeekWire.
Marchex believes that phone calls are becoming more important than clicks in advertising. The reason is that a customer who engages through a phone call is much closer to a purchase decision than one who simply clicks on an online ad, according to the company.
Call advertising typically results in sales conversions of about 20 to 30 percent, which compares to one to three percent for search advertising.
“We’re not focused on getting around search really, but we believe that we are in the middle of a fundamental shift in the digital advertising market where phone calls are the new clicks,” said Christothoulou.
Jingle will bring Marchex mobile voice search technology, and that’s something that Christothoulou said would not have been easy to build on its own.
“Supporting mobile carriers and mobile network operators not only requires the appropriate infrastructure, but specific understanding and knowledge,” he says. “As a result, this would be difficult to build with any speed.”
Additionally, Jingle had already negotiated several key exclusive deals with mobile companies.
Jingle employs about 30 people, and those staffers will be joining Marchex as part of the deal. Marchex — with revenue of $97.6 million last year — now employs 410 people.
Jingle had raised a boat load of cash, with VentureBeat reporting in 2009 that total capital raised stood at $88.7 million. Investors included First Round Capital, Lead Dog Ventures, Liberty Associated Partners, Goldman Sachs and Hearst.
The deal is expected to bring Marchex more than $16.2 million in revenue for the remainder of the year, and more than $1.2 million in adjusted operating income before amortization.
Together, Marchex said that its Call Advertising Network will now have an annualized reach of more than 500 million phone calls. The new technologies from Jingle will be used to track and measure the success of call advertising campaigns.
With the acquisition, Marchex said that call-driven revenues will represent more than 75 percent of revenues on an annualized basis.
