Marchex Buys VoiceStar for $28 Million

The image “http://www.marchex.com/images/logo_main.gif” cannot be displayed, because it contains errors.Marchex announced this afternoon that it has acquired VoiceStar, which provides PPCall and call tracking services. The acquisition price is $28 million broken out as follows:

Marchex total anticipated investment to acquire VoiceStar will be $28 million, consisting of approximately $20 million in transaction consideration and $8 million in company investment. Specifically, transaction consideration consists of approximately $12.9 million in cash consideration and Marchex will issue approximately $7.1 million in restricted stock that is subject to vesting over two-and-one-half years from closing to certain employees of VoiceStar; and company investment consists of $8 million relating to products, infrastructure, human resources and other items through 2008. The acquisition is expected to close by October 1, 2007. VoiceStar will continue to operate from its headquarters in Philadelphia, PA.

Here’s what Marchex said and projected regarding VoiceStar revenues:

[Marchex] believes that VoiceStar will generate revenue of approximately $1.5 million for the full year 2007, with an operating income loss. . . Revenue contribution to Marchex from VoiceStar for the remainder of 2007 is anticipated to be $0.5 million. Additionally, based on current VoiceStar growth rates, Marchex anticipates that VoiceStar’s 2008 contribution will more than double its total anticipated 2007 revenue, excluding cross-selling opportunities with Marchex . . . Marchex expects that investment in VoiceStar and various call-related opportunities will total $3 million in 2007 and $5 million in 2008.

Separately, Marchex announced that it has added Bill Day as Chief Media Officer. Day was a co-founder and CEO of About.com. Day will reportedly be in charge of “Marchex’s media strategy, including its online content, consumer-facing initiatives and related advertising strategies.” That includes the forthcoming relaunch of OpenList.com later this fall.

I spoke briefly with Marchex Chief Strategy Officer Peter Christothoulou who said that in order to ultimately be credible in the local space you had to “deliver a comprehensive solution and support clicks and calls.” He added, “The key is now merging clicks and calls and search and calls into a combined platform.”

Asked about the purchase price, Christothoulou asserted, “The amount we paid is more than reasonable considering the opportunity. We can now take their products to our channel and advertisers and we can take our products to their advertisers.”

He stressed that Marchex is committed to being a leader in local and that includes call-based advertising. “We have the distribution and we have the advertiser and channel relationships. We have the ability to make this happen and the desire. We’re going invest significantly to extend our position in the local space.”

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The press release cites the market opportunity as being “up to $4 billion by 2009,” which is a debatable number because the two biggest traffic distribution sources (Google, Yahoo) have yet to adopt PPCall. That forecast was built on assumptions that have yet to come to pass. PPCall is, however, gaining traction in mobile and will eventually capture more distribution online.

Christothoulou told me that Marchex was going to push PPCall aggressively and he felt the company had the assets and the capacity to significantly expand the market.

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10 Responses to “Marchex Buys VoiceStar for $28 Million”

  1. Colin Carmichael Says:

    Congrats to Ari and the guys!

  2. Redeye VC Says:

    Voicestar acquired by Marchex

    Congratulations to Ari and Todd on their sale to Marchex (NASDAQ: MCHX). I first met the Voicestar guys back in 2005. They were among the pioneers of the pay-per-call market — and I recall being amazed by how much they

  3. New Marchex CMO on Local « Screenwerk Says:

    [...] and Marchex’s new “Chief Media Officer,” in the wake of the company’s acquisition of VoiceStar last week. Here are some [...]

  4. Dave Says:

    Congratulations to Ari on all his hard work and on a nice exit with Marchex. Marchex’s display of commitment to PPCall gives further encouragement other self-funded pay-per-call pioneers such as we at wwww.ZiffLeads.com (launched in 2005) of SPG Solutions.

    We have built from scratch a comprehensive and proprietary pay-per-call ad platform and network, a large direct advertiser base, and a substantial multi-media publisher network.

    With triple-digit quarterly growth, expected revenue this year of well over 3X that of VoiceStar’s and the turning of a significant profit, our excitement for the PPCall opportunity only continues to grow.

  5. Will Scott Says:

    So here’s my question in the wake of all this — what about VoiceStar’s customers who may already compete with Marchex.

    Marchex does domains.

    Marchex does SEO.

    Marchex does SEM

    My sense is that co-opetition is a short-lived myth.

    It’ll be interesting to see how Voicestar customers in mediated PPC and SEO respond.

  6. The Seattle-Search.com Blog » Blog Archive » Marchex Issues Local Search Report, Starts Local Blog Says:

    [...] Marchex, which recently acquired VoiceStar, launched 100,000 local search domains and is about to relaunch OpenList as a new, comprehensive [...]

  7. HELM, WHM/cPanel, Windows, Linux and SEO Blog » Blog Archive » Marchex Issues Local Search Report, Starts Local Blog Says:

    [...] which recently acquired VoiceStar, launched 100,000 local search domains and is about to relaunch OpenList as a new, comprehensive [...]

  8. Superpages in Distribution Deal with Marchex « Screenwerk Says:

    [...] of domain sites that have been enhanced with OpenList content and functionality. Marchex also recently acquired VoiceStar for $20+ [...]

  9. SMX LoMo: Day 2 Take-Aways « Your Suspect Says:

    [...] ill and had to withdraw from the panel. Ari is an expert in Pay Per Call, Click to Call etc, and recently sold VoiceStar to Marchex for $28M. I [...]

  10. Complete List of 2007 Web / Technology Acquisitions » The StartUp Blog at PartnerUp Says:

    [...] the pioneers in the pay-per-call and phone-to-web markets. Press Release | TechCrunch | Redeye VC | Screenwerk | [...]

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