Marchex has acquired local search player Open List, and plans to add its content aggregation, local search, and user-generated content technology across Marchex's network of vertical and local Web sites.
Over the past two years, Open List has crawled and indexed millions of Web pages in the travel vertical, focusing on categories like hotels, restaurants and attractions. The company launched as Local-i two years ago, and has added more cities and verticals to compete with local community sites like IAC's Citysearch.
"Our first order of business will be to roll out the Open List capabilities across the Marchex network of vertical and local Web sites," said Matthew Berk, Open List's CTO. "We will concurrently be looking at developing additional verticals within Open List that can be used to enhance the Marchex network of Web sites to create a rich user experience and that can be offered to third-party publisher partners, as well."
Under the acquisition agreement, Marchex paid approximately $13 million, comprised of $6 million in cash and $7 million in stock. The terms include stock options for the employee shareholders of Open List joining Marchex, including former Jupiter Research analyst Berk. According to Open List, the company generated approximately $150,000 in revenue in 2005, with an operating loss before amortization of more than $150,000.
"Open List is doing some of the most thoughtful work in vertical and local search. The company has been self-funded and has been slow to expand. This will allow it to ramp up more quickly in other verticals and help it build out local more fully," Greg Sterling, principal analyst with Sterling Market Intelligence, told ClickZ.
Marchex has already enabled 31 local and vertical sites with technology from Open List. These include LasVegasVacations.com, 90210.com, NewYorkDining.com, FrenchRestaurants.com, ChicagoLuxuryHotels.com and ShanghaiHotel.com. The sites now aggregate content like product or service descriptions, ratings, expert reviews, user-generated reviews, articles, awards, and maps. The company expects to further integrate Open List into most of its more than 200,000 direct navigation Web sites this year.
The deal will help Marchex turn the thousands of domain sites it owns into bona fide content sites, with navigation, user reviews and other content beyond advertising. That should improve the quality of traffic for advertisers on those sites, Sterling said.
Marchex acquired contextual advertising provider IndustryBrains last year. The company will integrate its private-label contextual advertising platform into Open List to create site-specific and page-specific advertising opportunities.
Advertisers will be able to use a self-service account management system to target and bid for advertising placements by location, category or both, as well as on a run–of-site basis. Marchex will initially focus on targeting ads for location-category combinations of restaurants or hotels in New York, Boston, Los Angeles, Las Vegas and San Francisco. Additional advertising categories are expected to appear in the coming months.
In addition to aggregating reviews from various online publications, Open List's platform also facilitates the creation of user-generated content. The platform collects and manages a proprietary database of reviews from Open List users, directly on the Open List Web site.
Open List licenses its vertical search functionality to Boston.com, the online division of The Boston Globe and a subsidiary of The New York Times Co. Boston.com uses Open List's API (Application Programming Interface) for its restaurant and travel search offerings, and for its Explore New England travel site. Marchex plans to expand the licensing of the Open List content aggregation platform to other vertical and local publishers.
"I think this is going to be very interesting for both companies," Sterling wrote on his Screenwerk blog. "Berk and crew will get more resources to build out the next generation of their product and Marchex will get some very valuable tools and technology to improve the quality of its domain network and the range of services it can offer to partners."
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Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.
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