Marchex to Buy Jingle, Owner of 1-800-FREE411

The merger of Marchex and Jingle Networks, announced today, will create an expanded pay-per-call ad network with marquee partnerships.

Marchex said it would pay up to $62.5 million in cash and stock for Jingle Networks. (Marchex has the option to pay with stock or cash, so the final price will be determined by the mix and the current stock price.) In December, Jingle raised a $6.8 million round of venture capital. Marchex’s reported 2010 revenue was $97.6 million, compared to $93.3 million in 2009.

Marchex provides unique phone numbers and analytics tools to let advertisers place, measure and optimize campaigns across digital calls.

Jingle operates 1-800-FREE411, an ad-supported service, and also powers free directory services for Sprint and WalMart’s StraightTalk phone service. In the last year, Jingle Networks added yellow pages publisher Dex One as a distribution partner and acquired Blackberry search provider Beyond411, growing its mobile partner call volume by more than 200 percent.

In 2007, Jingle Networks was awarded a patent on criteria-based marketing for telephone directory assistance.

Brands including Wal-Mart, Nationwide Insurance, Allstate Insurance, CVS, Sprint, Verizon Fios, Cablevision and Comcast have run pay-per-call ads within Jingle’s 1-800-FREE411 service, and Jingle has exclusive relationships with Sprint and Wal-Mart’s TracFone products.

Peter Christothoulou, COO of Marchex, says Marchex has a six-figure roster of national and local advertisers; the company doesn’t disclose exact numbers or names.

Marchex says that this deal is about mobile search. With the Jingle acquisition, the Marchex Call Advertising Network will span more than a hundred digital media channels, including four of the top five U.S. mobile carriers, Skype, mobile network operators, and mobile application and directory providers.

“Marchex has a lot of history, growth and scale in this market,” says Christothoulou. “This is about adding and expanding it through the mobile partnerships that jingle has. Jingle has been successful with working with some of the largest carriers in the US.”

Marchex thinks the opportunity for in-call advertising will continue to expand. Its internal analysis posits that 25 percent of the 2011 U.S. advertising market of $179 billion is spent by advertisers hoping to generate phone calls, and it’s betting that at least a portion of the offline media spend will shift to digital calls including cell phones and VOIP.

Combining Jingle’s inventory with that of Marchex will expand the company’s annual reach to 500 million phone calls.

In addition to ad inventory, Jingle brings a key piece of technology, according to Christothoulou.

“In the carrier world, because of the growth they’re experiencing in mobile device use, they’re seeing large growth in voice search. Jingle uniquely helps them by automating a lot of that experience,” he says.

Jingle applies proprietary speech-to-text transcription and automation technologies to reduce carriers’ voice search expenses, while offering an ad-supported business model. Marchex will maintain this tech as a product offering for carriers.

Marchex already charges as much as $60 per qualified lead, and claims a conversion rate of 20 to 30 percent.

“We have business rules with advertisers about what is a qualified call,” Christothoulou says. “There are a lot of factors, including duration of the call and, the frequency of the caller; for example, we don’t charge for repeat callers within a certain window. But one out of every four callers we send an advertiser converts into a sale.”