Marchex Pays $62M for Jingle Networks

Marchex announced this morning that it was paying $62 million in cash and stock for Jingle Networks, which is best known for free-DA alternative 800-Free-411. The company also operates a calls-based mobile ad network. I’ve also written up the announcement and some of the numbers at Internet2go.

Marchex revealed that Jingle’s 2011 revenues will be roughly $26 million. Jingle received about $70 million in multiple rounds from investors. Thus the exit is worth less than investors put into the company over the course of about six or seven years.

ThMarchex now significantly expands its Call Advertising Network with the addition of Jingle and its mobile ad network. Accordingly Marchex reports that the addition of Jingle’s volumes to its own will create a network of more than “500 million phone calls across digital media.”

Now call-based ads will now constitute “75% of [Marchex’s] revenues” in 2011 on an annualized basis.

Jingle’s initial growth slowed and the company lost much of its market appeal with the advent of the iPhone and the rise of smartphones, which are siphoning off traditional DA call volumes. Jingle was founded in 2004 before the current smatphone era.

Yet Jingle’s model is the most compelling among the exist DA providers. Most traditional carriers are just raising prices and managing a slowly dying cash cow. (Google left the market when it shuttered its 800-GOOG-411 service last year.)

Marchex, which has had trouble telling its story to the market and investors, can now do so in a phrase: PPCall advertising.

Marchex sources calls from traditional media, online and mobile. That latter component will dramatically expand with this acquisition. The company says its ads convert much better than clicks — in some cases 10X.

Update: Marchex says it didn’t buy Jingle for 800-Free-411 but for the call-based ad network. Here’s Marchex COO Pete Christothoulou:

They do own 1-800-Free411, but that is not the reason we acquired them (in fact, this is a declining minority of their total call volume).  There are many reasons for the acquisition, but the core rationale for the acquisition was:  1) mobile voice search is an important product for our call advertising network and we could own that core IP and market leadership position; 2) Jingle has strong mobile partnerships with both carriers and mobile network operators; and 3) Jingle has growing, high-quality call volume in an important digital media channel, mobile.  For these reasons, we wanted to combine their business into our Call Advertising Network and accelerate our strategy and increase our scale and effectiveness.

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