CityGrid Buys Yext’s PPCall Business (Updated)

This morning CityGrid and Yext announced that the IAC owned company had acquired “Felix,” the Yext division that housed its PPCall business. While the terms were not disclosed, it’s clear that Felix was the major revenue source for Yext, which will now focus exclusively on its PowerListings product.

Yext CEO Howard said in a blog post that “about a year ago” PPCall was 90% of the company’s revenue. That revenue was probably north of $25 million and less than $50 million annually (my guess). I would assume that CityGrid paid no more than $100 million for Felix. (Update: I understand the number is much much less than what I speculated.)

The novel idea that Yext brought to PPCall (its only business at the time) was that it would only charge customers for “good calls.” The company generated most of those calls originally from its own directory sites and SEO. However it used speech-to-text transcription and an algorithm to determine whether calls were worthy or not. Marchex has used a similar approach but now augments that with IVR to capture user intent.

CityGrid said the following in its press release:

Felix is innovating advertising by offering the most sophisticated pay-per-action phone advertising product to local businesses.  Instead of paying for clicks or all phone calls, merchants only pay for high quality customer calls that are likely to lead to customers.  Using advanced voice recognition and call analytics technology, bundled with easy-to-use tools, Felix enables merchants to market themselves with highly effective techniques previously available only to large enterprises.  For businesses that depend upon high-quality phone calls to acquire new customers, Felix offers one of the best advertising services in the local market segment.

CityGrid now joins Marchex as a PPCall ad network of sorts and will be likely place more sales emphasis on calls as the “ad unit” going forward.

The conventional wisdom is that SMBs just want to pay for calls vs. clicks. That’s perhaps true at a high level but the PPCall business is more complicated than that simple notion implies. Once providers start charging for calls (and raising prices accordingly) SMBs look more closely at calls; they don’t want to pay for certain kinds of calls that they don’t consider good leads. And not all SMBs want to pay for calls. Most restaurants don’t for example.

CityGrid already has a PPCall business but Felix will likely improve its quality and perhaps volume. Yext is now “betting the farm” on its PowerListings product.

Contrary to what some are arguing we are not entering a golden era of PPCall that will generate billions and billions in revenue or swallow all other models. PPCall is a model that will live beside others in the market and find great success in certain contexts, especially mobile. Yet calls are equally if not more important as an analytics product — especially in mobile.

I’m curious whether you believe . . .

  1. This is a good acquisition for CityGrid?
  2. Whether Yext was wise to jettison Felix and focus exclusively on PowerListings?

Update: I spoke briefly with CityGrid’s CEO Jason Finger. He was very bullish on the acquisition obviously. He said the “best in class” call analytics capabilities as well as the expertise acquired would dramatically improve CityGrid’s PPCall product offering.

He likened Felix to a “scalpel” and said what CityGrid had before was more like an “ax.” Finger added that the analytics are so valuable to CityGrid that the company will be able to build new products on top of them.

He said also that the call analytics capabilities would simultaneously enable CityGrid to evaluate which traffic and distribution partners were delivering quality calls and to re-prioritize traffic and ad spend accordingly.

We spoke about a lot of things. Among them I asked what Finger’s assessment of the overall PPCall opportunity was. He said that it was vertical and that there were certain categories of businesses that really valued calls and others that did not. He explained that CityGrid was moving toward more vertically specific ad packages and this was consistent with that initiative.

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  1. Century Interactive Combines Call Tracking with ‘Humanatics’ says at

    […] and Yext’s Felix (now part of CityGrid) use automated speech-to-text call transcription and algorithms to evaluate the quality of calls. […]

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