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MarchexInvestor PresentationMay 2013
www.marchex.com
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This presentation contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this presentation regarding our strategy, future operations, future financial position, future revenues, other financial guidance, acquisitions, projected costs, prospects, plans and objectives of management are forward-looking statements. In addition, there are certain risks and uncertainties relating to our announced spin-off transaction which contemplates a separation of our mobile and call advertising business and our domain and advertising marketplace business, including, but not limited to, the impact and possible disruption to our operations, the timing and certainty of completing the transaction, the high costs in connection with the spin-off which we would not be able to recoup if the spin-off is not consummated, the expectation that the spin-off will be tax-free, revenue and growth expectations for the two independent companies following the spin-off, unanticipated developments that may delay or negatively impact the spin-off, and the ability of each business to operate as an independent entity upon completion of the spin-off. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. There are a number of important factors that could cause Marchex's actual results to differ materially from those indicated by such forward-looking statements which are described in the "Risk Factors" section of our most recent periodic report and registration statement filed with the Securities and Exchange Commission. All of the information provided in this presentation is as of today’s date and we undertake no duty to update the information provided herein.
SAFE HARBOR STATEMENT
www.marchex.com
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www.marchex.com
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www.marchex.com
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Investment Highlights
Businesses spend billions to generate phone calls – more advertising dollars are shifting to mobile
Large and growing advertiser base and expanding mobile app and publisher base
Expanding Mobile Ecosystem
Marchex has built a scalable call advertising and analytics platform to capitalize on this opportunity and deliver mobile performanceand customer acquisition for advertisers
Proprietary Technology
Large Market Opportunity
Call Advertising is expected to grow at 14% - 17% in 2013 (up from 9% in 2012)
Substantial Growth
*Calculated based on Marchex call-driven revenue for the quarter ended September 30, 2012.
www.marchex.com
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Marchex is a Mobile Performance Advertising Company Focused on Delivering Quality Calls & New Customers to Businesses
www.marchex.com
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Businesses Need Calls & Spend Billions to Get Them
Source:1 Over half of this is currently in offline spend, such as Yellow Pages and print.2 BIA/Kelsey, June 2012.
$43.6
$24.7
$0
$15
$30
$45
$60
$75
National Spend Local Spend
$68BILLION
Ann
ual S
pend
in $
B1
National and local businesses are spending $68 Billion annually on Calls2 from potential customers
www.marchex.com
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Mobile Growth Drives Advertising Opportunity
� By 2020, 10 billion mobile devices are expected to be in the market, 10X the number of PCs today*
*Katy Huberty, Ehud Gebium, Morgan Stanley Research, Data and Estimates as of 2/11Global unit shipments of desktop PCs & notebook PCs vs. smartphones & tablets 2009 – 2015E
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
PCs
2009 2010 2011 2012 2013 2014 2015
Glo
bal U
nit S
hipm
ents
(M
)
Mobile Devices
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Monthly C
alls in M
Calls from mobile search
www.marchex.com
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Mobile Ad Spend is Expected to Grow +300% to $11 Billion in 2016 from 2012
% o
f Tot
al M
edia
Con
sum
ptio
n T
ime
or
Adv
ertis
ing
Spe
ndin
g
% of Time Spent in Media vs. % of Advertising Spending, USA 2011
Note: *Internet (excl. mobile) advertising reached $30B in USA in 2011 per IAB. Mobile advertising reached $1.6B per IAB in 2011. Print includes newspaper and magazine. Source: Time spent and ad spend share data eMarketer. Mobile Forecast: eMarketer. US Mobile Ad Spending Soars Past Expectations. 2012 mobile ad spend forecast is $2.6B per eMarketer.
10%
Dollars will follow consumer behavior
1%
10%
Mobile Time Spent
Mobile Ad Spend
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1 2 3
How It Works – Mobile Search Application
A consumer conducts a textual or voice search
for a business on one of our media sources
Marchex delivers your advertisement to the
consumer
Consumer clicks to call your business
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Our Proprietary Call Analytics Technology Identifies Quality Calls
1. Generating The Call
Ad Serving & Targeting
Call Routing
3. Measure Performance
Reporting & Insights
2. Connecting & Filtering Calls
Call Filtering for Quality Calls (25% are spam & misdials)
4. Advertising Optimization(Feedback loop)
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A Large & Growing National & Local Advertiser Base
DIRECT
• Dedicated sales team
• Strategic advertiser & agency relationships
RESELLER
Advertiser Budget
Advertiser Breadth
• Category & Local Business Resellers
• Multi-Year Exclusives
• 10k + in-field reps
Over 100 M
ob
ile So
urces
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Across Many Categories, Including…
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Marchex works with over 100 Mobile Call sources
An Expanding Mobile App & Publisher Network
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PRE-CALL IN-CALL POST-CALL
Caller Fingerprint
Spam / Pattern Detection
Honeypot
Blacklist / Whitelist
Post-Call Analysis
Automated Scoring
Call Features:IVR, Recordings, Routing
Rules, Etc.
Audio Analysis
Real-time Feature Injection
Mining
Caller History
Analytics
Call Data Repository
Telephony Integration
Session Border Controllers
Intelligent Routing
Spam Detection
Quality of Service
CALL PRODUCTS
Our Call Analytics Capability Leads the Industry
CALL INTELLIGENCE• Demographics
• 3rd Party
• Marchex Data Science
www.marchex.com
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Calls are the Highest Converting Advertising Outcome
Print, Radio, TVSub. Or Cost per Thousand Views (CPM)
< 1%
EstimatedConversion*
Browse
Transact
Advertising Medium Funnel
< 1%
< 5%
20%+
Source: Marchex Internal Data.
DisplayCPM
SearchCost-per-Click (CPC)
CALLMarchex Pay For Call (PFC)
www.marchex.com
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Financial Focus
Call-Driven Revenue continues to grow significantly.
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
2009 2010 2011 2012 2013
120%
110%
100%
90%
80%
70%
60%
50%
40%
30%
20%
Total Revenue Call-Driven Revenue
$31.7
$46.8
$101.8$111.2*
$129*
$93.3 $97.6**
$147.6$137.3
$148*
* Mid-point of company guidance.** Reflects the estimated savings impact to AT&T Interactive of the $7.6 million pricing and financial incentives as part of the extended and expanded agreement
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Balance Sheet Highlights
$17 million cash in hand as of March 31st
Significant operating cash flow funds investment, share buyback and a growing cash balance
Repurchased 30% of common shares outstanding through March 31st
Implied Enterprise Value = $109 million
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Archeo’s Assets – An Opportunity to Unlock Value
200,000+ best-in-class domains with very meaningful value
We’ve sold less than 5% of domains we own for over $30 million
Significant domain inventory provides a long-term sales window
Potential to build out more proprietary sites
Unique, premium advertising marketplace with multiple growth catalysts
Rich Assets + Ability to Monetize = Strategic Flexibility
www.marchex.com
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Archeo Business Opportunity
Domain Marketplace
(200,000+ domains)
Premium Advertising Marketplace
$$
1
2
Resource the Domain Marketplace
� Opportunistically buy domain names to support our marketplace
� Sell more domains by accessing new sales channels
� Selectively develop digital properties to add to our advertising marketplace
Products Growth Catalysts
Expand Advertising Marketplace
� Innovative new products and technology
� Expand on the existing premium publisher partnerships
� Leverage proprietary digital properties to increase advertising sales
www.marchex.com
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The Mobile opportunity is large and growing – Mobile performance advertising will be big
Key Themes
Clicks are the natural use case in the desktop environmentCalls are the natural use case on the phone
Marchex has transformed our business by making mobile call advertising perform – delivering quality calls and new customers to businesses
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