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Originally published September 18, 2014 at 1:22 PM | Page modified September 19, 2014 at 9:29 AM

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Marchex stock battered as big client Allstate cuts back

Shares of Seattle-based Marchex, a mobile advertising company, fell almost 46 percent Thursday after the company lowered its annual revenue outlook because of a revised agreement with Allstate, one of its five top clients.


Seattle Times business reporter

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Shares of Seattle-based Marchex, a mobile advertising company, fell almost 46 percent Thursday after the company lowered its annual revenue outlook because of a revised agreement with Allstate, one of its five top clients.

Marchex stock closed at $4.07, a 52-week low.

The company now estimates its call-driven revenue, which last year made up 89 percent of total revenue, will range this year from $170 million to $172 million, down from August’s estimate of $178 million.

Marchex provides products and services related to advertising for businesses that depend on consumer phone calls to drive sales. For the pay-for-call service, which was the primary arrangement with Allstate, Marchex charges an agreed-upon price for each quality call or lead a company receives from Marchex’s network: the more calls that translate into sales for a client, the more revenue for Marchex.

However, Allstate wanted to move to a fixed payment, which had little financial upside for Marchex and left the company with greater financial risk, CEO Russell Horowitz said in a call with analysts.

“Marchex doesn’t believe it’s in our best long-term interests to work under such an arrangement,” he said.

Horowitz said Allstate still will utilize the company’s call-analytic technology, which provides data to help advertisers understand which marketing channels, advertisements and keywords are driving calls to their business.

However, that arrangement will be a relatively small financial contributor, he said. Allstate will account for about $17 million in third-quarter call-driven revenues. The company still revised upward its estimate for third-quarter call revenue, from $46 million to about $48 million.

In 2013, Allstate made up 12 percent of total revenues for Marchex, and in the first half of 2014, Allstate contributed $33.4 million in call-driven revenue.

The fourth quarter and 2015 outlook were not discussed in depth in Thursday’s conference call, but Horowitz said aside from the call-analytic program, he does not expect Marchex to have “any meaningful contribution from Allstate.”

Coral Garnick: 206-464-2422 or cgarnick@seattletimes.com. On Twitter @coralgarnick



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