• by Laurie Petersen , August 13, 2007

Marchex shares sank to their lowest point in almost three years on Friday after the company lowered its 2007 revenue outlook due to an expected $4 million decrease in Web site marketing sales and a $4 million cut in revenue attributed to Yahoo's quality-based pricing initiatives. The stock was down to $9.09 in after-hours trading--a decrease of 23.3%.

Kaufman Brothers analyst Sameet Sinha questioned the company's heavy investment in local search at this moment, after the announcement it would buy pay-per-call ad provider VoiceStar. It happened to be the first official day at work for new Chief Media Officer Bill Day, most recently at WhenU, but also a co-founder of About.com and one of the online pioneers of the '80s at Prodigy. He was nothing but optimistic about the opportunity for local.

The market doesn't seem to be supporting the latest news.

From purely a stock standpoint I'm not the right person to talk to--I'm brand new. But we clearly feel it's the right time from a local standpoint to invest in the business.

Why is the time right now for local?

When we did it at About.com, it was too early. The interest area was the place to invest. Things have changed. First of all, many more people use the Internet.

If you want to have a pro-sumer model, you need one that scales to be very comprehensive. Marchex is a leader. It already has thousands and thousands and thousands of sites.

You also need a model that can get really really deep within those localities.

I did a lot of diligence coming in and with the Yellow Pages advertisers now coming on, it suggests it really is a good time to invest in local. You have to invest to reap the rewards.

What is the first thing you'll do in your new job?

The first thing is to focus on the continued rollout of our open list technology populating businesses down to the ZIP code level. I'm also talking to media companies in the local space. There's a lot of business development I need to do to get the ball rolling.

Will you focus on any specific target region?

It will be population-driven. Start where the population is denser. My belief is--you roll things out pretty quickly. Going slow is not a benefit. It's better to have all your sites out and growing. I expect us to do a lot of stuff really quickly.

What will the human element look like?

I don't know. I definitely think there will be a human element. It could range from individual voluntary contributors to a full-time dedicated staff. That's the unique challenge. I haven't been around long enough to figure it out. I just started today.

Who is doing local right?

There are certainly sites that get parts of it right. I can't point to one network that gets it right consistently. I don't know anything countrywide. The sites that tend to do that are using very stale and automated generic content that is not good enough to get repeat visitation.

I've looked at some of the WashingtonPost.com sites, what Sidewalk's done for Digital Cities. We're in a pretty open space for starting to do things that haven't been done so far on the net--to truly create a broad, deep network of sites.

What about Google?

Google's never been in the content creation business. People don't understand what Marchex does. Google will be a great complement. The company already indexes a lot of its sites very highly. That's very similar to About.com, by the way. Google tends to love sites that offer high-quality deep content that's very nichey.

What will your specific role be?

I can focus on building out the media side--additional investment in ad sales force, additional partnerships and additional content.

You've been around a long time, going back to Prodigy. Remember when Jim Bellows had citizen journalists filing local reports on breaking news stories?

Jim Bellows. Now there's a name from the past! Prodigy was like the Xerox Parc of Internet. Definitely what's new is always what was old. I continue to find the things we did at Prodigy are applicable today.

So what's different?

1. The environment for creating the types of services you want to create is much better. Many more people are online. There's enough critical mass to support an audience. Enough critical mass to find people in many of those localities to be part of the content-creation process.

2. The tools are better. Many more people are blogging. Video is hotter. The infrastructure exists for doing video and digital photography, and those are much better vehicles for conveying local content.

3. From the advertisers' side, a lot of local advertisers have seen and heard about the Internet, but the action hasn't really happened yet. It may take a little time to develop a lot of the infrastructure for the local services. But the consumers online are different than the sorts of people who were newbies. They behave differently. That plays to our advantage.