Like Search Engines, Search Marketing Firms Growing Revenue

Fathom that: Ask Jeeves veteran gets successful search result from the San Francisco
Business Times profiles search firm Fathom Online and worth a read for those who need a refresher on how search marketing companies
are growing as investment and acquisition targets.

San Francisco-based Fathom earned $20 million in revenue last year and expects to double that to $40 million this year (though a large chunk of that may go right back out
to the search engines themselves).

The company, only three years old, employs 50 people and expects to reach 100 by the end of the year. It has a single outside investor that’s contributed $6 million, so
far. But Fathom CEO Chris Churchill — a former Ask Jeeves exec — says there are no plans to go public or sell in the near future.

Meanwhile over in Texas, Range Online founders Cheryle Pingel and Misty Locke were recently
named in Fast Company’s new list of Top 25 Women Business Builders. Like Fathom, Range pulled in over $20
million in revenue last year.

Cast your mind back to January, and you may recall Efficient Frontier had
announced (link to PDF press release) they were managing over $100 million in annual paid
search marketing spend. What really caught my eye about that, aside from the double zeros behind the one, was the claim they handled more than any other search marketing firm.

I didn’t necessarily doubt that they were handling more revenue than anyone else, but how could they prove that? They company’s PR firm emailed back:

To answer your questions — there are no pure-play public search engine marketing firms so there is no public information on fees, spend under management, number of
advertisers – so we need to use our data to understand the market.

We were able to compile a list of the top 400 paid search advertisers by using our proprietary technology and our knowledge from the sales cycle. We download the bid
landscape each day for all of our keywords (over 7.5 million in 2004 alone) and we run models and estimates to determine how our customers should buy in the space. We also run
competitive analysis to figure out what their competitors are spending in the marketplace.

This gives us enough data from our every day activities to identify the top spenders. In addition, our sales team talks to the top 1000 advertisers all day long, so we know
what people are spending based on actual conversations. Based on our top 400 spenders list, we were able to confirm that we manage more than any competitors.

That $100 million, by the way, is purely the in-and-out money. In other words, it’s what’s managed on behalf of Efficient’s clients, not what the company itself keeps. So
total revenues generated are higher, though what’s actually retained by Efficient (as with the other companies above) is less.

By the way, bringing things back to Fathom, that company and Efficient recently teamed up (PDF release) to
share services.