Peter Christothoulou

After spending the past six years identifying acquisition targets for Marchex, Peter Christothoulou has a new role at the Seattle online advertising business. The 37-year-old graduate of Blanchet High School and University of Washington attendee (see explanation here) was named chief operating officer last week, with the goal making sure all of the moving pieces at the publicly-traded company work together. It's a lot to integrate, since Marchex has made nine acquisitions and asset purchases since its founding in 2003.

Christothoulou admits that Marchex has a hard story to tell. But he's confident that the company -- which has more than doubled its base of small business advertisers to 80,000 over the past two years -- is on the right path.

We chatted with the former Go2Net executive about the differences between the current economic meltdown and the dot com bust; the advantages and disadvantages of running an Internet business with high school buddies; and why someday he may want to try cultivating wine.

What's happening in the local online advertising market?

Peter Christothoulou: "Fortunately, Google has done a good job at educating the market on advertising in general. If you are a local business, you understand that you need to generate leads for yourself and Google -- as an example -- may be a place that you can do that. What we are seeing is the education of local businesses has really been happening in the last few years, just because of what is happening in the industry and how fast it is moving. And what that means is that local businesses who want to drive leads as efficiently as they can are looking to advertising online."

Why would a local advertiser choose Marchex over Google?

PH: "For a couple of reasons. Advertisers in general don't have time to focus on driving leads to their business, they are focused on operating their business. What we allow them to do is be a one-stop-shop, if you will, where they come in to use us to drive leads on Google, on Yahoo, on Microsoft, on mobile devices and anywhere online. If you go to Google, you just get ads on Google. If you come to us, you can be on Google and all of these other places where we are relevant.... We have been able to take our platform and really offer this to big aggregators of local advertisers like AT&T who are using their sales force to sell local online advertising packages to their customers."

Are small businesses still getting comfortable with local online advertising? 

PH: "I think we are the kind of at the sweet spot now where we are seeing a lot of traction and uptake from businesses who want to generate leads, whether those are clicks or calls."

Given your recent layoffs and management re-organization, are the projections not as good as you would have hoped for '09?

PH: "We acquired a number of technologies and businesses that helped us create the product that we have over the last few years, whether it was ad serving or campaign management or call provisioning and call tracking and analytics. Through these acquisitions we've ended up with effectively siloed products sold through disparate sales forces all under the Marchex umbrella if you will. And while it has been successful, it has actually been fairly inefficient internally. And so this reorganization is to designed to ... take our products and sell them through a unified sales force. As you know it is all about serving the customers as best as we can. We have really organized ourselves around that principle."

You have so many different offerings at Marchex. How do you explain what you do?

PH: "We are a complicated story to understand. And what we are going through now ... is a simplification of our story externally, which includes our customers. But ... we are pretty simple company. We are focused on local search and advertising and our business is structured against that mission."

How does hyperlocal content and local online journalism fit into Marchex's strategy?

PH: "What we are seeing is the verticalization of the Internet and the localization of it.... You have lots of blogs and even local companies such as RealSelf coming out and creating real specialized content. Ultimately, you need to figure out how to make money off that content. Our focus, and really what is happening online, is to put advertisers wherever they are relevant.... If you are a local site that has content about plants, we want to make sure that we are putting the local florist on that Web site."

Are you doing that yet and do you have partnerships with small niche publications or is it all within your own network of OpenList?

PH: "It is predominately in our own network of OpenList. We are focused on increasing distribution with some of the niche vertical sites.... Right now, we have 200 distribution partners where we distribute our ads on. That includes the Googles of the world and Yahoo and Microsoft. But we also have vertical Web sites, like The Motley Fool or BusinessWeek or BankRate, where we are putting our advertisers onto those sites.... We will continue to work with -- call it geo vertical partners -- where we can help them. An example could be a company like an Urbanspoon if you will."

Would Marchex create a local advertising network in Seattle or other geographic markets?

PH: "That is a focus of ours. The key is to make it easy for those companies to work for us and to make it efficient for us internally to work with them. We think there's a big opportunity ... so it is a focus."

You created Marchex after working with John Keister and Russ Horowitz at Go2Net in the 90s. What are the advantages and disadvantages of having that history together?

PH: "The key when you are building a company is the people and with that is the trust....  It is a tight group that is very focused and wants to win. Those are the combinations you look for. I feel very fortunate to have these guys as business partners, but more importantly as colleagues. Russ is an incredible CEO. He is probably the smartest guy I know.... There isn't another group I would rather be with.

That also represents challenges when you know someone for a long time. I can't say that there haven't been difficulties. The key for us is just being honest with ourselves about what you don't know. You can work with someone for long enough and you end up knowing what the other guy thinks, and so it doesn't expand your mind about what the possibilities are. So we have tried to focus on bringing in other people to think through complex problems, so a guy like Nick Hanauer is an example who has come on board recently. Just an outsider to help think through kind of the challenges in how to grow our business."  

Having worked through the dot com bust, what's different about the current economic crisis?

PH: "This time it is not industry specific, it is every industry. You have a broader depression, whereas historically you could have technology or just Internet technology that gets really impacted, now it is hitting every vertical. What you are seeing are contracted budgets across every vertical and more trepidation as people are thinking about 2009. It feels a little different."

How's Marchex positioned for the downturn?

PH: "The good news is we are here for the long run. We think local is a huge opportunity and it is less impacted than the other places. So if we keep executing on our strategy, I think we are going to come out of this fine."

Why is local online advertising less affected by the downturn?

PH: "Ultimately, people have an affinity to local and businesses around them. They also have smaller budgets and they risk less of their capital on marketing than others do, so you could have a local advertiser spending, $1,000 or $5,000 or $10,000 a month and it really isn't a huge percentage of their overall business, so they are not likely to change that spend.... "

A closer look at Peter Christothoulou:

Age: 37

Car: Range Rover

Hobbies: Soccer, travel.

Favorite travel destination: Tuscany, Italy

Coolest new tech startups in Seattle: Mixpo, RealSelf and WidgetBucks

Favorite gadget: iPhone

Favorite iPhone app: The New York Times

Claim to fame: Finished third in his division in the Seattle Pepsi 10k race more than 15 years ago, running time of about 38 minutes.  "If I did it today, it would be double."

If you weren't working at Marchex, what would you be doing? Growing wine. "I like to drink it. It seems something that would be very interesting."