Local.com soars on patent
Provider of paid-search services on the Internet Local.com Corp. (Nasdaq: LOCM) continues to lead small-cap percentage gainers Monday, up 57.4% or $3.97, to $10.89, after announcing that it was awarded a patent for a method of responding to directory assistance inquiries using protocols such as voice-enabled and SMS systems.
“They’ve been good about filing patents—they have a portfolio of 20 patents,” said Canaccord Adams analyst Colin Gillis. “Both are sizable patents for them.”
The Irvine-C.A. company said its patent covers a system and method for providing businesses with referral advertising opportunities like pay-per-click or pay-per-call using directory assistance and wireless messaging systems.
The model allows businesses to receive search leads on a pay-per-referral basis when their listings are included in a set of search results. These search results are provided to consumers by an enhanced directory assistance inquiry. The results are delivered to customers through operator assisted calls, messaging systems such as SMS, WAP, and automated voice-enabled systems.
“In our view, the burgeoning free 411 marketplace is being underwritten by a variety of advertising supported models,” Local.com CEO Heath Clarke said. “Our patent is directly related to a referral advertising model such as pay-per-click or pay-per-call listings, which are delivered to consumers as a result of an enhanced directory assistance inquiry or local search, where the results can be provided to consumers via many mobile channels, including voice.”
This patent comes on the heels of another patent awarded just last week for the process of indexing and retrieving web-related information by geographical location. Company officials said the newest patent is complementary to the company’s local search patent because it provides the company with intellectual property coverage for “pay-per-referral,” a widely accepted monetization method in the directory assistance market.
“Local.com could get folded into a larger company; but that is of course difficult to call,” Canaccord’s Gillis said, “I’d invest in the merits of its own traffic, not based on a take over basis. They’ve taken [the business] from $7 per cost of service to over $35.”
Gillis went on to say that the website receives 10 million visits per month and that the company is beginning to sell direct as opposed to through partners like Yahoo!.
