Given Yahoo!’s Problems, Are Overlooked Online Advertising or Forum Stocks Worth a Look? MCHX, LOOK & CRWG

2011 was not a good year for media stocks that depend upon advertising while online portal Yahoo!’s (NASDAQ: YHOO) problems are well known but it might be worth taking a closer look at click or search advertising stocks Marchex (NASDAQ: MCHX) and LookSmart (NASDAQ: LOOK) along with online forum stock CrowdGather (OTC: CRWG). After all, Marchex (MCHX), LookSmart (LOOK) and CrowdGather (CRWG) are not exactly household names but that could mean they have just been overlooked by investors. Hence, here is a closer look at all three to help you decide whether they deserve a closer look:

Marchex (NASDAQ: MCHX)

Marchex is a performance marketing company that delivers call and click-based advertising products to advertisers. For 3Q2011, Marchex reported that revenue rose from $24.2 million for 3Q201o to $39.9 million while GAAP net income came in at $1.2 million verses a net loss of $547,000 for the same period the year before. However, investors should note that Marchex did sell a small number of non-strategic domains for $2.5 million while net income came in at $141k, $576k and $645k for the previous three quarters. Otherwise, investors should note that Marchex’s Chairman and CEO has pointed out that since the launch of the company’s Pay-For-Call product in July of 2009, every quarter has validated the company’s decision to focus on Digital Call Advertising and making a bet on the emergence of mobile and other call media sources (along with deep call analytics). On Wednesday, Marchex fell 2.07% to $5.67 (MCHX has a 52 week trading range of $5.53 to $10.87 a share) for a market cap of $211.3 million.

LookSmart (NASDAQ: LOOK)

LookSmart is a search advertising network solutions company that provides relevant solutions for search advertising customers. For 3Q2011, LookSmart had reported revenues $7.4 million verses $11.3 million for the same period the year before and $6.6 million for 2Q2011 (which means the company can claim a sequential revenue increase) while LOOK’s net loss came in at $224k verses net income of $718k for 3Q2010 and $354k (including $339k in non-operating income from the closure of a Settlement Fund that was created in 2008 to cover a litigation matter) for 2Q2011. LookSmart’s Chairman and CEO noted that while the company had an increase in revenues, paid clicks and revenues per click were impacted by higher traffic costs due to the company’s revenue mix and expenses related to shifting the product engineering team from San Francisco to Kitchener, Ontario. The later transition is expected to be completed by the end of the year. It should also be noted that total paid clicks for 3Q2011 were 151 million verses 175 million for 3Q2010 and 146 million for 2Q2011. On Wednesday, LookSmart fell 1.64% to $1.20 (LOOK has a 52 week trading range of $1.17 to $2.26 a share) for a market cap of $20.7 million.

CrowdGather (OTC: CRWG)

CrowdGather specializes in monetizing a network of online forums and message boards designed to engage, provide information to and build community around users. For the fiscal 2Q2012, CrowdGather reported revenues of $468,296 verses $462,925 for the same period last year with revenues being entirely from the monetization of the CRWG’s forum ad inventory. However, CrowdGather’s net loss increased 7% to $757,733 verses a net loss of $711,272 for the same period the year before as payroll expenses from new employees along with non-cash charges for stock-based compensation increased. Nevertheless, it should be noted that CrowdGather’s traffic reached between 230 to 235 million monthly page views across all properties verses 80 to 90 million monthly page views during the same period last year plus the company had 17 to 19 million monthly unique visitors verses 4 to 4.5 million monthly unique visitors a year earlier. On Wednesday, CrowdGather fell 8.06% to $0.114 (CRWG has a 52 week trading range of $0.11 to $1.90 a share) for a market cap of $6.6 million.

The Bottom Line. Advertising stocks or online forum stocks Marchex (MCHX), LookSmart (LOOK) and CrowdGather (CRWG) have produced mixed results and are trading near their 52 week lows – which may not excite investors but traders might want to take notice of them.