Online ad firm sees a comeback

DirectoryM has teamed up with the publisher of the For Dummies books.

DirectoryM, an online advertising company specializing in local business information, says it is making a comeback, despite the faltering economy.

The Boston company recently signed a deal with the publishers of the CliffsNotes and For Dummies series to provide information about specific topics and businesses.

"It's a good time for us," said chief executive Panos Bethanis, who cofounded the firm. "Boston is a very good place to grow right now." Not long ago, the story was different.

DirectoryM was founded in 2002, but the original team lost control of the board in 2005, when the venture capital firms Matrix Partners, of Waltham, and BV Capital, of San Francisco, invested $15 million, or more than half of the company's worth.

But DirectoryM was soon losing about $500,000 a month, Bethanis said. He and some employees raised $4.5 million to repurchase it in 2006, and DirectoryM was relaunched last year. Bethanis said it is now earning about $200,000 a month.

DirectoryM acts as an information warehouse and distribution center, collecting business data, assembling it on a website, and connecting users and service providers.

Someone seeking information on gardening, for example, would access DirectoryM's sites through another site, such as Google, a chamber of commerce portal, or a local newspaper.

DirectoryM hosts some sites, while its media partners host others. A search for "Gardening with annuals in Boston" turns up a site DirectoryM hosts. It includes a list of companies, links to details on Boston-area garden shows, related articles, and excerpts on gardening from "Gardening All-in-One for Dummies."

"Our technology brings all the parties together," Bethanis said.

Advertisers pay for space on DirectoryM sites. Businesses with fewer than 20 employees can place information for free.

The partnership with the Dummies publisher, John Wiley & Sons Inc., is a way to broaden DirectoryM's customer base by bridging the gap between users who are well versed in a topic and those who are new to the subject matter, Bethanis said. It also boosts the firm's credibility, because of the Dummies brand reputation, Bethanis said.

Kristin Kliemann, Wiley's vice president, said the partnership allows her company to get maximum value from its content and "delivers consumers a more rewarding and relevant online experience."

Although economists say the overall economy is still headed downward, interactive advertising, including local search, display ads, and e-mails, is expected to grow from 7.4 percent of the global advertising market at the end of 2007 to 21 percent by 2012, according to Kelsey Group, a market-research firm.

"Interactive advertising is here to stay," said Matt Booth, Kelsey's senior vice president. "It's going to take a lot of money from traditional media."

Partnerships with content providers such as Wiley can draw users directly to DirectoryM's websites and make it stand out, Booth said.

Since Bethanis and DirectoryM's employees repurchased the company, they have concentrated on trying to attract consumers directly, Booth said, instead of focusing on adding businesses to their stable of advertisers. "That's the difference between having a company that's really successful and having a company that's a little bit successful," he said.

DirectoryM increased its staff to 30 from 20 during the past month and plans to hire more employees in 2009, Bethanis said. It relocated from a 1,500-square-foot office in Cambridge to a 7,000-square-foot space in downtown Boston. The firm also wants to start doing business in Western Europe and possibly in more of Asia, he said. It expanded into China and Latin America last year.

The stalled economy gives DirectoryM some advantages, Bethanis said. For instance, the pool of experienced talent grows, and businesses are more willing to discuss ways to gain market exposure, he said. "All the components of a successful business model become easier to put together during tough times," he said. "We think tough economic times lend themselves to a flight to quality."

A spokeswoman said Matrix had no comment beyond saying it wishes DirectoryM the best in its venture. BV Capital could not be reached for comment.