Marchex (NASDAQ:MCHX) is kicking butt and taking domain names. The company behind the contextual marketing service and the local directory hub is putting its portfolio of more than 200,000 domain names to good use. Whether it's populating some of its more attractive properties with stickier content or improving the interface of its more than 75,000 ZIP Code dot-com handles, Marchex keeps marching along.

Last night, the company posted second-quarter results that require a closer look to fully appreciate. Revenues rose 50% higher, to $31.7 million for the June quarter. Yes, there have been acquisitions along the way, but the company's organic growth is still an impressive 30%. The company reported a loss for the period, but if you back out stock-based expenses, earnings rose from $0.08 a share to $0.12 a share for the period. On that basis, analysts were expecting to earn $0.11 a share on $32 million in revenues.

I caught up with Marchex CEO Russell Horowitz after last night's conference call, in hopes of shedding a little more light on the company's monetization strategy. I haven't been overly impressed in the past. Many of its choice domains like and were stagnant pages populated only with ads. It's a strategy that found Marchex, much to its chagrin, blocking access from search engines like Google (NASDAQ:GOOG), for fear that the domain would be blacklisted as useless.

The new Marchex is in much better shape, though even Russell acknowledges that the process to improve will never end. The company has used its OpenList technology to populate hundreds of travel and dining related sites with localized auto-generated content. The public is digging it. In a beta test of 29 sites that launched two months ago, July page views were up 175% over their springtime averages. Revenues were only up 75%, but that is a result of Marchex creating more useful sites that consumers can navigate and bookmark over stand-alone pages where the only way out beyond clicking a back key is to click on a paying ad.

The kinder and gentler Marchex is a good one. Its content-rich sites now welcome search engine visits and that means garnering free traffic from search-engine result pages, instead of relying only on mostly direct type-in traffic.

The company's collection of ZIP Code sites has also been enhanced, falling back to a catchall portal that should serve the company well for the thousands of five-number dot-com domains that it does not own.

Marchex is also relying less on third-party ad servers like Google and Yahoo! (NASDAQ:YHOO) to fill up its contextual marketing needs. More than a third of the company's revenue is coming from its growing collection of sponsors. This is making it easier for to land new accounts in the financial and IT space, where sites with high-quality niche audiences -- like CNET's (NASDAQ:CNET),, or us here at -- are favoring Industry Brains over more mainstream providers like Google, Yahoo!, or Microsoft (NYSE:MSFT).

I asked Russell how he would compare his monetization strategy to that of CNET. The domain-rich CNET has acquired popular sites and rolled them into more valuable generic domains. Chowhound became TVTome became Russell admires CNET, but doesn't feel that the editorial challenge is the best approach for Marchex. Being able to create auto-generated content has helped Marchex produce operating margins before amortization of better than 30%.

Keep an eye on Marchex. The company continues to inch in the right direction. The already impressive 28 million monthly page views that the company is generating throughout its properties is only going to climb higher as its domains grow stickier.

It's a cost-effective way to grow a business, and an appropriate one.

CNET is a Rule Breakers recommendation and Microsoft is an Inside Value selection.

Longtime Fool contributor Rick Munarriz is a fan of the local search market, but he does not own shares in any of the companies in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.