When looking to broaden their online presence, local business owners can get a hand from ReachLocal. Targeting small to midsized businesses, ReachLocal offers Internet-based advertising and marketing services, including search engine marketing (for preferred placement of a company's listing on
search results pages), marketing analytics, and display advertising. The company serves mostly US businesses through a network of locally based marketing consultants that use, among other tools, the company's proprietary technology platform to create advertising and marketing campaigns. ReachLocal was founded in 2003; it launched an initial public offering in mid-2010.
ReachLocal has some 70 global sales offices, support facilities, and data centers. Although the company brought in about 65% of its revenue from North America during fiscal 2013, it is focused on expanding into even more international markets.
Sales and Marketing
The company offers its products and services through two primary channels. Its Internet Marketing Consultants (IMCs) sells products and services directly to SMBs, which is referred as Direct Local channel. ReachLocal also sells its products and services through third-party agencies and resellers, and to national or regional businesses with multiple locations, such as franchisors, which the company refers to as national brands.
Because the sale to agencies, resellers, and national brands involves negotiations with businesses that generally represent an aggregated group of SMB advertisers, ReachLocal groups them together as its National Brands, Agencies, and Resellers channel.
ReachLocal's annual revenue increased 13% to $514 million in fiscal 2013 from $455 million in fiscal 2012. The spike in revenue was attributed to the double digit growth in the direct local channel revenue and a slight increase in national brands, agencies, and resellers revenue.
ReachLocal suffered a net loss of $2 million in fiscal 2013 compared to just $0.2 million in fiscal 2012. The increased loss was largely due to an increase in operating expenses such as selling and marketing expenses, increased salaries and compensation expenses, and new product initiatives. The company's cash flow suffered a drop largely as a result of increased expenses.
ReachLocal's long-term strategy includes expanding its network of marketing consultants and offices and bolstering its offerings, primarily through expansion of its advertising capabilities and by offering its customers advertising and marketing capabilities on video and mobile formats.
Mergers and Acquisitions
The company's strategy includes expanding its protfoilo through acquisitions. In 2012 ReachLocal acquired technology, advertisers, and several employees of RealPractice, Inc for $2.9 million. RealPractice provides the company with a platform for building a marketing automation and lead conversion pipeline.