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 Yahoo! or Google's 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.
The company used the proceeds raised from its IPO (around $35 million after deducting underwriting fees and other expenses) to fund its general operations, buy out the remaining shares of its Australian operations, and invest in complementary businesses and technologies.
ReachLocal has 68 sales offices, support facilities, and data centers located in North America, Australia, the UK, the Netherlands, Germany, Japan, Brazil, and India. The company brought in about 72% of its revenue from North America during fiscal 2012.
ReachLocal has been moving into international markets. It started by offering services in Australia and the UK. In early 2011, it launched an office in Berlin to cater to the German market, one of the largest concentrations of Internet users in the world.
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 21% to $455 million in fiscal 2012 from $375 million in fiscal 2011. The increase in the revenue was attributed to the double digit growth in both Direct Local and National Brands, Agencies and Resellers revenue.
Direct Local revenue increased by 23% while National Brands, Agencies, and Resellers revenue increased by 14% due to an increase in revenue from its domestic and international National Brands clients of $7 million coupled with an increase in revenue of $6 million from its domestic and international Agencies and Resellers.
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.