Lately, the market for local online advertising has heated up. Based on various reports, it looks like Google (GOOG) was ready to pay $550 million for Yelp, which is a leader in the space. But the deal fell to pieces -- probably because of a disagreement on the valuation.This definitely bodes well for another player, ReachLocal. In fact, this week the company filed to go public.
Founded in 2003, ReachLocal has built a platform that helps small and medium size businesses (SMBs) create effective online media campaigns. Some of the services include: connections with search engines, directories and ad networks; keyword provisioning; bid management; and tracking. To scale its business, the system is highly automated and is currently managing tens of thousands of campaigns. The pricing ranges from $500 to $3,000 per month.
Yet, there is still some old-school approaches. For example, ReachLocal has a "feet-on-the-street" direct sales force that includes 438 employees.
But the formula is getting results. For the first nine months of 2009, revenues came to $143.3 million, up 37.5% from the same period a year ago.
And, it looks like the local online advertising market is still in the early stages. According to Borrell Associates, SMBs spent about $60.5 billion on local advertising last year.
In light of this, it's clear why Google -- and other top Internet operators -- want to get into this space.
Tom Taulli advises on business tax preparation and resolving tax problems. He is also the author of a variety of books, including the including The Complete M&A Handbook
. His website is at Taulli.com.
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