ReachLocal Reaches For IPO

Local online marketing company ReachLocal on Tuesday filed for a $100 million initial public offering.

The majority of the proceeds from the IPO will go toward general corporate purposes and working capital, according to the company.

Founded in 2003, Calif.-based ReachLocal caters to small- to medium-size business owners, which have traditionally overlooked digital advertising in favor of more trusted channels like local newspapers and direct mailings.

ReachLocal combines its own targeting technology with a digitally savvy direct sales team to provide businesses with a single, easy-to-use and ostensibly cost-effective service to market with digital media.

Clearly experiencing some degree of success, the company saw revenue more than double last year. During the first nine months of this year, meanwhile, revenue was up 38% to $143.3 million, which made it possible to post an $11.7 million profit.

At the beginning of the year, ReachLocal unveiled a new targeting system to help local advertisers show ads only to those consumers who previously visited the advertisers' Web site or live in a certain area.

Nationwide, locally placed search advertising will grow 30% during the next five years, from $4.1 billion in 2008 to $5.3 billion in 2013, according to a recent report from Borrell Associates.

Leading the way, according to Borrell, will be ad service providers that can adopt scalable technology infrastructure and recalibrate their economics to allocate more customer investment to search media spend.

ReachLocal says it plans to use a small amount of the proceeds from the IPO for a deferred payment on its purchase of the stake in its Australian operations that it did not already own.

To date, the company has raised more than $60 million in funding, including $55.2 million in a round two years ago. According to an SEC filing, ReachLocal's primary backer VantagePoint Venture Partners controls 53.22% of the company.

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2 comments about "ReachLocal Reaches For IPO ".
  1. Joop Rijk from Advanced Media Productions , December 23, 2009 at 7:50 a.m.

    I wonder that their annual churn rate is.

  2. Nick Taylor from BrightHub.com , December 23, 2009 at 11:13 a.m.

    Check out the video under their Careers page:
    http://www.reachlocal.com/careers

    If I were running this company this is not how I'd want to portray my sales team... I feel like I just watched the movie Boiler Room with Vin Diesel and Ben Affleck.