ReachLocal Acquires DealOn Daily Deals Service
ReachLocal has acquired DealOn Media for about $10 million. The daily deals site operates in 18 U.S. markets, such as New York and Los Angeles, with more on the way.
DealOn offers a daily deal service, a white-label and co-branded deals platform, and the recently launched OfferEx platform, which enables other deal sites and publishers to supply and/or resell deals through an exchange. ReachLocal will not attempt to compete with Groupon because it's a direct-to-consumer service rather than a tool for publishers, says Zorik Gordon, cofounder and CEO of ReachLocal.
"We see the opportunities in supplying publishers with quality deals to sell on their sites, because they don't have the resources to do it themselves." Gordon wanted the DealOn's OfferEx exchange, designed to connect media sites with companies that want to offer deals and discounts to consumers. Along with a product suite for publishers, about 30 employees support DealOn, founded in 2009.
In December, Rich Razgaitis, DealOn CEO, told MediaPost the co-branded white-label platform will do for daily deals what DoubleClick did for publishers. DealOn will remain as a stand-alone company under ReachLocal. "Citysearch's offering is a classic example of what's been missing in the ecosystem," Gordon says. "Most of the deals you see are sources by Groupon, and I'm sure they would like to find secondary sources for deals as well." Publishers like Citysearch will find new ways to source deals. Gordon wants DealOn to supply them.
Group buying strategies that sell and promote products and services will likely go the way of Facebook in time, meaning the coupons could pull from big repositories to complement search engine marketing campaigns. But some search marketing experts like Ben Kirshner, CEO at Elite SEM, believe it will take years before agencies will successfully integrate SEM and group buying campaigns. "We can make the buy for the client, but the client will have to decide the budget for the service."
Since ReachLocal went through an IPO in the past year, the company has grown. "Today, we supply Google with more local SMB dollars than any other company, and we're probably the biggest supplier of display ad dollars in the space," Gordon says, with "more than $300 million in ad budgets."