Yearly Archives: 2009

ReachLocal’s S1 Filing Provides New Details About Company


ReachLocal’s S1 filing to raise $100 million includes valuable details about the company. With grosses of $146.7 million for the first nine months of 2009, and operations in the U.S., Canada, the U.K., and Australia, the local search and display reseller has become one of the biggest bets in local.

According to the S1, ReachLocal, which was founded in 2004, has 14,500 active advertisers and 17,600 active campaigns. Most advertisers spend between $500 and $3,000, and represent a wide swath of local verticals, including home repair and improvement, automobile sales and repair, medical and health services, legal services and retail and personal services. “Our target market is SMBs that spend at least $5,000 per year on advertising,” notes the company.

A little more than two-thirds of revenue – 68 percent — comes from ReachLocal’s sales force, while the rest comes from over 350 third party agencies and resellers. But the direct sales force is more profitable, and the company’s intent is to focus on bringing in more sales consultants.

Sales consultants that survive the first year (“upperclassman”) bring in substantially higher revenue than new consultants (“underclassman”), who spend much of their time in boot camp (one week) and other training activities. The company says that 438 sales people in North America and 87 sales people internationally, and roughly 40 percent are “upperclassmen.” The pool of upperclassmen is a little shortchanged right now, however, as the company slowed down new sales hires in 2009 on account of the recession.

The company suggests that its costs and search costs in general could go up as the economy recovers and more advertisers increase their quotient of Internet advertising. “An increase in the cost of media in these marketplaces without a corresponding increase in our media buying efficiency could result in an increase in our cost of revenue as a percentage of revenue even if our business expands.”

It also notes that its media costs have already gone up from 52.7 percent of revenue to 55.6 percent, mostly as the result of Google’s 2008 action to terminate its publisher rebate program in North America. Google gets the lion’s share of ReachLocal’s spending, although the company also works with Yahoo and Microsoft, and has recently begun providing display ads, and expects to move into mobile ads as well.

Looking forward, the company says it will work aggressively to “address new segments of an SMB’s marketing activities, such as digital presence, reputation management and customer retention.”

Center’d Raises $1.875 Million in New Round


The year- end money deals continue. Today, the San Jose Business Journal reports that Center’d has raised another $1.875 million on top of the $6.5 million it has previously raised. The two-year-old, Moms friendly local search and events planning site, initially launched as “FatDoor,” is lead by former Yahoo Marketplaces head Jennifer Dulski and former Microsoft maps exec Chandu Thota. Among its board members is former Intuit head Bill Harris.

The site is working to differentiate itself from competitors on the cityguide side such as Citysearch and Yelp, and on the events side such as Eventful, Zvents and American Towns with an orientation towards mothers, and features such as “Sentiment Analysis,” which, like Marchex’s OpenList, semantically analyzes what people are saying about local places on the Web, sucking in information from local and travel review sites, review aggregators and blogs.

Insights into eBay’s Classifieds Strategy via eBay vs. Craigslist


eBay is expected to dramatically boost its efforts in classifieds in 2010, so we welcome clues into its historical and current thinking into classifieds via eBay vs. Craigslist. eBay has been seeking redress from Craigslist, which has diluted its 28 percent ownership share to 24 percent in a bid to squeeze out its influence. Craigslist, meanwhile, is seeking to force eBay to sell its shares, saying that eBay had an oral commitment to dispose of its shares if ever chose to directly compete against the company, a la Kijiji.

Highlights: eBay feared Google’s entrance into classifieds via Craigslist, and wanted to buy Craigslist as a pillar for a broad international vertical and classifieds play.

As noted in AimGroup’s excellent, comprehensive coverage of the trial, pretrial depositions showed that EBay’s initial vision was to merge all of its acquired classified titles into a single entity that included Craigslist. eBay also believed Craigslist wasn’t fully monetized and that it could add immediate value with its expertise in product search, trust and safety and international expansion. Another reason that eBay wanted in with Craigslist was to prevent Google from taking a similar position.

But it quickly became apparent that there was a major culture clash between “Top Down” managed eBay, which sought to maximize profits, and “Bottom Up” managed Craigslist, which was driven by its appeal to its community – a position that it took so seriously that it consciously took out an “.org” URL.

Craigslist also turns out to be very conscious of its public image. Desiring not to look greedy to its users, Craigslist did not publicly reveal that Craig Newmark and Jim Buckmaster received $16 million in “extortion money” from eBay to allow it to receive shareholder rights.

A major issue in the trial is whether there was an agreement that eBay would dispose of its shares if it started to compete against Craigslist, as it did in 2007 when it launched Kijiji , and stated buying search ads on Google to divert Craigslist users. While eBay acknowledged that there was some kind of understanding, it was never formally included in a contract. Indeed, Buckmaster testified that he felt that eBay was using sensitive, proprietary information to build its competing brand. He said eBay’s behavior directly lead to Craigslist taking its actions to dilute eBay’s shares.

A decision in the case is expected in early January. The judge in the case has said that both sides will be unhappy with the outcome, and he scolded them for not reaching a settlement.

ReachLocal Files for IPO


ReachLocal, the fast growing search and display sales channel for small businesses with operations in the U.S., UK, Canada and Australia, has filed with the SEC to raise $100 million in an IPO. The company recently reported that it has 500 + sales people and 300 staffers.

Reach earned $146.7 million in revenue in 2008, up from $68.4 million in 2007. It had a net loss of $7 million in 2008. It has raised over $60 million, including $55.2 million two years ago and was rumored to be valued at $305 million at that time.

The IPO, assuming it goes out, will be closely watched by other SMB sales companies that may pursue a similar route, including WebVisible, Yodle, Clickable, Matchcraft, Orange Soda and others. Marchex has been public since 2004.

RepairPal in $4 Million Round


The battle to win a digital slice of the $150 billion auto repair marketplace heated up a little today as RepairPal announced a new $4 million round, adding to $3 million it previously raised. The round was led by Tugboat Ventures and includes several individual investors.

RepairPal focuses on providing leads to repair shops and expert information to consumers. It competes against DriverSide, which raised $5.3 million last March, as well as several regional players, most of which provide static, non-personalized information.

CEO David Sturtz tells us that the site is now getting a million visitors per month between its destination site, its partner sites, its mobile applications and partnerships with Cars.com, AOL Autos, Belo Interactive, AutoNation, AAA of California and others. “This funding will allow us to grow every aspect of our business,” he says.

Sturtz adds that RepairPal’s database can generate more than 70 billion individual ‘RepairPrice’ estimates and the company now has close to 1,000 shops and dealers subscribing to its lead generation product, AppointmentsPlus.

BIA/Kelsey’s Parade of Verticals: ‘WineTwits’


Verticals that can engage certain demographics on a socio/geo basis and drive loyalty and conversion are the basis of our Marketplaces research program. A new one that has caught our eye is WineTwits from Happyhours.com founder Steve Gilberg. Three years ago, HappyHours and Lawn and Garden Search were among the first verticals that made us think there was another side to marketplaces beyond the big classifieds categories.

Gilberg tells us that the development of WineTwits started a year ago when his team was fooling around with Twitter to see what it could do for the online wine retailers that he works with. “We quickly had a few thousand followers, and we were moving cases of wine. In one 24 hour period, we sold $16,000 of wine,” he says.

As the site comes out of beta, it now has 45,000 followers. It is currently poised to promote wine more aggressively, and work local channels to promote wine stores, specials and wine events. “Our business model is to create a platform that will organize conversations around wine,” says Gilberg.

The WineTwits platform is essentially made up of two products: “WineTwits Mobile” and “WineTwits Live.” Mobile allows event planners, retailers and restaurants to create lists of wines being tasted at specific events, and build a feedback community, like a specialized version of Foursquare.
WineTwits Live allows event producers to project the tweets on screen, and upload interstitial advertising.

The platform has already been applied in November at The City Winery event in New York, where it was called “Spit and Twit.” The company is also in discussion to apply the tech for the San Francisco Vintners Market event in April.

The ultimate vision, says Gilberg, is to apply lessons from the WineTwits experience to several adjacent products. “CigarTwits,” “RumTwits” and “TequilaTwits” are all on the horizon.

Zillow Adds Rentals to Real Estate Listings; Introduces Premiums


Facing up to the reality of a real estate market in which many houses for sale end up becoming “shadow” rentals, Zillow has added rental listings and information to its real estate services. At the same time, Zillow is attaching a $9.95 premium for listings to be posted for six months, which represents the first time that the ad-supported service has ever charged for listings. The fees include unlimited photos.

Zillow’s new fees, however, will only be assessed for “manual” listings that are not part of the feeds that Zillow receives from its primary sources, which include brokers, 200 Multiple Listings Services and 171 newspapers. Just three percent of its listings are said to be“manual,” representing a potential rental listing market of 120,000 units.

CFO Spencer Rascoff says that he expects to see strong demand for rental information. The company points to research showing that 25 percent of its four million unique visitors are “dual tracking” rents and houses for sales, seeing whether they can get a better deal from renting or owning. “No one expects price appreciation anymore. All you have is an option to pay for a house outright,” says Rascoff.

The rental option gives users an option to view rental costs a la carte, or against “for sale” information. While adding rentals would theoretically pitch Zillow against rental publishers such as Apartment Finder, Apartments.com, ApartmentGuide and My New Place, Rascoff says Zillow’s offering is really oriented towards single family homes, or small complexes, while the others are oriented towards large property managers. “A third of rental units are single family homes,” he says. “More than half of rental units are four units or less.”