Today ReachLocal announced Q4 earnings (it now has 16,900 “active advertisers”). The company also said it has acquired DealOn Media, which offers daily deals to consumers and has a white-label product and a new “deals exchange.” The acquisition, worth $10 million, gives ReachLocal a fast on ramp into the daily deals space.
For DealOn it offers the missing local sales force that the company didn’t have. DealOn CEO Rich Razgaitis now becomes “General Manager of ReachLocal Deals.”
DealOn has a presence in 18 markets in the US. and, as mentioned, a white-label business and the “OfferEx deal exchange.” DealOn’s OfferEx is like the RightMedia exchange for daily deals.
Deal channels, “suppliers,” assign bids to each offer in the system. That’s the amount they’re willing to pay resellers/distributors as a commission for repping or promoting the deal. Big channels that own lots of distribution such as Groupon or LivingSocial don’t need to participate but smaller providers in the ecosystem would. (Analog Analytics, which I will write about shortly, also operates a new deals network/exchange as well.)
Deals are now entrenched as a component of the “local product suite” for small business advertisers. Let the deal market consolidation begin!
Update: I spoke this afternoon with ReachLocal CEO Zorik Gordon. He told me that Reach evaluated a large number of the white-label providers and picked DealOn because of the founders/team, the white-label capability and the OfferEx exchange. He sees ReachLocal and DealOn now sourcing deals for other publishers and distribution partners, as well as maintaining the white label business.
He also said that Reach was thinking about ways to “evolve” the deal space and make it applicable to a broader range of merchants, such as HVAC professionals for example. ReachLocal will use existing sales staff and “some dedicated people” to sell deals to local advertisers in its various markets.