Reply.com this week announced plans to raise $60 million in an IPO. ReachLocal had earlier announced similar plans to go public. The success of one or both companies’ efforts will have a major impact on other local-themed companies’ efforts to raise funds and/or go public.
Looking at Reply.com’s SV-1, we see that the company has 127 full-time employees, including 103 in sales and marketing, 14 in technology and 10 in general and administrative. It has raised $27.5 million since its inception, and last year grossed $34.3 million in revenues from more than 5,000 advertisers. It also delivered 700,000 leads.
The brainchild of AutoWeb Cofounder Payam Zamani, Reply.com was founded in 2001 primarily as a lead generation service for autos, with real estate added in 2003. In 2005, the company acquired Connecting Neighbors, which builds sponsored neighborhood Web sites for real estate professionals.
In 2006, Reply.com’s strategy made a sharp turn. It announced plans to sell Connecting Neighbors, which recently only contributed 5 percent of its revenues; and added “enhanced clicks” generated from auctioning inventory for a variety of local categories from the search engines and ad networks. The company reasoned that the search engines and ad networks had a massive amount of left-over local inventory that needed to be specially targeted.
The online auction marketplace was introduced in 4Q 2008 with auto and real estate components. Since then, it has added home improvement and has just added insurance.
In the SVI, Reply.com noted that 65 percent of its income comes from locally targeted national accounts, aggregators and channel partners. But an emerging sales focus is on channel partners offering white-labeled versions of its system. Traditional media companies with a large installed base of advertisers are being specifically targeted.
Reply.com COO Sean Fox is a featured speaker at Marketplaces 2010, taking place in San Diego March 22-24.