ReachLocal Gets Into Deal a Day Via DealOn
Local sales leaders are now jumping into the deal-a-day phenomenon. Yesterday, Citysearch said it would push deals hard to its thousands of advertisers. Today, ReachLocal announced that it was buying DealOn Media. Specific terms weren’t disclosed, but ReachLocal is valuing DealOn at $10 million. DealOn will be keeping its name for now, and CEO Rich Razgaitis will become GM of Reach’s new deals division.
DealOn operates in 18 markets and is based in New Jersey. The 30-person company — of whom 20 have been sales — provides white-label services for publishers and has done especially well with restaurants, powering Zagat Exclusives and Nation’s Restaurant News, among others. It recently launched an exchange for offers that permits publishers to pick and choose the best offers for their users. More than 20 partners were using the exchange after its launch in December. Exchanges are clearly hot right now, and becoming central to the strategy of several white-label providers.
The deal with DealOn continues Reach’s evolution beyond being a simple search reseller. Suffering from high churn last year, it began an effort to provide its advertisers with a variety of engagement tools via its acquisition of SMBLive, and social networking tools via Bizzy. The connecting point is Reach’s 700-person-strong sales team.
ReachLocal CEO Zorik Gordon told ClickZ that he expects that the company’s deal flow will be helped via partnerships with pure plays such as AOL, Yahoo, Google, Yelp, OpenTable and travel sites. Traditional publishers, however, are less likely to participate, he says, as they still see ReachLocal as direct competition.
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I think this is an interesting move.
With such a large installed base ReachLocal provides a great sales channel, if nothing else, for DealOn.
The other element which is interesting is that it shifts the relationship with ReachLocal going from being fee-for-service / agency commission (effectively) to taking a piece of the action.
If the business is sustainable, I can see the value proposition of taking a piece of the action from hundreds of deals.