ReachLocal Introduces Retargeting Ad Product for SMBs

I thought ReachLocal already offered this: display advertising for SMBs using retargeting. Apparently not.

Yesterday the company announced a (new) display product that uses search and site retargeting. Site retargeting means displaying an ad to people who have visited the website of the SMB in question. Search retargeting involves showing the ad to people who have searched on relevant keywords.

The program is not really intended for the smallest SMBs but those that have a meaningful budget and some sophistication about online advertising. ReachLocal says its display network extends to “90% of the US online audience.”

Historically ReachLocal’s client’s minimum monthly spend has been at least $1K. The monthly minimum budget for the new display program is $500. Beyond monthly minimum cost, I asked ReachLocal a number of questions about the product.

The search retargeting data are coming from a variety of sources: “[We are] gathering it across multiple sources including search engines, custom search boxes, and publisher sites.”

I also asked about mobile distribution. ReachLocal told me that these ads would appear on the PC and in “mobile browser inventory,” which suggests no in-app inventory. However, according to Nielsen, US mobile users now spend about 80% of their time in apps. ReachLocal said there was no mobile-only inventory available.

ReachLocal designs the ad creative or will allow SMBs to work with their own agencies to do the creative if desired.

Citi’s Mark Mahaney is generally bullish on ReachLocal, calling the online local market a “material hyper-growth market opportunity” for the company. He believes that ReachLocal’s salesforce is a meaningful differentiator and barrier to competition. However he still cites “competition, high churn, and execution” as risks for the company. ReachLocal doesn’t reveal its advertiser churn numbers, which are believed to be better than many of its competitors but still fairly high.

In contrast to the product-oriented approach that Reach and other local players have taken rival Yodle has simplified its approach to sales by generating calls/leads from multiple channels and not productizing them separately. I believe that this is ultimately the right approach for the bulk of the SMB market.