By Mark Potts

ReachLocal, a company that sells local advertising on behalf of Google, Yahoo, MSN, AOL and other national Web services, just raised another $55 million in venture financing for a nationwide expansion (they're already in the Top 10 U.S. markets).

Great idea, this notion of offering local feet on the street ad sales for national players, and I blogged about it last December. As I said then, this is exactly what newspapers should be doing: Unleashing their local Web sales teams on behalf of — perish the thought — potential competitors. What better way to leverage your assets, keep an eye on competitors and keep new competitors in check?

I talk a lot about local being the last defensible franchise for newspapers, and that's not just about news. Newspapers have longstanding, priceless relationships with their local advertisers, and they should be extending that advantage by being the one-stop shop for local advertising of all kinds. But nope; they're clinging to their print products, barely selling their own online products — and letting upstarts like ReachLocal build impressive businesses by taking the local advertising market right out from under them.

Here's a question: With ReachLocal now worth upwards of $300 million, would any big national newspaper company (Gannett, Tribune, McClatchy, etc.) be smart enough to write a check and bring them into the fold? Somehow I doubt it, alas. Three hundred million is a lot of money. Of course, as history teaches us, newspaper companies have punted these opportunities before. In a couple years, when ReachLocal is worth, oh, say, $3 billion, and chomping into the local advertising pie, today's valuation will look like a bargain.