12/22/09

            There's lots of interesting reading and valuable information in the filing for an initial public offering by ReachLocal, which provides advertising tools and placement for small and medium-size businesses in the U.S., Canada, the U.K. and Australia and offers "campaign support services" in India.

            For instance:

           --- When it hires sales reps it doesn't expect them to generate profits for a year. It refers to sales reps with less than a year of experience as "underclassmen;" those who've worked for ReachLocal for more than a year are "upperclassmen."

           --- It started generating a profit in 2009, after a net loss of $7 million in 2008. (The company was launched in 2003.)

           --- The company has 525 sales reps in 37 markets, and also works with more than 350 third-party agencies and resellers.

          The company hopes to raise $100 million in the IPO. It has raised more than $60 million ($68 million is one number we saw) in venture capital, and had more than $43.7 million in cash and equivalents in the bank on Sept. 30. Lead underwriters on the offering are J.P. Morgan and Bank of America Merrill Lynch.

          More from the filing:

         --- As of Sept. 30, the company managed 17,600 "active campaigns" from 14,500 active advertisers; most of them spend $500 to $3,000 per month with ReachLocal, which in turn places most of their advertising on Google, Yahoo and Microsoft search sites, as well as an "extensive network" of local search and directory sites.

        --- "Selling advertising to SMBs is difficult. ... Offline media companies addressed this problem ... by developing dedicated local sales forces. We believe that offline media companies --- even those with online products and services --- have not effectively refocused their existing sales forces to sell online media. In contrast, online media publishers have generally not made the investment in a dedicated local sales force to sell to SMBs."

       --- Its revenue increased 37.5 percent during the first nine months of 2009, year-over-year, to $143.3 million.

       There's lots of online coverage here, here and here so there's no need for us to recap it further.

       One final tidbit of note to our audience: Michael Kline, one of the founders who is currently COO and chief product officer, was an SVP of AdStar.com, and founded Recycler.com, the online site of the Recycler classified advertising newspapers in Southern California. He served as GM of Recycler.com from 1995 (very early in the Internet era) to 1998.