ReachLocal Pricing and Reviews

Many Third Marble customers have used ReachLocal in the past.  Some of our customers have given us their ReachLocal pricing and they always show us a flat rate, monthly pricing.  Some as low as $500 per month, some much more. Regardless of the monthly fees, when we ask our customers how much of that goes to pay for the clicks – ie. actual advertising – they don’t know. The reports they get don’t break out Reach Local’s fees from the cost of the ads.

In Reviewing ReachLocal for customers, we learned they were publicly traded.

So we did a little investigative research on their  reviews  and ReachLocal’s pricing and costs. Since they’re a publicly traded company (NASDAQ: RLOC ), we can see the breakdown of ReachLocal’s sales to their expenses.  In 2013, here’s the story:

Sales – $514 mm.

Cost of Sales – $241 mm.

Selling, general and admin expenses – $251 mm.

Total Net Loss – $2 mm

So if we’re reading this correctly, for every $100 a ReachLocal customer spends for their service, only $47 goes towards the ads.  We’re assuming ‘Cost of Sales’ is the advertising cost paid to Google and other online services, so $241 / $514 = 47%.

That means $53  goes to pay for their sales people and other administration expenses ($251/$514).  That’s a lot of overhead.

Moral of the story – know how much of what you pay actually goes to pay for the ads.  If you’re spending $1000 per month with ReachLocal, only $470 of it is going to pay for ads.  Are they really doing $530 worth of work for you each month? (That’s $6360 a year.)  Food for thought.

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