ReachLocal Bows Local Ad Xchange

ReachLocal becomes the first company to formally announce a local ad exchange. I say the “first” because there are others in the works and over the past year I’ve had several conversations with different companies about the concept. Put V-Enable and Citysearch in this category. The YP publishers have discussed this for a long time and have taken some steps toward a network within the industry.

That of course raises the question: “what’s the difference between a big ad network and an ‘exchange’?” This is a discussion I had endlessly, it seems, with people when AdECN and RightMedia were relatively new, independent companies. In a way it doesn’t matter as much as what the network-exchange accomplishes for those that participate in it.

According to the press release issued this morning The ReachLocal Xchange is described as follows:

The ReachLocal Xchange is a new proprietary technology platform that enables major and long tail Internet publishers and solutions providers a cost-effective way to tap into the advertising budgets of local advertisers. For local advertisers, the ReachLocal Xchange offers unprecedented reach to potential customers across the ever-expanding universe of Internet publishers . . .

For media publishers integrating directly into the ReachLocal Xchange, they can easily create custom ad inventory offers that are then displayed and promoted to local advertisers via ReachLocal’s global feet-on-the-street Internet Marketing Consultants (IMCs). This access allows publishers to generate more revenue and higher overall yield for their inventory; to enhance ad content with locally and regionally-focused advertisers; and to create custom ad offers across different ad formats, sizes and types.

For local advertisers, national brands, and agencies, the ReachLocal Xchange offers them unprecedented access to Internet audiences in order to deliver their marketing messages wherever and whenever their target consumers are online. This is achieved with a single media buy, full campaign tracking and reporting, and optimization technology that places ads only on the best converting publisher properties.

Here are some responses from a short e-mail Q&A I did with Reach late yesterday. ReachLocal co-founder Rob Wright provided the responses:

Beyond Ask/Fox, who are some of the publishers? (MSN, et al)

Rob Wright: Besides the Google, Yahoo, Fox, Ask, etc.. We have many signed and pending publisher contracts that we’ll unveil from ad:tech forward. Some of the many solutions providers taking advantage of the Xchange include video production companies, TurnHere and Spotzer; Web site hosting and design company, DealerHD; online scheduling widget, Full Slate; and live chat software and service company, ApexChat.

Can any publisher join? It appears that publishers and tech vendors must apply. Who gets approved?

Rob Wright: Any publisher can apply, but we do have a strict approval process. Quality of traffic, reach and targeting capabilities are a few of the more important criteria.

Does integration happen via APIs; are there any technical hurdles here?

Rob Wright: As it relates to search, this is all automated via our XML syndication feed. For all other media types, the publisher is given a choice to use the manual interface or write to the underlying API.

What kind of ad inventory is relevant: display, text, everything?

Rob Wright: The focus as we launch the ReachLocal Xchange is to continue the build out of our ReachSearch and ReachDisplay products. That being said, the ReachLocal Xchange does support video, mobile and even digital signage, giving us the technical flexibility to introduce new products as the market evolves.

Will there be a self-service interface for advertisers to plug directly into? Does this represent a change in the Reach business model from sales channel to network?

Rob Wright: We do not currently contemplate a self-service interface for advertisers. ReachLocal was built on the fact that most SMBs don’t consume through self-service platforms. Because of that, these publishers and solutions providers are leveraging our sales force to sell their inventory and/or solutions. Our business model hasn’t changed to network from sales channel, we’re simply providing more tools for the advertisers to reach deeper into the Internet for consumers. In fact, the ReachLocal Xchange makes the sales channel that much more compelling. If there is a change, it’s more about ReachLocal being a complete end-to-end online advertising company for local advertisers, and less about being a search company like the many that follow after us.

Beyond local-geo, other forms of targeting are available?

Rob Wright: We have built the platform to support any targeting capabilities offered by the publisher – geographic, keyword, demographic, behavioral (including remarketing), to name a few.

In a way, this development was inevitable given:

1. The importance of local inventory and the ultimate market opportunity
2. The fragmentation and complexity of the market (as Reach co-founder Zorik Gordon says in the release)

As I said there will be others to come forward that will offer a similar proposition to the market. That said, there have been local ad networks for some time, and all the major online ad networks offer geotargeting (largely based on reverse IP). Centro is also there as a buying service across multiple ad networks for those who want to reach local display inventory.

Yet ReachLocal has done something potentially quite significant here, making local inventory more accessible to more marketers. It has also shifted its model somewhat and potentially made itself that much more valuable as a company as well.