I spent a bunch of time with ReachLocal co-founder Rob Wright on the Ad:Tech exhibit hall floor (in a blood-sugar deprived state) getting a demo of the new ReachLocal Xchange product. Rob took me through the sales/advertiser facing screens as well as the publisher side of the exchange. A few things are now much more clear than when I was just looking at an press release and exchanging emails with Reach.
Reach has built an impressive platform (from my lay perspective). It can accommodate virtually any type of ad unit on any publisher site (online or mobile), where publishers do their own ad serving. Reach doesn’t (yet) have ad serving capabilities for smaller publishers.
Reach is carefully managing who gets to plug into this. All publishers are approved on a case-by-case basis. By the same token, Reach is doing some outbound sales to selected publishers. On the advertiser side, Reach is not currently going to allow other sales channels to plug into this exchange. For example: a YP publisher could receive ads but not use the system for additional traffic for its advertisers. No other sales entity or channel (except the company’s reseller partners) can use the platform. That could change down the line but for the time being that’s the policy.
Here are Reach’s answers to the reader questions that arose in the wake of my previous post:
Q: Banner exchanges worked (right media) because there were standard ad units, ad tags and measurement. How will this work in local where you have search, display, and mobile? No one has figured this out for national why would local be first? The Xchange provides a standard way for local businesses to provide campaign information, including creative, to media publishers so that they may traffic these campaigns in their systems as they do today. Where necessary (for instance, where a media publisher is not set up to provision hundreds of IOs at smaller dollar values, as is typical for the SMB market), ReachLocal will be providing a standardized IOs to the publisher and, possibly, providing ad serving directly. The ReachLocal Xchange will support multiple ad types and pricing formats that can be integrated into 3rd party publishing systems.
Q: What is the point of the app exchange? If SMBs do not want to self serve, who will be using these apps?
The ReachLocal Xchange for Solutions is inclusive of products and services. As an example, web and banner design would be considered a service, while online chat and online scheduling would be considered a product. Products and services can be purchased by our sales force (Internet Marketing Consultants) in the ReachLocal Xchange on behalf of the SMBs, because it is our experience that small businesses will not self-service.
Q: Why is fox the anchor tenant. Social networking inventory is proven to be the lowest value ad inventory on the web?
Social networking is just a portion of the Fox Audience network (Fox News, Fox Sports, Fox local O&O sites and other premium local inventory) that is available through their network. In addition, we will be leveraging remarketing and other behavioral targeting capabilities afforded by the network. The Fox Audience Network is a great complement to the existing network of display publishers we are currently working with.
Q: Will the exchange be open to all buyers; e.g., can WebVisible advertisers buy ads through WebVisible on the exchange?
ReachLocal currently provides online marketing solutions to hundreds of partner resellers, including advertising agencies and vertically-focused online marketing companies. They will have access to the ReachLocal Xchange for their advertiser clients. WebVisible is not currently a ReachLocal partner reseller.
Q: How are all of the SEM campaigns set up if the advertiser comes from outside the reach network?
We’re not quite sure we understand this question, but if this is referring to the hundreds of partner resellers with whom we work today to provide SEM services, those partner resellers have access to the ReachLocal platform to provision and view reports on their SEM campaigns.
Q: What is the exchange fee?
There are no fees associated with joining the ReachLocal Xchange.
Screenwerk 
April 23, 2009 at 7:31 pm
Reach Local has recognized three key drivers in this space. First, SMB’s don’t want to self-service, they want to get customers and to run their business. (Long-time corollary: advertising is sold, not bought.) Second, SMBs want quality local spaces in which to advertise effectively; Reach Local, by screening publishers and letting their resellers work with the SMB, delivers that as well. Third, publishers will generally find it a huge burden to have to sell their product door to door to SMB’s; the sales cost per ad unit forces up the price, so that typically neither the publisher nor the advertiser win.
There are other models that recognize these principles, including some of the YPs who are selling full ad placement services to their strongest SMB niches and treating their publishing businesses as complementary but separate assets with good cashflow. It is the set of principles under which AmericanTowns.com has, for the last 6 months, exceeded $11 RPM’s, as a publisher of hyper-local info with no sales force. (Confession: 10% of our revenue is self-provisioned.) Even Google proves the rule: it is only because of Google’s breadth in providing a wide range of contextually relevant placements that SMB’s do find it time- and cost- effective to learn to self-provision with them; it’s the rare publisher that can count on that.
In the end, those 3 principles impact all of us in local, even if we find ways to skirt one or two of them. Reach Local is to be credited for recognizing them. We’ll all be interested to see how they execute.
April 23, 2009 at 8:00 pm
[…] we have received in the WSJ at Local Web-Ad Market Cools Down – WSJ.com – and Greg Sterling’s blog ReachLocal Xchange Revisited Screenwerk. Greg is the industry guru when it comes to Local Digital Media. Jeff – honestly don’t mean for […]
April 24, 2009 at 12:20 pm
Maybe I also have to see it to understand it, but I don’t get it. It seems, with the purchase of DoubleClick, the release of their own ad serving platform and advances in location identifying algorithms, that Google is positioning themselves to do exactly what it appears ReachLocal is doing …but in a more intelligent and scalable way. At least if I’m understanding this correctly.
If so… Well, let’s just say I wouldn’t want to go head to head with Google.
April 24, 2009 at 12:27 pm
Paul:
DoubleClick is now enabling people to build their own network and they have increasingly good geotargeting. And they have scale. They don’t have the Reach sales channel and the SMB ads that Reach brings to the market. All the DBL click stuff is going to be about national ads doing geo.
April 24, 2009 at 2:24 pm
I’m with Paul, seems RL is building something that will aspire to slay a Google solution.
April 24, 2009 at 2:36 pm
RL’s network is not either or with G or anyone else’s. It’s an “and.” Publishers can use multiple solutions and the ones that monetize better will win ultimately. Google doesn’t have a local sales force. Now if it lets its reseller partners somehow become part of a new and improved geotargeted ad network . . . but IYPs and other local sales channels are increasingly looking for alternatives to buying SEM to drive leads for their customers.
April 24, 2009 at 2:58 pm
@Greg
While I definitely think your points are true for the near future, I also see a scenario where Google can gain a lot of ground very quickly by making a few maneuvers.
Local agencies probably represent the second largest locally focused sales team in any market are now adapting to take advantage of new opportunities (like SEM & social media). They are getting very familiar with Google ad technology. If there’s a local ad network that is easily accessed from the Google interface they are already accustomed to, they’ll use it. So yes, it’s not either/or, but it is about convenience and relationship.
I don’t see ReachLocal trying to form these local relationships. I know they have their own local sales teams in various markets but, on a national scale, is it really that big? If they have other sales “channels”, I don’t know what they are. As far as I know, RL has stopped allowing new resellers into their program a long time ago. If they still are, they certainly aren’t promoting it.
If RL wants to make this work, they need to proactively partner both local publishers and local sales teams. Google does not. Google can go after these audiences passively since most already are using some Google ad technology. In other words, Google can flip a switch and become the big winner …all while enjoying some fava beans and a nice chianti.
Kudos to RL for launching the first local “Xchange”. I really hope they can make a go of it, but I’m not optimistic at this point.
October 5, 2009 at 6:37 pm
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July 6, 2012 at 8:03 am
josh beistle…
[…]ReachLocal Xchange Revisited « Screenwerk[…]…