Love them or hate them, MerchantCircle is a dramatic success. Today the company announced that it had “signed” it’s millionth merchant. This is how the company describes what that means:
Out of the estimated 15 million local merchants in the U.S. today, more than one million have claimed their listings and have accessed MerchantCircle’s suite of free and premium tools to reach local consumers online.
Early on MerchantCircle used widely criticized “robo calling” (many argued it was deceptive as well) to get merchants to sign up. But that practice reportedly stopped some time ago. The company has raised about $15 million in a couple of funding rounds.
While the number of advertisers is tiny by comparison to the number of merchants who’ve claimed their listings, MerchantCircle is now a certain takeover target. The only questions are:
- Who buys the company and how soon?
- How much does it sell for?
The yellow pages industry has relationships with about 3.2 million advertisers. MerchantCircle has a database of a million local merchants (again not advertisers). But this is a huge asset in addition to the local reviews, coupons and other content on the site.
Most of these local businesses are very small and have very small ad budgets, with the majority spending less than $2,500 per year on advertising (and most spending less than $1,000). By contrast most ReachLocal merchants spend at least $1,000 per month on advertising.
While MerchantCircle’s investors and employees would probably like a near-term exit. The company could also build tremendous value over time if it operated as a private company. It could later potentially go public (provided revenues were sufficient).
MerchantCircle would also be an interesting Google acquisition and alternative to Yelp, though the former doesn’t have a sales force or a consumer brand. IAC is also a logical acquirer — perhaps the most likely among the large online players.