Online marketer ReachLocal expects turnaround to take hold this year

ReachLocal a finalist in 2015 American Business Awards' 'new product or service of the year' category

ReachLocal Inc. sells online advertising, marketing and website services to small and medium-sized businesses looking for more local customers.

Founded in 2003, the Woodland Hills company quickly faced competition in helping small firms negotiate the transition from print advertising and yellow pages listings to touting their wares and services online.

ReachLocal's pitch was simple: Online search ads are better because they're highly targeted and shown to people who are actively looking to buy a particular product or service. It filled a niche for businesses that lacked the time, people power and expertise to do it themselves or to hire an advertising agency.

ReachLocal employs 1,900 people in U.S. and international sales operations in several countries, including Mexico, Japan, Britain, India and Australia.

Revenue rose to $514.1 million in 2013 from $291.7 million in 2010.

The company ran into trouble last year when sales dropped to $474.9 million, and ReachLocal posted a net loss of $45 million.

In May 2014, the company hired a new chief executive, Sharon Rowlands, a former board member of Constant Contact and formerly the chief executive of Penton Media and Altegrity. She is known for turning around companies.

The latest

On May 8, the company announced that it was a finalist in the 2015 American Business Awards in the "new product or service of the year — lead generation solution" category for its ReachEdge program

"ReachEdge provides local business owners with the right balance of marketing science and art, without taking their attention away from the various responsibilities that exist when running a business," the company said in a news release.

Accomplishments

ReachLocal won a 2014 Small Business Influencer Award for its success in helping its clients expand their businesses through effective online marketing.

Challenges

Financial results for the three months ended March 31 show that the company is still trying to regain its footing. Revenue fell to $99.6 million from $124.7 million a year earlier, a 20% decline.

ReachLocal's net loss widened in the first quarter to $12.8 million from $6 million in the year-earlier period.

In a conference call with analysts to discuss first-quarter results, Rowlands said that the company is on track to return to profitability in the second half of 2015 through a sales reorganization and aggressive cost cutting.

Analysts

Wall Street is cautious about the company's turnaround prospects.

Of the four analysts that regularly cover ReachLocal, three suggest holding the stock and one rates it as underperform, meaning the company's stock is expected to do slightly worse than the overall stock market return.

ronald.white@latimes.com

Twitter: @RonWLATimes

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