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.
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 – $514mm.
Cost of Sales – $241mm.
Selling, general and admin expenses – $251mm.
Total Net Loss – $2mm
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.
“We’ve used companies like ReachLocal but Third Marble delivered literally double the leads at half the cost.”
Hunter M, Marketing Director
National Career College