Reply Buys MerchantCircle for $60 Million

The owner of sites including Contractors.com and iMotors.com has agreed to acquire local business network MerchantCircle. Reply, a firm that connects buyers and sellers of real estate, auto, and home contractor leads and site traffic, purchased MerchantCircle for $60 million in cash and stock.

Reply will consist of the Reply Marketplace platform which offers locally-targeted ads on a cost-per-lead and cost-per-click basis, along with Reply Media, now home to MerchantCircle.com, Contractors.com, Bloglines.com, and iMotors.com. MerchantCircle President and founder Ben Smith will serve as president of the Media arm. Reply’s founder and CEO Payam Zamani will be CEO of the combined firms.

MerchantCircle, which includes 1.6 million local merchants in its network, offers small local businesses marketing services, allowing them to buy leads and create coupons, for instance. Consumers can also post reviews about companies on the site, which will maintain the MerchantCircle name after the acquisition is complete.

MerchantCircle’s Smith expects overall traffic to grow significantly as a result of the pairing, in part because his firm’s traffic is organic while Reply’s is historically paid traffic. “I don’t think there’s a whole lot of overlap on the traffic side,” he said.

As MerchantCircle has focused on organic traffic and building a publisher network, Reply has focused on building a sales force and turning paid traffic into leads, said Smith. “It’s almost like we were separated at birth,” he added.

The companies expect the acquisition to be complete in the third quarter of this year. The companies said in a press release that both firms are profitable, projecting revenues of more than $100 million next year.

“Too many companies, especially large online media companies like Google and Yahoo, focus on building directories rather than a level of engagement with local [businesses],” said Zamani. “That’s really what we are focused on building together.”

According to Smith, the combined companies plan to make another acquisition, though he would not reveal what type of firm they are in the market for.