[Editor’s note: Last Friday I interviewed Local.com CEO Heath Clarke and Senior VP of Corporate Development Peter Hutto about their company’s acquisition of Octane360. In doing research, I realized the first article I ever wrote on DNW — March 9, 2005 — was about their company’s purchase of the Local.com domain name for $700,000. That was 3,575 posts ago.]
I’ve long thought Octane360’s business model was one of the most innovative monetization strategies for domain owners. The only challenge was that, as a startup, it was going to take time for its model to be fully realized. It needed a bit more octane.
That all changed July 1 when publicly-traded Local.com snapped up the company, drastically accelerating its strategy.
“We bring the scale component,” said Local.com Chairman and CEO Heath Clarke in an interview with Domain Name Wire. “We offer Octane360 access to capital and we can do ad sales at scale.”
Indeed, Local.com has a market cap over $100 million and touches 20-25 million users a month, both on its flagship Local.com site and through syndication deals. On the same day it announced the acquisition it also announced a $30 million line-of-credit from Silicon Valley Bank.
In return, Octane360 gives Local.com the opportunity to expand beyond its main site and offer new products.
Peter Hutto, Senior VP of Corporate Development, explained that the acquisition “Takes our footprint and expands from Local.com into potentially hundreds of thousands of sites. It gives us an expanded product set to offer to small businesses.”
Local.com has a solid sales machine, but now has a new and innovative product to sell. “We lack the right suite of products to really light that up,” said Clarke. “We were selling a product that has been in the market for 15 years. This product is new for our audience.”
It will also allow the company to go upmarket by offering a suite of products from Octane360 that can sell for $1,000 or more. That’s a major difference from selling a $50 product, as it opens up an entirely new sales channel.
“This allows us to have a product at a price point that a feet-on-the-street sales force can sell and make money,” explained Hutto. “That opens up channel sales partners. We have all those partners already; what we don’t have is a product to sell through them.”
Not only is having a product to sell through outside sales representatives a first for Local.com, but it’s also a first for domainers.
“This is entirely new for the domain industry, period,” said Clarke.
Octane360 clients should start to see increased revenue in the near term. Local.com’s pay-per-click search listings have already been integrated onto Octane domains. Soon you’ll see the effect of sales from more call centers and through additional channels. For now, the company still works mostly with domain owners with 500 or more geo category domain names.