Reply.com Acquires Marketing Network For Small Businesses MerchantCircle For $60 Million

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Ad network Reply has acquired online marketing network for small business owners MerchantCircle for $60 million in cash and stock. The transaction is expected to be completed in Q3 2011.

Merchant Circle provides a business directory for merchants in smaller towns and currently lists over a million small businesses. MerchantCircle has long targeted merchants in small locales versus catering towards the consumers, as sites like Yelp and CitySearch do. MerchantCircle has local business members in 95% of the 24,600 U.S. cities and towns with populations over 200. The company also acquired Bloglines from IAC late last year.

Reply.com is a cost-per-click ad network which targets ads for local businesses. Its strategy is to gather more information from consumers who click on their ads by inserting a “middle page” between that pops to ask them where they live or what brands they like to improve targeting before showing them an ad. Last year, the company filed for an IPO.

Clearly, MerchantCircle brings Reply an inventory of small businesses. Reply says the combined company projects revenues of over $100 million in 2012.

Merchant circle has raised $14 million in funding from SV Angel, IAC, Rustic Canyon, Steamboat Ventures, Scale Venture Partners and others.