This morning I had the chance to talk to Julie Mason, general manager of Kellysearch. The site is a B2B vertical search engine and directory that mostly focuses on industrial products, services and equipment. Basic listings are free with the option for additional levels of paid enhancements and upsells, such as hosting a searchable product catalog (print or electronic catalogs are converted to HTML).

Interestingly, Mason asserted that most of its advertisers prefer flat annual pricing, rather than cost-per-click. Like most of the site's features and functionality, it has determined this through extensive usability studies and surveys with existing users and advertisers. These surveys have also, for example, determined that 70 percent of its users have B2B intent rather than B2C intent, and it has tailored the usability and specificity of ads and sponsored links accordingly.

But back to performance-based vs. flat pricing. It is interesting that Kellysearch's customer base largely prefers the latter, given the general move toward the former among SMEs (we projected in our most recent forecast that performance-based advertising will account for 26 percent of traditional directional ad revenues by 2010). It could have something to do with the proclivities of the specific verticals the company serves or that of the B2B industrial equipment market in general.

Nonetheless, Mason sees a slight trend toward increased demand for performance-based marketing among the site's advertisers. It will accordingly launch a pilot program in the near future that will involve a cost-per-click model. Eventually there will likely be a combination of pricing models or an option for the advertiser.

Interestingly, the affinity for performance-based pricing is greater in the U.S. Mason is in a unique perspective to make this observation given that Kellysearch was started in the U.K. and operates in several countries and languages (which raises a whole host of challenges with its taxonomy and site design). Generally speaking the U.S. is about six months ahead of the U.K. in terms of advertiser sophistication and demand for interactive advertising, and the rest of Europe trails about six months behind the U.K., according to Mason.

The site will undergo a front-end redesign in the next 60 days that will include better indexing of business listings. In addition to product category, vertical tags and behavioral tracking will be used to help it build a more robust ontology. We'll keep an eye on the company and check back in post redesign.

Here is an item from Bloomberg that says buyout firm KKR will saddle up PagesJaunes with a record level of debt for a European LBO, about US$8 billion. This will certainly motivate PagesJaunes managers to optimize cash flow.

College newspapers are often overlooked as part of the local ecosystem. Local newspapers in college towns such as Lawrence, Kansas, and Austin, Texas, vie with college papers (a little) for advertising. And classified vendors such as LiveDeal and Ad2Ad have begun working with various college paper networks. College communities are an excellent target for used goods, right? But otherwise, there isn't much action — especially considering that there are 1.9 million users of college papers registered online.

A recent survey of college newspaper readers by Y2M Youth Media and Marketing Network, however, suggests that the college papers ought to rev it up — especially at the local level.

Y2M's survey, with 7,500 respondents, including 2,925 undergrads, suggests that college papers' focus on national and world events as "practice journalism" doesn't sit well with their readers. Ninety percent of the readers, in fact, rely on the college papers for local and campus news.

The respondents are also clamoring for more local advertising. Sixty-four percent want more local restaurant ads, 57 percent want more recruitment ads, 51 percent want more local entertainment ads, and 50 percent want more local store ads.

One of the oddities of the Internet's impact on college papers is that on campus/near campus readership has actually been dwarfed by national readers such as alumni. The percentage of "local" readers compared with "national" readers, in fact, has fallen from 43 percent to 35 percent between 2005 and 2006.

But "local" readers still make up the most regular readership, both in print and online. Seventy-seven percent say they look at either the print or online edition of the college paper at least once a month, with almost half indicating they look at the paper at least twice a week.

The online edition is increasingly popular, especially among undergrads. Twenty-four percent of undergrads look at the online edition at least twice per week, and 33 percent look at it at least once a month.

One area that has fallen, however, has been the use of classified ads in the papers’ print and online editions. Y2M suggests these markets are beginning to fall sway to Craigslist and other free listings. Perhaps this is something that the deals with LiveDeal and Ad2Ad will begin to alleviate.

Fast moving classified aggregator LiveDeal announced yesterday that it will partner with classified transaction engine AdStar. The deal will allow LiveDeal to offer its online classified advertisers a print upsell in the 40-plus newspapers AdStar works with, which include the Houston Chronicle, Chicago Sun-Times and Denver Post.

This will include a tool offered to LiveDeal classified advertisers that will let them design and purchase print ads in these papers. This print upsell model was examined in Part 2 of our newspaper White Paper series (Part 3 is now fresh off the presses), and has been tested by some online classified providers (recycler.com, for example) to varying success.

This is LiveDeal’s second major newspaper partnership and its first in the U.S. The integration of offline and online classifieds, and more syndication of classifieds across affiliate Web sites, is picking up in the market. It’s a strategy that makes more sense online but one to which newspapers have been averse, largely for cultural reasons.

Microsoft product unit manager Garry Wiseman echoed these thoughts at The Kelsey Group’s Drilling Down on Local conference in March.

"We need to look at print and online as a whole. It may be in some categories that print supports online and becomes the marketing channel for it, versus other categories where online still plays the supporting role to print," he said. "Traditionally newspapers have always owned the content and kept it in a walled garden. But you can do a lot by syndicating content to make it really valuable."

This represents a growing attitude online that syndicating content to as many places as possible can gain wider distribution and also drive traffic back to one’s own site — rather than fighting for users to show up at your doorstep. The integration of print and online classifieds holds a similar concept and for LiveDeal will carry the advantage of a very large base of online classified advertisers to upsell to print. LiveDeal will benefit from additional distribution of its ads and a piece of the upsell revenues, while newspapers will gain additional advertisers from the expanding universe of online classified advertisers.

There is a lot more to it and we’ll keep watching to see how it plays out, and if it will stimulate other such deals in the marketplace.

Two deals were announced to distribute Hollywood studio content this week. The first, reported by MSNBC, involves the sale of the episodic television show "Arrested Development" to Internet portal MSN and cable networks HDNet and G4. (Read: Warner and Apple here).

This is the first time a Web portal has purchased first-run syndicated content at the same time the studio licensed it to cable networks. MSN will have the rights to the shows for three years beginning later this year. It will allow MSN subscribers to access the television show for free and include other interactive elements. The plan is to generate ad revenues against the content. No official word on whether this is part of the strategy for Microsoft's Zune launch, but digital music and movie content will play an increasingly large role in pushing services and devices.

We expect to see more studio and record company deals where portals and device manufacturers purchase the syndication and digital subscription rights. In turn, music and movies will be offered at reduced prices (or free) to consumers as part of a larger subscription package or to drive device sales by promising interoperability.

Apple is now offering Warner Bros.' television content through its popular iTunes store. Television shows like "Friends," "Babylon 5," "The Jetsons" and the never before seen pilot episode of "Aquaman" are now available. (Calls to agent Ari Gold were not returned.)

Apple has already sold 35 million videos through its iTunes storefront, which clearly puts it in the leadership position. A few months back, Steve Jobs sold Pixar to Disney and is now the largest single shareholder. Apple already has deals with Disney offering episodes of "Lost," "Desperate Housewives" and other prime-time television content.

Microsoft's Zune is about to launch with an enormous marketing effort. MS has also been aggressive in gathering first-run content. Apple is continuing to push studio and record music content from Warner and others. Interestingly, Warner was co-helmed by Terry Semel, who is now the CEO of Yahoo!. Given Mr. Semel's studio relationships and the macro environment, we expect Yahoo! to start announcing more deals as well.

Google announced earlier this week that it will infuse live traffic data in its mapping application that can be accessed from Web-enabled mobile devices. Live traffic data is available on Yahoo! Local and in the newest release of Windows Live Local, but neither company has ported the functionality to mobile mapping products. We expect that they will soon, given that mapping has thus far been a highly competitive area for which rapid feature development has been characteristic.

This will follow into the mobile content world, where significant growth opportunities exist for mobile local search applications by portals and smaller third-party application developers, such as InfoSpace. This San Jose Mercury News piece explores how portals are increasingly creating programs specifically designed for mobile devices and are putting more resources into developing mobile Web applications. Yahoo! in fact announced last week that it has reached an agreement with Motorola to have the Yahoo! Go personal content platform preloaded on tens of millions of mobile devices. When it comes to carriers however, smaller application providers are preferred over portals, as the Wall Street Journal pointed out today (via Greg Sterling).

It’s clear that mobile content delivery represents a large opportunity in both mapping and search as well as entertainment, news and sports content. IDC expects as much, as does Microsoft. As Matt Booth reported in the previous post, Microsoft will launch a mobile entertainment device that unlike the iPod will have more functionality for accessing and downloading content.

Mobile content delivery, mobile search and their monetization strategies (paid content, subscription pricing or targeted mobile marketing) will all be dynamic areas to watch in the coming months and will continue to involve a great deal of experimentation in the marketplace to discern user preferences and to establish positioning in what will likely be a large market for local search.

Prolific journalist and blogger Mark Glaser takes a detailed look at social media and community-edited news. More specifically, he asks whether the users who do the tagging, reviewing and in some cases editing that fuel some news sites’ notable success (i.e., Digg) should share in the fruits of that success. In other words should they be paid? Longtime blogger and Weblogs founder Jason Calcanis (now with AOL, leading Netscape’s comeback) thinks so. Digg CEO and Cofounder Jay Adelson doesn’t. An interesting read.

This applies in some ways to social search Web sites such as Insider Pages, Judy’s Book and Yelp that utilize user participation to populate their sites with value-added ratings, reviews and commentary. This can be a valuable source of trusted content, but stimulating user participation has been a challenge. Like Digg, some social search sites have incented user participation by giving them an online identity and a place to have a local voice that is set around the reviews that they create. Insider Pages has also come up with interesting ways to stimulate community interaction. This is an interesting model that gains a virtually free source of trusted content on local businesses, given that professional reviews have proved to be a major expense for local sites that have attempted to provide them (i.e., Citysearch).

One downside, however, is that until user participation reaches a certain level in a given geography, reviews can be sparse and inconsistent across the entirety of business listings in that area. Similarly, applying this model across different geographies with different overall proclivities for social media (i.e., San Francisco vs. Omaha) can create challenges. Motivating these reviews is therefore an important challenge for social search sites. We'll explore this challenge and others, and survey the social search space in an upcoming report.

Kate Bowler of Platefood points out that Platefood Performance is a PFP platform and not, as I suggested, a local search platform. It may well be that the Platefood engine will be licensed by World Directories to complement the Local Matters local search engine.

News from World Directories that the company has chosen Local Matters to power its local search platform. This is a particularly interesting win for Perry Evans and team as it presumably beat out competitors Platefood — a collaboration of Sensis and FAST — and most likely Amdocs. For Local Matters this news should bolster its efforts to go public. It also suggests that Andrew Day and team have moved beyond their Sensis experience by not selecting either Platefood or Amdocs. The win for Local Matters should give the company additional momentum in lining up other directory and local search players in the European and North American markets.