I’m slowly getting around to catching up with all of the local search companies that received accolades at the TechCrunch50 show earlier this month. Rounding out the list is Yext, a company that characterizes itself as a “pay per action” provider.

Essentially what this means is that it has a dashboard for advertisers to organize quality calls from bad calls (wrong numbers, telemarketers, etc.). This comes down to the longstanding issue that pay-per-call providers often charge advertisers for all of the above.

Discerning the quality of calls is accomplished through a patented voice processing technology that picks out keywords that advertisers specify they’re looking for. An auto mechanic might identify words like “transmission” or “brakes” and pay for those terms through an AdWords-like bid system.

Transparent Intentions

From there, the system does its work, weeding out good calls from bad. The main point is that advertisers are only charged for the “good” calls. The system also accomplishes a feedback loop where good sources of calls are identified and future ad placements (where those calls generated) can be optimized.

A question of transparency came up when talking to the Yext executive team — fresh on my mind from last week’s DMS discussions around YPs moving toward more transparent lead-based pricing. The question, as it applies here, is how only charging advertisers for good leads affects top-line revenues and ARPA, if negatively.

“As we pushed towards letting people bid on certain actions, our research shows that it’s going to drive prices up, not down,” says Yext CEO Howard Lerman. “Yeah, people might bid down ‘oil change’ from $10 to $8, but it’s offset by bidding up ‘transmission repair’ from $10 to $30.”

Good answer. Meanwhile Yext will scale by working with publishers that wish to attract advertisers with this pay-per-action model. They do this by integrating Yext numbers into their media, such as an IYP, thereby channeling calls into the Yext system.

Yext then splits the revenues with the publisher partner. For larger publishers, there is a sales cycle and a handshake, but smaller publishers can also plug right into its system and are encouraged to do so. So far it works with Topix and Yellowpages.com and serves about 20,000 advertisers and growing.

Making the Phone Ring

Eventually, a third dimension will arise where Yext licenses out this call management dashboard to businesses of all sizes that want to automate quality control. There are lots of enterprise or customer service applications that come to mind.

But for now it’s all about driving leads to SMBs. Its top categories are service-based businesses for the obvious reason that they value calls most (as opposed to clicks). These are also categories that have a corpus of “conversations” that are easier to process and define. But it’s mostly about the higher yields.

“The verticals we’re going after first is actually a pretty simple formula,” says Lerman. “We look at Yellow Pages spend.”

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Related: Speaking of TC50 companies, Peter Krasilovsky and I also had the chance to speak with grand prize winner Redbeacon. Peter has a report coming out on the subject and we’ll provide info here as well.

I just received an e-mail from Aloqa CEO Sanjeev Agrawal regarding the release of the product’s API for iPhone, Android and BlackBerry.

In our last writeup on Aloqa, one of the features highlighted was the ability for businesses to create a branded “channel” within the Aloqa app. The benefit here is that it’s much cheaper than building your own iPhone app and could even get found easier, given the increasing amount of noise (85,000 apps) in Apple’s App Store.

From the e-mail:

Aloqa’s API provides websites and other content publishers with location-relevant content to get their content to mobile users across all key smartphone platforms at zero cost. Any publisher with geo-spatial content can now create their own “branded channel” on Aloqa instead of having to build their full mobile application – so no cost of designing, building, porting or maintaining an app across multiple platforms and devices.

Example: A publisher with content on great things to do in Napa Valley can simply use Aloqa’s API to create a “Napa Activities” channel simply by making their content available as an RSS feed containing simple geo-tags (e.g. as a KML or GeoRSS feed). Once the channel is created, they can then let their users know how to find their channel on Aloqa.

The level of market reach for participating SMBs will depend on how widely Aloqa is adopted and used. In typical chicken-and-egg fashion, the application’s content will in turn drive this usage, but hinge partly on businesses that create channels.

The challenge for Aloqa could therefore lie in marketing this API to businesses, and convincing them this is something that’s easier and cheaper to do than building an iPhone app. Indeed, many SMBs aren’t really there yet. Aloqa is thinking in these terms though; the API comes with a style guide and set of “how to” guidelines to get started.

Caught up with Bill Dinan after our Directional Media Strategies event last week, where he sat on a panel that I moderated called “Fixing the Yellow Pages Business Model.” Much of the session content centered around pay-per-call models.

The same day, Dinan’s company, Telmetrics, issued a press release titled, “Telmetrics Urges Traditional Media to Move to Performance-Based Revenue Model at The Kelsey Group’s DMS ’09 Conference.”

In our conversation, Dinan made clear that he doesn’t believe the Yellow Pages business is going 100 percent pay per call, but he does believe it will become the largest revenue category, from overwhelmingly subscription today to 70-30 in favor of performance pricing within a few years.

“It will stabilize at that level,” Dinan said. “Subscription pricing will always be there.”

Not everyone agreed. On the same panel, Mike Boyce from R.H. Donnelley was skeptical that pay per call will represent more than 25 percent of RHD’s revenues in the future. He believes most small-business advertisers prefer the stability of subscription pricing, but just want to know their advertising performs.

What is clear to us is that the industry is moving to a model that is more transparent and performance driven. We would expect a mixture of pure PFP, traditional subscription and hybrid models that combine fixed fee and performance guarantees will coexist for some time to come, and the models that drive the best KPIs (ARPA, retention, growth, etc.) will dominate over time.

The San Diego News Network announced ambitious plans to expand its template for local news, sports, events, lifestyle and entertainment, to 40 North American cities in the next 30 months. The company, renamed  The U.S. Local News Network, already has sites in San Diego and the southwest portion of adjacent Riverside County. It is set to launch in Orange County before the end of the year. The company has raised close to $2 million.

CEO Neil Senturia, CEO of USLNN, a longtime high-tech entrepreneur, said in a statement that “our business model is the future for how local news will be reported and consumed.” The model involves a mix of local reporting, user-generated content, and syndication to local sites such as TV and radio stations, and local cable.

President Chris Jennewein said the site’s model is very much tied to developing local advertising and that the ties with local media companies are partnerships rather than intended as revenue generators. In San Diego, the site has been heartened by ad sales to many of the area’s largest advertisers, including Sempra Energy, Barona Casino, Ace Hardware, Ultra Star Cinemas, La Jollas Playhouse and Rancho Financial Mortgage Center. The site has also sold ads to local restaurants and retirement homes.

Jennewein adds the site will keep its San Diego headquarters, and is adding to its staff in small increments as it expands to other markets.

Facebook is tweaking its approach to advertising, given the realities of what’s effective in social media, according to Facebook Director of Monetization Tim Kendall, who was speaking at TargusInfo’s Online Lead Quality Summit last week in Las Vegas. The problem is people who are visiting social networks are not explicitly in “consideration mode,” he noted.

For instance, “we targeted fans of ‘the Washington Redskins,’ ” said Kendall. “It really wasn’t a good way to reach a consumer.” What happened is that Facebook and its advertisers fell into the classic trip of trying to “transpose” a search campaign. And that ends up disappointing everyone.

“People have a very high commercial intent when they are making a search,” Kendall said. But they have very low commercial intent when using Facebook. “Eighty-four percent of social campaigns don’t measure ROI.” It is also a challenge to scale social content.

But there is still a great deal of potential with social media –including local applications.  “It is compelling because it is about your friends,” said Kendall. “It is directory utility consumption. What is better than a friend saying, I’m going to a movie?” he said.

For a social campaign, what Facebook has learned is that it is more effective to switch the query target to a people or subject target. Or instead of using a term such as “digital camera,” use “photography.”

Ultimately, Kendall suggests the scale issues will be met by the broader uses of Facebook outside the Facebook URL. “The experience might be less defined by Facebook.com,” he says. “With Facebook Connect, there are more mechanisms, more social opportunities.  Facebook might be an application that goes across the Web.”

I missed this until now but Sarah Lacy at TechCrunch has an interesting post on Internet radio business models. This is told through the story of Pandora, which had a few brushes with fatality, since being alleviated by grassroots action, funding and a favorable RIAA settlement.

I’ve been a big fan of Pandora for a while, including the technology behind it. It is rooted in the Music Genome Project, which algorithmically recommends songs based on attributes of the music you like. It takes into account the beats, tempo and other things, rather than behavioral targeting or “other people also liked…” This makes it a novel discovery engine, which has caught fire and doubled its user base over the past year.

Combining the discovery aspects of radio with two-way IP-based communication has meanwhile opened the door for affiliate revenue from iTunes purchases — something terrestrial radio is beginning to look at in its possibilities for transmission to mobile devices (something we’ve explored in the past).

Mobile is in fact another factor that has caused Pandora to gain popularity so quickly. The growth of smartphones and the mobile Web has caused rich media streaming to become more portable and services like Pandora to find a natural home.

This could be one reason for the radio industry to take a more earnest look at the mobile opportunity — given that it is a longstanding media that is 1. inherently mobile 2. the original music discovery engine. Music discovery that is integrated with a device capable of two-way interaction is, however, where a new opportunity lies.

This is where things not only get interesting with affiliate revenues for song purchases, but also for things like local event promotion. From TechCrunch:

Pandora also has more creative ways of advertising. Westergren also talked off camera about a recent gig in LA for Aimee Mann. Pandora sent an email to users in driving distance of the club that it knew loved her music and the venue quickly filled up. “Can we do this every night?” the club owner panted.

Pandora didn’t charge the club anything for this, but there’s clear opportunity to do so. This kind of promotion plays directly to Pandora’s strengths especially now that it’s on iPhones, Palm Pre and Android.

It’s an interesting take and we’ll likely see the company move in such directions as it continues to evolve its business. Read the rest of the article here, including additional commentary from an NBC Press:Here interview with Pandora CEO Tim Westergren.

There has been kind of a disconnect for me in former Web.com head Jeff Stibel’s twin identities as a top local executive, and as a brain scientist. Not anymore. In a provocative and valuable new book, “Wired for Thought,” Stibel lays out a solid case that the development of the Internet parallels the development of the human brain — only the Internet doesn’t suffer from poor memory and slow processing speeds.

Things have moved quickly since the early 1980s, when I learned in a psychology class that the development of computers was based on human thought patterns — behaviorism. That’s too limiting for Stibel, who looks to the Internet and its free flow of billions of connections as the correct analogy for brain development.

But what is it about the brain science that excites Web entrepreneurs like Stibel and former Microsoft research head Nathan Myhrvold? On the outer stretches, Stibel has developed technology that enables paraplegics and others to use implanted brain devices to turn on lights and manipulate TVs and computers.

But more practically for us, Stibel looks to social networks and search as direct beneficiaries of brain science. Yahoo’s hiring of hundreds of librarians in the 1990s to catalog the Web just wouldn’t make any sense today, he says. Indeed, linguistics is the more appropriate field of research to really understand how search will eventually climb the frontiers of “artificial intelligence” — a phrase that Stibel disparages.

Newspapers can still win with a hardcore community focus in their journalism and advertising, and a renewed emphasis on print. Or at least, that’s s the message delivered by Ed Moss, the newly installed publisher of The San Diego Union-Tribune, which was sold a few months ago at a fire-sale price to Platinum Equity, a buyer of troubled properties.

Moss, who was interviewed on KFMB-TV’s Sunday morning talk show, said the paper is focusing on “micro-zoning,” with 19 different zones within its circulation area. A plumber could target 13,000 readers in Scripps Ranch, he noted. It isn’t necessary for him to spring $800 or more to reach beyond his territory. The new orientation is consistent with the new sales staff brought in. In fact, the new sales leader is a veteran of PennySaver.

Moss also said that the paper, whose daily circulation has just fallen below 300,000, still has 175 journalists on board, and they will similarly focus on providing hard-core community news. It seems unlikely, however, that the 19 advertising zones will be replicated with the paper’s content zones, which are currently split in five.

What Moss didn’t have on-air time to address was the strategy for SignOnSanDiego. The paper, however, apparently doesn’t have expectations that it will be a major contributor to the bottom line. Mostly, SignOn will be supported to complement print content and to stave off online competitors such as local TV stations and The San Diego News Network, whose president is former SignOn leader Chris Jennewein.

Here is the roundup of coverage from last week at DMS, in case you missed any posts.

CityVoter, the “best of” city service that works with local broadcasters and newspapers, says it has passed the milestone of 3 million votes. The company gets about 1.4 million unique visitors per month and is on pace to increase annual page views to 70 million in 2009. This is nearly 100 percent year-over-year growth, even though the company has dramatically cut back its employee count.

CEO and Founder Josh Walker says the company has raised roughly $5 million to date, and is nearing profitability. As CityVoter has zeroed in on its core mission of promoting the best small businesses in a community, it has grown more efficient and become more effective. It currently has more than 60,000 SMBs engaged with the company.

“We’ve really carved out a niche supporting brands and publishers,” he says. “Two years ago, we looked like a directory” and weren’t really hitting the marks.

Key to the company’s efforts are the “best of” contests that are its hallmarks. The cities where CityVoter has the strongest brands have had “best of” contests promoted by TV station partners and by local businesses themselves. Roughly half the traffic comes from broadcast and newspaper partners, while the other half comes from the CityVoter.com destination site.

Walker says markets such as Detroit, Denver and Indianapolis have prospered in this manner. Detroit had 180,500 votes, Denver had 109,000, and Indianapolis had 95,000. Conversely, “You won’t see Chicago doing very well” because it hasn’t yet conducted a  “best of” contest.

The Detroit relationship with WDIV-TV, a Post-Newsweek station, actually makes for a good social media case study. The eight-week “best of” contest not only drove 180,000+ votes, but more importantly, drove 86,000 recommendations. It also saw a 25 percent increase in businesses competing, and an 86 percent increase in user accounts created. “This is fantastic local energy and enthusiasm for one of America’s most economically depressed cities,” notes Walker.

The key to WDIV’s success was that it incorporated the contest into its news broadcasts and provided fun promos. It also built on-air anticipation about the results by making a big deal about the “secret ballots.” It provided businesses with “best of” signs and “best of” balloons, and filmed businesses as they were notified that they were winners, Publishers Clearing House style. Walker notes that CityVoter is working with at least 10 other stations that have engaged in similar efforts.

Its efforts with newspapers play off different strengths. The San Francisco Chronicle, for instance, has launched different “best of” sections with three or four editions conducted at different times of the year. For instance, it has separate winery and restaurant sections. “The winery voter is not the same as the local gym voter,” says Walker.

Newspapers remain challenging, however. “There is a constant fight with editorial about user-generated content,” he says. There is something to that. Newspaper editors are leery about hiring non-union writers for special sections. They are also leery about users stuffing the ballot box — an ongoing focus for CityVoter and others in the field.

Besides the local media partnerships, Walker says CityVoter has done very well piggybacking off national promotional efforts. For instance, it has been working with NBC’s “Biggest Loser” and OfficeDepot on its recent “Survival of the Smartest” SMB contest, which gives tips to SMBs on how to survive in tough times.