Citysearch announced today that it has shifted its ad model for small businesses, moving from the cost-per-click model that it pioneered several years ago to a new model that will drive consumers directly to their own Web sites. The new model provides advertisers with a complete range of SEO and marketing services across the CityGrid network of 100 Web and mobile partners.

The new services are being offered as “CityGrid Complete,” and will use Orange Soda as a partner. As part of the announcement, Citysearch also announced an investment in Orange Soda, which competes with the likes of ReachLocal, Yodle, WebVisible, Marchex and MatchCraft to resell search engine advertising and optimize content. Orange Soda currently works as a reseller for media companies such as Gannett and Freedom Interactive, and also works with franchise operations such as Remax and Jiffy Lube.

Neil Salvage, Citysearch executive vice president of sales and service, said the announcement is consistent with the enlargement of his own job description, which now includes product development on the merchant side. Salvage acknowledged that Citysearch has had a “not robust” search engine marketing platform, and has been searching for a better solution for 18 months.

“We talked with everybody,” Salvage said, and came to the conclusion that Orange Soda is a superior solution with a “robust back end oriented system.” Its SEO solutions “fit somewhere between ReachLocal and Yodle,” he added.

To Salvage, what’s really important about the announcement is that Citysearch is moving away from its complex cost-per-click sales model and toward a fixed-fee model that will boast a wide bundle of services. The move should allow Citysearch to increase its monthly yield from$600 to $800 per advertiser to more than $1,000, said Salvage. “That’s where we need to be.”

Cost-per-click overemphasizes the reseller factor and has become “old school,” added Salvage. “It was built to go after Yellow Pages, but wasn’t really appropriate because the Citysearch product set did not really support that. It was an entertainment site. Now we want to focus our time and energy on platforms and the process,” he says. “We are focused on signing up more publishers, not on owning the [SMB] relationship. ”

Citysearch CEO Jay Herratti is a keynote speaker at Marketplaces 2010, which is taking place March 22-24 in San Diego.

Zvents, the events lister, is reporting 35 percent year over year growth with over eight million unique visitors, largely due to its powering events for 285 local media brands, including  major newspapers and the NBC owned-and-operated TV stations.

CEO Ethan Stock cites Quantcast data showing Zvents Media Network as the 250^th most used net on the Web, ahead of Citysearch (#267) and Local.com (#291). “We’re a very large local property by any measure,” he says.

The company, which has raised $32 million over its five year history, also claims it has been averaging 12,000 monthly event listers. These use the site to promote a wide range of local events and activities, including live music, performing arts, sporting events and community activities.

Of those listers, roughly 1200, or 10 percent, are now boosting their presence by taking out ads via self–serve – a percentage that Stock thinks will climb to 20 percent in 2010. The company also sells regional and national accounts via telemarketing and national sales, with top categories including major concert promoters, sports teams, casinos and  home and garden events.

High end shopping, with its sales-oriented events, such as Williams Sonoma cooking demonstrations, are also becoming more important to Zvents bottom line.  “There is a significant segment of consumers who perceive shopping as entertainment,” says Stock.

The key to the company’s future in local, however, is to stay away from the trap of focusing on directory-type advertising. Instead, Zvents will stay focused on events and shopping, he says, which have the most highly motivated advertisers. “They are also relatively concentrated in terms of the volume of advertising.”

Indeed, the company’s focus on events and advertising puts it most in competition with social sites such as Facebook and Google, rather than local sites such as Citysearch and Yelp, who may be more directory oriented, says Stock. Other events oriented companies include Eventful, and “new city guide” players such as Center’d and American Towns.

In hindsight, the company’s initial focus on teaming with newspapers “look like a very smart choice,” adds Stock. While newspapers are commonly disparaged in today’s climate for their declining circulation and advertising, “they have high repeat traffic. Much more than national partners.” Top Zvents newspaper partners include SFGate, the Denver Post, Seattle PI, Boston.com, the Dallas Morning News, the Atlanta Journal Constitution, New York Daily News, and the Orange County Register.

Stock also sees a major boost coming from renewed efforts in local from national partners such as AT&T’s Yellowpages.com, which has been an investor in the company ; and from MSN, where Zvents listings will be showing up in Bing, and trigger Instant Answers via Silverlight search.

Citysearch officially rolled out its CityGrid publisher network this week. The network moves Citysearch away from an exclusive focus on its individual sites (“Citysearch.com,” “Insiderpages.com,” “Urbanspoon”). Instead, it works on a distributed basis with partners (i.e., “SuperPages”) to marry local content and advertising.

In the short term, CityGrid represents the new face of Citysearch and the next evolution in the local market. It allows the company to leverage its existing infrastructure and content, and reach down into the distribution channel with a more automated and cost-effective option versus a focused business development effort. For its publisher network, and its 500,000 local advertisers — projected to jump to 750,000 by year-end — it also represents a real alternative to Google.

Overall, our enthusiasm for the product is as high as it was when we were first walked through it some 14 months ago. Here’s why we like it. The local market fundamentally suffers from two broad problems. First, it’s hard to make money without a substantial investment in sales. Even then, success is not assured. Second, content is expensive to create. Yes, user reviews can be acquired, but there are still large swaths of categories that still lack deep engaging content.

In theory, CityGrid addresses both problems. It gives small and large developers local content and local monetization together in package. The power of this cannot really be underestimated since both of these are hard to come by, not to mention expensive. Urbanspoon used this to great success and eventually was acquired by IAC (Citysearch’s parent). Nearly every review and ad on Urbanspoon was from Citysearch.

We have seen some reports that this product is a reaction to other companies in the field entering the space. It’s not. If anything, it simply takes the winning strategy of opening up an API to developers and letting them build products on robust infrastructure. Think Google Maps, for example.

To our knowledge, there is no one else doing this model with the same scale and focus. Indeed, 100 developers signed up to work with the API within the first two days of its release. We expect, however, that more people will enter this market quickly. But not before Citysearch gets a major head start, if Citysearch CEO Jay Herratti gets his way.

“My vision is [that it will become] the leading content and ad network for local,” he told us, adding that it is no longer just about Citysearch.com as a destination site. “This is Citysearch,” he says. “It isn’t distributed in one place. It is part of many places, all around the Web.”

The result also provides an alternative to Google. “We look at what Google is doing with local as a major competitive threat,” says Herratti. “It controls access to the Internet.

“Last year, we were building and rebuilding,” Herratti notes. “This year, we are very, very focused on execution.” Still, the current product is relatively primitive and will be rapidly evolving. “Right now, we are talking about version 1.0” he says. “Twelve months from now, there will be new geotargeting solutions, new ways of creating content. We’re taking all of these pieces and putting them together. The next thing is to optimize, and optimize.”

Center’d started its mission in June 2008 like most city guides, albeit one largely aimed at women and planning. But over time, the local space has changed. And the site itself has refocused to meet “the missing pieces” in local.

CEO Jennifer Dulski and CTO Chandu Thota, in a conversation with us, say they’d encountered  a noisy ecosystem of local sites suffering from content overload and meaningless, one-dimensional user-generated content that gives four stars + to everything. “There is certainly not a lack of content,” says Dulski.

Their solution: comprehensive information and deeper context. Dulski, the former head of Yahoo Marketplaces, says the Center’d team has spent the past year building “Sentiment Analysis,” a data platform that pulls in and analyzes data and language from social media sites, maps and other sources. “It is more robust than it appears at first glance,” she says, noting that it actually understands language, while most sites are focused on a keyword approach.

The platform, which has some similarities to Marchex’s OpenList, “understands food terms. We know that salmon and crème brulee is food.” The presentation of the analysis is also more complex, showing sentiment as a series of bar charts, rather than simple “star” systems.

“One piece of this is like Zagat,” the popular ratings company, says Dulski. “But it is much broader,” partnering with sites such as Topix, Mobimissimo, Insequent, Silicon Valley Moms Blog Network and various other local and travel blogs and Web sites (a few dozen or so). At the same time, Center’d’s own count of city guides has expanded from 12 to 50 cities.

The site has also added a Twitter page and a popular iPhone app. Dulski, in fact, projects that mobile is going to play an increasingly important part of the city guide business, perhaps accounting for 50 percent of usage within a few years.

Three years ago, BIA/Kelsey created the Marketplaces research program and conference because we saw that local advertising was quickly “verticalizing.” Indeed, money and talent have poured in for the new breed of vertical products that would take their place among existing vertical success stories, such as AutoTrader, Cars.com, Realtor.com and ServiceMagic.

The Marketplaces 2010 conference reveals just how fast the industry has evolved. This year’s event, now under construction, is set to highlight all the major trends in Marketplaces, including:

• AOL’s $50 million investment in Patch.com, and ongoing transformation of its Mediaglow vertical properties (and Mapquest)
• eBay’s renewed efforts to build up classifieds as entry-level e-commerce via Kijiji, eBay Motors and other services
• Examiner.com’s  big bet on local/vertical content, and its network of 26,000 “examiners.”
• Groupon’s “smart mob” theory of local commerce, backed by a $32 million investment, that allows hundreds to make a volume purchase of local services and products.
• Redbeacon, AlikeList and others’ efforts to remake ServiceMagic-like home and trade leads with social media
• Adify and Pulse360’s  bid to verticalize ad networks for local merchants and national brands
• OpenTable’s big bet on mobile to let diners make reservations wherever they are.

The two-day conference takes full advantage of its location in sunny San Diego. It includes rich research presentations, top-flight demos of the latest services, and a preconference showcasing all the best tools of Marketplaces 2010. Come to San Diego March 22-24 to learn, enjoy the unbeatable networking and participate. You can register at early-bird rates here.

CONFIRMED SPEAKERS (in Alpha)

• Ethan Anderson, CEO, Redbeacon
• Jeff Beard, CEO, Localeze
• Rick Blair, CEO, Examiner.com
• Jon Brod, EVP, AOL*
• Craig Donato, CEO, Oodle
• Jim Delli Santi, CEO, AlikeList
• Todd Dubner, SVP, NCI
• Russ Fradin, CEO, Adify
• Krista Glotzbach, VP, Vast.com
• Mark Goldstein, Chairman, Loyalty Labs
• Martin Herbst, GM, Kijiji U.S., eBay
• Scott Jampol, Senior Director, Marketing, OpenTable
• Jaan Janes, CEO, Pulse 360
• David Kidder, CEO, Clickable
• Steve Larsen, CEO, CallSpark
• Andrew Mason, CEO, GroupOn*
• Colin Pape, CEO, ShopCity
• Ben Saren, CEO, CitySquares
• Craig Smith, President, ServiceMagic
• Mat Stover, CEO, Local Matters
• David Vazdauskas, President, Local Thunder

*keynote

New York Magazine, whose online effort is run by longtime MSNBC.com exec Michael Silberman, has emerged as one of the most ambitious city magazine efforts on the Web, competing directly against city guides and other local services. Yesterday, the site, which leverages a sales force of 100, announced a partnership with Clickable to power its local online advertising.

Clickable itself is gaining steam. The company has expanded beyond its roots in vertical search to include a platform with display ad management as well. Last week, it announced a similar deal with Fox Audience Network.

CEO David Kidder tells us that more than 2,000 sites are currently using the Clickable platform, which provides access to Google, Yahoo and Microsoft. Kidder says that Fox is rolling out the platform in two phases. The first phase will utilize Clickable’s performance-based model. It is a lot of strategic positioning for inventory and integration. The second phase will include several enhanced features, such as click to call.

Mapping has become less about radius of where you are and more about what people define as local, how far people are willing to travel and the importance of certain events or locations in their community. While the advertising paradigm has focused on ZIP codes/postal codes, consumers identify more with neighborhoods or specific areas of cities, which sets up a major disconnect.

The clear trend is the linking of social and mapping to drive action and to link people with their network of friends or favorite bands or events. According to Julia Scott, CEO of Bargain Babe, “linking social and mapping allows people to surface activities and deals that you may not be aware of.”

The goal, according to Darrin Clement, CEO of Maponics, is “to add more context to maps to help drive actions on a localized basis and to understand what is most valuable to the consumer to see on a map.”

A unique view of mapping came from Jason Bosek, president of Parking Data Ventures, who said that “parking is a point of necessity to allow people to utilize and take advantage of destinations particularly in urban areas.” Parking Data Ventures is an example of how mapping is becoming more specific to the needs of consumers beyond what is nearby to how to enable getting and staying in a particular location.

One of the main challenges of mapping pointed out by Clement was that “people’s ideas of local are more personalized to their neighborhoods and cities requiring sites to redefine what they consider local and offering layers of mapping choices to better match needs.” With this more personal view of what is local people are seeking ways to find friends, their favorite bands, sports and recreation activities on what they determine is a reasonable distance to travel or walk.

All this will force marketers and site owners to think more like their consumers and offer the mapping choices they need based on the type of search they are conducting and how they plan to travel to the location they have designated.

Neil Budde of DailyMe and Mike Orren of Pegasus News helped the ILM:09 audience understand what it takes to offer a truly customized news offering that is engaging and relevant.

One of the key takeaways both Orren and Budde discussed was the idea that not everything can or should be customized on the news site. Orren pointed out, “if we customize too much for the customer we take away those items they might stumble upon and become interested in following in the future.” Early days of customization meant sites were built and rebuilt for users as their choices and interests changed, requiring more administration and oversight to make things work effectively. One of the side effects of too much customization is that people were not aware of the level of customization, which took away from users promoting the value of the site to others.

Behavioral tracking is a necessary level of customization as people often say one thing and their behaviors might suggest another. Orren joked that “some people say they like champagne and opera then do searches on cheap beer and honky-tonks.” Without behavioral tracking the site would not have the flexibility to react and adapt to new interests. Budde added “there needs to be a mix of traditional editorial that is constant with personalized choices and behaviorally driven content to make it relevant and valuable.” Behavioral targeting is also valuable in advertising delivery not only for consumers to see items of interest but in more specific targeting for advertisers to reach those who might be more engaged in their products or services.

Orren pointed out, “the goal is to reach those consumers with high levels of interest and engagement to drive more value to advertisers in the way of sign-ups, redemption or attendance.”

Editorial content is one of the greatest drivers and one of the greatest cost issues for localized new sites. Data analytics is becoming a significant tool in helping to identify content trends based on what people are searching for and what they might be reading.

“DailyMe analyzes topics of interest and queries to determine editorial gaps to drive editorial focus or the need for additional freelance writer support to meet emerging needs,” Budde said. The reality of making a hyper-local news site work is a small dedicated editorial staff that not only creates new editorial but can be the aggregators of relevant news from other resources or local bloggers who are viewed as content experts.

The trend in news is definitely focused on delivering personalized content and local information in a single location to make it relevant and easy to access. The goal is to strike a balance between what consumers ask to be shown and what might be of interest either at the moment or what might be an emerging interest.

In a wide-ranging interview this afternoon at ILM:09, ILM Program Director and conference chair Matt Booth tried several times to pin the Yelp COO, Geoff Donaker to the mat. But the unflappable and diplomatic Donaker just wasn’t going to go there.

Donaker spoke with surprising humility about Yelp’s phenomenal growth, from around 14-15 million uniques in late 2008 to some 26 million uniques last month. He emphasized Yelp’s focus on “Quality over quantity” when it comes to building their inventory of reviews. He highlighted their “one city at a time” growth strategy, which seems almost counter-intuitive in our era of buzz-driven hockey stick growth expectations.

In fact, Donaker maintained that it is exactly this ‘go slow’ approach that is responsible for Yelp’s success and staying power in the review/social network space.

For the data hounds out there, Donaker offered up some juicy stats, e.g:

-Restaurant reviews comprise 29% of Yelp’s inventory of reviews

-Reviews of various retail establishments comprise about another 22%

-Reviews of nightlife venues are (surprisingly) small

-Many Yelp reviewers post reviews in multiple categories – effectively using Yelp as their “lifestyle blog”

-Yep now has “community managers” in about 33 metro areas in the US and selected international markets

-Yelp has about 300 employees total, of which about 200 are client-facing

-They have over 100 partners who republish Yelp’s content (with permission)

And finally, back to Donaker’s diplomatic style:

Booth asked several questions about competitors, such as Google with its Favorite Place program (scannable window stickers for businesses that when scanned from an appropriate mobile device, take the user to the Google location with business profile and other information on that business). Booth also asked about AOL’s announced intention operate local sites in 100 US communities, in direct competition with Yelp.

To these questions, Donaker’s response was, in so many words “this continent is big enough for all of us”.

The New York Times weighs in today on whether hyperlocal sites will fill the local coverage gap left by shrunken or collapsed newspapers — never mind that newspapers themselves have only recently rediscovered neighborhood-level news themselves. Almost of their attention has been on broader, metro-wide coverage.

We’re delighted to be included in The Times’ piece. Our view on hyperlocal is similar to the one expressed in the article by Everyblock’s Adrian Holovaty: “We have a very liberal definition of news. We think it’s something that happens in your neighborhood.”

This isn’t necessarily the approach embraced by journalism-centric groups. Most are focused on the city council meeting or tax rolls and other avenues of the professional journalist. As it turns out, the interests of journalism aren’t always synonymous with the broader interests and engagement of the community.

The approach of The Knight Foundation, the biggest backer of hyperlocal, is more a step in the right direction. Although Knight clearly has its roots (and money) from journalism, and is closely tied to J-schools, its mission has been nicely defined as funding experiments in “social innovation,” “economic development,” “citizenship and civic engagement,” and “neighborhood sustainability.” It has funded 35 projects to date.

Do the interests of local businesses fit in here somewhere? Perhaps a little, especially on the elusive “sustainability” front. But it has never really been a focus. Surely, we need something that serves as a middle ground between the bar hopping in Yelp, the plumber reviews in Angie’s List, the rock concerts in Eventful and local news coverage.

Trust me, the city council meeting isn’t always, or even usually, as captivating as a remodeling of a favorite department store; the onetime class taught by a famous chef at a gourmet store; the opening of an eBay drop-off store; the happy hour special at a local restaurant; or the 80 percent closing sale at Home Expo (or Circuit City or Bed Bath and Beyond).