Vertical businesses that have relied on Yellow Pages and newspapers and other classified channels aren’t always seeing the same performance-based results that they might expect in the Google age. But many of them also aren’t likely to become keyword experts, or spend a lot of time managing their accounts. That’s always the SMB dilemma, right?

That’s what Reply.com is focused on. The two-year-old, 125-person company, backed by $17 million of venture capital, provides vertical advertisers with “enhanced click” packages and validated leads, complete with leads scoring. In addition, advertisers using Reply.com’s auction-based system can filter locations, and put caps on spending and cost-per-click rates.

Vertical segments targeted by Reply.com include key leads categories, including home insurance, health insurance, life insurance, education, auto finance, mortgage, used cars and auto insurance. Auto and real estate segments make up the biggest segments, with 60 percent to 70 percent of Reply’s customer base. Under Reply’s system, each category is customized for the particular aspects of a vertical.

One key differentiator is that the targeted categories are typically not “inventory based.” They may be new cars, rather than used cars; mortgage, or pure relocation leads, rather than search-based rentals leads.

Reply CEO Payem Zamani suggests that Reply’s clicks and lead offers are more efficiently processed than typical ad exchanges, in part due to narrowing the market base with geotargeting and a system for discerning consumer intent. The company is processing 9 million clicks per month, and 1.58 million leads, with customers for its auctions including auto manufacturers, major media companies such as Hearst Newspapers, and vertical sites such as RealEstate.com and Autobytel. The company also works with several of the search engines, SEO sites and e-mail providers.

The basic idea is to create a “Google-like” platform for acquiring traffic, says Zamani. Reply’s knowledge of user intent and location — driven in part by the installation of a pixel to track users — really streamlines the process and drives higher conversion rates, he says. Conversion success depends on how deep the advertiser wants to go. Information that goes all the way through to consumer credit cards for purchase will be a small fraction (maybe 0.1 percent) of more general conversions (30 percent to 40 percent) that provide additional information.

Reply.com COO Sean Fox is a featured speaker at Marketplaces 2010, March 22-24 in San Diego.

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

EBay is expected to dramatically boost its efforts in classifieds in 2010, so we welcome clues into its historical and current thinking into classifieds via eBay vs. Craigslist.  EBay has been seeking redress from Craigslist, which has diluted its 28 percent ownership share to 24 percent in a bid to squeeze out its influence. Craigslist, meanwhile, is seeking to force eBay to sell its shares, saying that eBay had an oral commitment to dispose of its shares if it ever chose to directly compete against the company, a la Kijiji.

Highlights: eBay feared Google’s entrance into classifieds via Craigslist, and wanted to buy Craigslist as a pillar for a broad international vertical and classified play.

As noted in AimGroup’s excellent, comprehensive coverage of the trial, pretrial depositions showed that eBay’s initial vision was to merge all its acquired classified titles into a single entity that included Craigslist.  EBay also believed Craigslist wasn’t fully monetized and that it could add immediate value with its expertise in product search, trust and safety and international expansion. Another reason that eBay wanted in with Craigslist was to prevent Google from taking a similar position.

But it quickly became apparent that there was a major culture clash between “Top Down” managed eBay, which sought to maximize profits, and “Bottom Up” managed Craigslist, which was driven by its appeal to its community – a position that it took so seriously that it consciously took out a “.org” URL.

Craigslist also turns out to be very conscious of its public image. Desiring not to look greedy to its users, Craigslist did not publicly reveal that Craig Newmark and Jim Buckmaster received $16 million in “extortion money” from eBay to allow it to receive shareholder rights.

A major issue in the trial is whether there was an agreement that eBay would dispose of its shares if it started to compete against Craigslist, as it did in 2007 when it launched Kijiji, and started buying search ads on Google to divert Craigslist users. While eBay acknowledged that there was some kind of understanding, it was never formally included in a contract. Indeed, Buckmaster testified that he felt  eBay was using sensitive, proprietary information to build its competing brand. He said eBay’s behavior directly led to  Craigslist taking its actions to dilute eBay’s shares.

A decision in the case is expected in early January. The judge in the case has said that both sides will be unhappy with the outcome, and he scolded them for not reaching a settlement.

Facing up to the reality of a real estate market in which many houses for sale end up becoming “shadow” rentals, Zillow has added rental listings and information to its real estate services. At the same time, Zillow is attaching a $9.95 premium for listings to be posted for six months, which represents the first time the ad-supported service has ever charged for listings. The fees include unlimited photos.

Zillow’s new fees, however, will only be assessed for “manual” listings that are not part of the feeds that Zillow receives from its primary sources, which include brokers, 200 Multiple Listings Services and 171 newspapers. Just 3 percent of its listings are said to be“manual,” representing a potential rental listing market of 120,000 units.

CFO Spencer Rascoff says he expects to see strong demand for rental information. The company points to research showing that 25 percent of its 4 million unique visitors are “dual tracking” rents and houses for sales, seeing whether they can get a better deal from renting or owning. “No one expects price appreciation anymore. All you have is an option to pay for a house outright,” says Rascoff.

The rental option gives users an option to view rental costs a la carte, or against “for sale” information. While adding rentals would theoretically pit Zillow against rental publishers such as Apartment Finder, Apartments.com, ApartmentGuide and My New Place, Rascoff says Zillow’s offering is really oriented toward single family homes, or small complexes, while the others are oriented toward large property managers. “A third of rental units are single family homes,” he says. “More than half of rental units are four units or less.”

It would be a pity if The New York Times Co.’s Boston Globe were shut down, because its Boston.com site continues to innovate with local online advertising capabilities. Today, the company’s YourTown hyperlocal sites launched Flyerboards: a virtual bulletin board on which businesses can post “flyers” to advertise their services and events.

The technology behind Flyerboard, by New Haven-based PaperG, automatically converts images into flyers. What makes it different from other print conversion programs is that it also enables various Web 2.0 functionality, including e-mail sharing, social networking and online maps (although vendors like Travidia and HarvestInfo have been adding a host of advanced solutions to their own offerings).

Boston.com’s plans are to initially launch Flyerboard on Newton, Needham, Waltham and Wellesley. Other communities will eventually being added.

One touted advantage of the Flyerboard is that it can be sold on a self-serve basis. Alternatively, publishers can bundle Flyerboard sales with other sponsorships.

PaperG CEO Victor Wong tells us that more deals for the Flyerboard are set to be announced in coming weeks by several additional newspaper companies. “It is already live with 50 Web sites,” largely focused on the college market, he says. For those sites, Wong says it is “outperforming the clickthrough rates of banner ads and Google at a fraction of the cost.”

We’re always looking for what’s up and down in the economy. One likely contender:  garage sales.

According to coverage in the L.A. Times, garage sale postings on Craigslist are up 80 percent nationwide (and 50 percent in the L.A. area).

MySpace and Citysearch today confirmed the launch of MySpace Local, a new local city guide using functionality and feeds from Citysearch, including its taxonomy of categorization, geography structure, search functionality and content. A beta version of the site launches this week, with a general U.S. launch next month. It will be available on the Web and on MySpace mobile products.

The two companies will share ad revenues, but Citysearch CEO Jay Herratti says this deal is more important than that. “We are going to live wherever consumers want to be,” he told us. “The strategy is to make Citysearch an open platform.”

Herratti notes with pride that MySpace Local was “created almost overnight. … It is a complete city guide that rivals Citysearch” in quality. But he insists that MySpace Local won’t be cannibalizing Citysearch’s audience.

There is no cannibalism “whatsoever,” says Herratti. “Users come to the sites with different mind-sets.” While Citysearch and Insider Pages claim 30 million unique visitors a month between them, and MySpace has “millions and millions of users,” Citysearch’s audience comes to the site with “specific local intent.” MySpace’s users, on the other hand, are more likely to use the site for discovery.

While MySpace is using many of Citysearch’s features, it won’t be relying on Citysearch’s reviews. MySpace has its own reviews and review functionality, says Herratti. But at some point, Citysearch might bring in those reviews with MySpace’s brand on them.

As for advertisers, Citysearch’s sales department is managing MySpace Local as a special program. “The offering is free [to businesses], but there will be two layers of premium services available,” notes Herratti.

“The first layer is an offering that will add special features on the page, and increase connections to consumers with merchant video” and other services. The second layer is to extend reach within and beyond MySpace. “We are giving merchants exposure across MySpace and across the Web,” he says.

For Citysearch, which recently announced its open platform program as part of its five-year “Citysearch 3G” initiative, the signing of MySpace is something of a coup. While Citysearch already works with Facebook Connect, where users can enhance their Citysearch experience among their Facebook friends, the MySpace deal goes further by bringing content directly onto MySpace for everyone to see and use.

For MySpace, the launch of MySpace Local may be seen as the third leg of an effort to reach out to local advertisers. In October, it launched MyAds, a self-serve SMB ad platform for SMBs, and it has also signed up to take part in Oodle’s classified platform.

The companies are both based in Los Angeles and MySpace President of Sales and Advertising Jeff Berman and Herratti both keynoted at Kelsey’s Marketplaces 2009 conference two weeks ago.

One of the great mysteries is what Wal-Mart is really doing with classifieds. Last June, it signed up to use the Oodle platform, but not much has been heard from it since.

In this week’s Ad Age, Wal-Mart’s Duncan Dreschel sheds a little light, noting that the company seeks to simultaneously extend the brand, drive traffic to the site and help customers. “We see part of our role as connecting customers to help each other. It also allows us to provide a more complete offering.

“We’re looking at lots of things to make classifieds evolve,” he added. Already, he noted, some people close deals struck on the Web site in the parking lot of their nearest store.

Online leads for cars are broken. The vast majority of auto shoppers won’t even fill out a request for bid because they think they’ll get inaccurate, incomplete and tardy information from the dealer.

But that doesn’t stop vendors from working on better solutions. Today, Cobalt’s Dealix division rolled out a new leads platform that it claims will transfer leads to dealers almost instantaneously, while “identifying, processing, and delivering higher quality leads.” The new program uses TARGUSinfo On-Demand lead verification services to confirm consumer names, addresses and phone numbers contained within the lead.

Dealix handles nearly one of three auto leads. Its network includes Kelley Blue Book, Edmunds.com, AOL Autos, Yahoo Autos and MSN Autos.

Speaking at Marketplaces 2009 last week, Dealix Executive VP and GM Anna Zornosa noted that “shoppers who aren’t serious or qualified cost money and resources. Dealers need to be able to customize their leads program so it’s relevant to their unique market area, available inventory and sales goals.”

Gabriels and Endeca have launched a new white-label auto portal. The effort formally kicks off a recently announced partnership to inject Endeca’s search capabilities into Gabriels’ vertical sites.

The new portal moves away from a simple listing product, offering a stronger media play that can compete with industry leaders such as AutoTrader and Cars.com. The site directly competes with other vendors that provide auto sites for media companies, such as Adicio Motors.

A press release notes that it gives newspaper sites and others the ability to enhance data, branding and functions, such as priority sort. It also noted that revenue opportunities are expected from boosts in data, traffic, user retention, time on site and ad impressions.

Gabriels supports more than 300 media properties across North America and Europe, including The New York Times Co., Hearst Newspapers, Scripps Newspapers, Cox Newspapers, Freedom Communications and VNU Media.