Merchant data sent in by fans of merchants and from merchants themselves is becoming increasingly important. Can it be relied on as a main source, or should it only complement listing data from the big three providers — InfoGroup, Acxiom and Localeze?

We talked to Pankaj Mathur, InfoGroup vice president of business development, about it. Not surprisingly, he has mixed feelings. It is certainly useful and cost effective, and from an SEM perspective, there is sometimes the feeling that “more [data elements] is better,” he says.

But he warns that accuracy and reliability are more important than ever before, especially with mobile phones that can send people to bad locations. Also looming is the sense that merchants are incentivized to misrepresent themselves so that they can boost their search rankings or be found under lucrative-but-wrong categories (i.e., cab companies under “airports”).

InfoGroup (and probably the other leaders in the space) instead take the “trust but verify” approach to merchant data. The company receives 10,000 to 15,000 submissions per month from multiple partners such as OnStar, Yahoo and AOL. “We find that about 50 percent of these submissions are false positive like duplicates or incorrect information, “says Mathur.

In a newly issued article, Mathur goes into more detail about the importance of the duplicates issue. In franchise corporations, for instance, there may be lists of storefronts within marketing departments, operations departments and accounting deparrtments. They don’t always overlap with LBS (location-based services) requests, he notes.

Moreover, retailers often neglect to delete or change storefront information — something that creates a special mess when companies such as Starbucks close hundreds of units throughout the country. Mathur suggests one-step updaters (such as his company’s “Express Update”) are a partial answer. In the meantime, the validated information from the leading listing providers remains in the driver’s seat.

A couple of stories caught my attention today. First, Reach Media Group (RMG), a digital out-of-home company that we’ve previously written about, signed a deal to push New York Times content to its network of 800 coffee shops, cafes and eateries in New York, Los Angeles, Chicago, Boston and San Francisco.

According to the press release, RMG’s digital place-based network (formerly known as “Danoo”) has been entirely re-envisioned to emulate the familiar, trusted design of NYTimes.com. We think this move will add considerable credibility to the fledgling network. It can offer a more compelling content experience (assuming you find the NYTimes content compelling) and ultimately, a more legitimate advertising sales proposition.

For some time now, we’ve said that digital out-of-home or digital place-based advertising models will develop rapidly over the next five years. But this scenario relies on the consolidation of the market, more standardized advertising options, and more targeting and mobile content connectivity.

We think we’ll get there. The potential for consumers to view condensed content on a screen and then connect to www.NYT2day.com for the full story offers advertisers a proxy for performance, and the user a simple way to more fully engage in the content.

The second interesting story today comes from The Omaha World Herald, which reports that New York equity firm CCMP Capital Advisors has made an offer to purchase Omaha-based InfoGroup — formerly known as InfoUSA. A deal like this has been expected since late last year, when the company hired an advisor to essentially find a buyer.

According to The World Herald, the sale of InfoGroup has been supported by Vin Gupta, the company’s founder and former CEO. While Gupta is no longer an officer of the company, he still sits on the board of directors. In our view, InfoGroup’s sale makes good sense for the company and the shareholders. Taking it private will enable the company to continue its re-branding process from InfoUSA to InfoGroup.

For years we’ve been asked by companies around the globe if InfoUSA or any of its competitors offered similar business listing information. Shifting the name to InfoGroup would certainly enable the company to expand it offerings beyond its current borders.

Should this deal be finalized, it would presumably be the end of Gupta’s involvement, active or passive, in the company he founded almost 40 years ago with $100 and the vision to compile, aggregate and verify the names, addresses and telephone numbers of millions of businesses in America. Certainly, it has been a difficult job. But Gupta and his pioneering colleagues can proudly take credit for delivering hundreds of millions of qualified leads to SMBs.

I had the opportunity to speak with Brad Reynolds, CEO of Mongoose Metrics, a Cleveland, Ohio-based call measurement and conversion analytics company. Reynolds was quick to point out that it is not simply a call tracking company, but rather it is dedicated to linking online and offline conversion so clients can better understand what leads to sales conversions. According to Reynolds, “Our business is based around illuminating the sales funnel related to offline conversions. Our goal is to make it easy to track online and offline conversions side-by-side. We want to drive actions like tweaking marketing spend and efforts with a full basket of information.”

While some companies focus entirely on online conversions, the reality, according to Mongoose Metrics, is that a large majority of transactions occur offline via the phone. In most cases there is a chain of events that lead to an offline conversion. By better understanding how online and offline media influence the conversion path, marketers have a better sense of what media and messages they should be using to maximize their effectiveness. With good offline and online conversion data in hand, brands can personalize their messages across media to create a conversation and a stronger relationship.

Mongoose Metrics has also been busy putting together an effective international local number tracking network and recently put together deals in Canada and the U.K. to deliver true local exchange numbers across both countries. Rather than relying on VoIP numbers or toll-free numbers, Mongoose is now able to offer local telephone numbers better linking businesses to their local area. “Until recently, it had been nearly impossible for Canadian and U.K. companies to use local phone numbers to follow visitors from Web-to-phone to understand how their Web sites drive phone calls and ultimately sales,” according to Reynolds. Mongoose Metrics’ move into the U.K. and Canada is a first step in expanding internationally.

When asked where call measurement is headed in the near term, Reynolds quickly pointed to mobile. “While many feel there will be transactions handled on the handset, the current reality is that most sites are not fully enabled for mobile screens, requiring too many clicks and too much scrolling. People want to get a quick answer to their question and often will revert to contacting the store or company since it is easier — and they have a phone in their hand to expedite the need for information. Click-to-call features makes sense on the mobile Web and will offer yet another layer in understanding where offline conversions are initiated.”

When asked about other developments, Reynolds replied, “Mongoose is currently working on a few proprietary products to provide deeper analytics of incoming calls and hopes to create a way to trigger specific actions tied to a recognized set of keywords. This is yet another step Mongoose is taking to help drive conversions and personalize the communication between consumers and advertisers.”

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

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”.

Oodle CEO Craig Donato led off day three of Marketplaces 2009 describing how classified advertising has gone through an evolution over the past five years, progressing from simply importing them online, to making them searchable and finally today integrating classifieds with social media/user-generated content (UGC). Donato pointed out that while newspapers led the way in taking classifieds online, they have done poor job of adapting to the changing online needs to maintain a leadership role. Because of the ongoing change, new opportunities emerged for eBay and Craigslist, both of which clearly understood what both buyers and sellers wanted.

The current phase of classified is the merging of social tools and more transparency with listings revealing information like why an item is being put up for sale or why a particular home is a great family home and what visitors have liked best about the property. According to Donato, “Local advertisers need to get involved in the conversation because conversation builds credibility.”

What Oodle has tried to do is encourage local advertisers to create profiles on Facebook and MySpace so they can build their networks and get involved in supplying good information about their products, being open to answer questions, and to feed the latest specials or newest homes for sale as examples.

For local sites, Donato suggests that “it is less about how to work with Facebook and MySpace, but rather how the usefulness of their tools can be integrated into your sites.” The more local advertisers can get their customers and prospects engaged in conversations about their listings, the more valuable the listing and sites become. Social classifieds are yet another example of the required transparency consumers are seeking about both new and used classifieds on the Web, and it is now in the hands of sites like Oodle to provide the tools and education to help get people talking.

SMBLive CEO (and blogger) Matt Howard has come up with a new metaphor for local search that I have to say I haven’t heard yet. I won’t steal his thunder, but I’ll point you to his analogy, which mostly focuses on the content and advertiser aggregation challenges at the fragmented SMB level.

On the similar theme of corralling the universe of SMBs and aggregating comprehensive local business listings, check out the conversation (video) I had with Localeze’s Gib Olander at SES Chicago. These are ongoing issues in local search and will be part of the overall discussion (on and off the stage) at our next conference: Marketplaces 2009.

IBegin has been trying to add its own Web 2.0 sensibility to the listings business, offering free basic directories of businesses, and customization services on an upgrade basis. It now has 150 businesses and organizations subscribing, including schools, local and state government, city services, chambers of commerce, professional associations, hotels, golf courses, newspapers, TV stations and radio stations. The company is enabling businesses to claim and control their own business listings — a feature that is also provided by other listers (MerchantCircle, etc.). Claimants can presumably add additional information while they are at it, including photos, data, contact info, etc.

Founder Ahmed Farooq says “the gigantic benefit for a business is that once the data is correct in our database, it gets filtered to all of our customers. One listing, 150+ potential distribution points — a win for everyone.” Moreover, Google, Yahoo and MSN all “deeply crawl our page. Google hits us up to 500,000 times a day.”

Farooq acknowledges that other companies also allow businesses to claim a listing, but they have loose terms for doing so — mostly e-mail verification. Businesses need to call from their actual phone numbers to claim their listings in the iBegin system.

IAC Vice President Kara Nortman, speaking at Interactive Local Media 2008, provided both a dose of reality and a glimmer of hope about where media companies in the local marketplace are headed. Nortman’s view of what is working well included sites that are building great organic traffic rather than relying on paid traffic, offering a unique distribution strategy at a cost-efficient price point and providing some level of a self-serve model to attract customers who cannot be affordably reached on the local level.

When talking about how best to attract and win local merchants, Nortman pointed out: “While a local field sales force is a significant advantage, it is only an advantage if there is enough of a merchant/advertiser base. So many smaller online companies are pushing for or building a large field sales force, which will likely hinder their growth and ability to break even.”

From a business model standpoint, Nortman views the local media landscape morphing into companies that bring together brands that build great content, own a robust distribution network, and can gain access to and retain local merchants. “These new media organizations may very well bring together several recognized local brands to become effective.”

Citysearch is a good model of this new local media company, offering an appealing advertising platform and bringing together merchants and content development to build sustainable consumer traffic, which helps local merchants to be successful.  

The “Deconstructing Internet Yellow Pages” panel at DMS ’08 revealed a number of areas in which IYPs need to evolve. Based on Kelsey’s IYP research, conference chair and TKG Program Director Charles Laughlin said, “IYPs appear too conservative and unwilling to do what it takes to win in the local search space.”

One of the key areas consumers value in IYPs remains accuracy of data, but items like look and feel and the ability to add and share information have risen to the top. Two of the “new breed” IYP sites, Brownbook.net and YellowBot, are certainly listening to consumers and responding with uniquely positioned sites. 

While major IYPs have advanced, they appear more oriented to supporting advertisers than the consumer. According to David Ingram, CEO of Brownbook.net: “There seems to be a mismatch between what consumers want and what the directory industry sees as important. Consumers want ease of use and accuracy versus publishers, who seem to focus more on advertiser-driven needs.” 

The need to structure data to make searching for and finding relevant information easier was viewed by most of the panelists to be vital in providing a satisfying experience on their sites. The challenge is structuring the content you control amid the vast amount of information on the Web, such as user reviews, consumer-generated content and other disparate data.  According to Morgan Zimmerman, VP business development for Exalead, “Consumers are looking for more localized information and demanding it from the sites they use and prefer — in an easy to digest manner.”

Taking a counterpoint was Erron Silverstein, cofounder and CEO of YellowBot, who felt consumers alter the way they search too frequently to adequately structure local search. “Tagging listing information shows you how to classify the information and how people are searching and offers suggestions to the advertiser base on how to connect. You need to let the consumer direct the structure.” 

The conclusion of the panel is that the current view of an IYP site needs to evolve with a more consumer-focused approach, which in turn will drive more traffic and ultimately better quality leads for advertisers. James Ashford, president of Yellow Assistance, summed it up when he said: “The user experience is key, and how they want to use your site will dictate how best to design and set up your functionality. Ultimately the users will supply the appropriate content and how they want it served up; this will drive the traffic your advertisers need.”