NPR will work with a pilot group of a dozen NPR stations to create multimedia local news that will work online and on radio, thanks to new grants from the Corporation of Public Broadcasting ($2 million) and $1 million from the Knight Foundation.

The stations will vie to provide a new model for community news, perhaps competing with, or complementing other local and hyperlocal projects, such as Outside.in, MSNBC.com’s Everyblock, The U.S. News Network and other services.

Details are still being worked out. It isn’t at all clear what the role of online will be. We will undoubtedly hear more about it from NPR SVP Kinsley Wilson when he speaks at BIA/Kelsey’s ILM:09 event in L.A. in early December. But it has been announced that the stations will experiment with an embeddable video player that can import PBS TV content.

The idea of outside support for specific news content was first developed in the early 1990s by The Markle Foundation (an effort that I provided consulting for). Markle provided funds to CNN for various public interest election coverage and election games that would not otherwise be supported by advertising. More recently, The News Hour with Jim Lehrer has embraced the sponsored content model with a special health desk supported by a $3.5 million grant from the Gates Foundation.

Here are some interesting directory and small-business advertising related items I’ve plucked from recent news alerts.

For a bit of insight on how small businesses in a meat and potatoes category (Tire Dealers) view the evolution of their ad spend, see this article from TireBusiness.com (I only get it for the articles). One observation is how little performance measurement enters into the discussion of where to invest ad dollars.

I also came across this piece from the Rochester, NY, Democrat and Chronicle that talks in anecdotal terms about the trend for consumers and small-business owners to tackle repair and remodeling projects on their own. What is notable is the scale of the projects, many involving complex and possibly dangerous plumbing and electrical work. This may stand to reason in a deep recession, but it isn’t good news for contractors or the local media that sell them advertising.

Interesting counterintuitive take on small-business advertising from The Wall Street Journal’s small business advice column. The basic message is don’t overlook unsexy media choices like door hangers, Yellow Pages or the local church newsletter. They are often more targeted and effective than given credit, depending on the product and the target audience.

Interesting report here on how Yellow Pages in New Zealand is struggling with its decision to offshore its DA call center. Having been to NZ a couple of times, I can see how an offshore agent might struggle with some of the Maori words, which come in handy given so many towns have Maori names. The larger issue raised is how much of a business is call-based DA in the era of the Internet and mobile phones?

A spoof is circulating around the Web that Local.com has been sold to Microsoft for $200 million — a significant markup from the public company’s current valuation at $60 million. The spoof suggested that the valuation was based on Local.com’s extensive patent holdings.

CEO Heath Clarke says there just isn’t any truth to any of it. He notes that the “release” has a date of Sept. 31 on it. He also says the company, which just cracked Nielsen’s Top 10 search providers in August, is in great shape as an independent entity, and has a host of valuable initiatives in the works.

We know that Microsoft also has great local plans for Bing and for MSN. Scott Moore and Cyrus Krohn are masterminding the MSN strategy and will address it at ILM:09 in L.A. in December. But for now, those plans don’t include folding in Local.com.

The ink hadn’t dried yet on our Yext post, when the company announced $25 million in venture funding today. The round was led by Institutional Venture partners. More details to follow.

The lineup for BIA/Kelsey’s Interactive Local Media 2009 is really taking shape. The speakers truly represent a “who’s who” of what’s going on in the space that is interesting, progressive and important.

ILM is the culmination of this year’s research and analysis, and takes place  Dec. 9-11 at our favorite hotel, The Century Plaza in L.A. Here’s the registration info. And here’s the current lineup.

Willow Bay, Senior Editor, Huffington Post
Cory Bergman, Director, New Product Development, MSNBC.com
Matthew Berk, Executive VP, Product Engineering, Marchex
Jason Boseck, President, Parking Data Ventures
Neil Budde, President and Chief Product Officer, Daily Me
Sukhinder Singh Cassidy, Executive in Residence, Accel Partners
Surojit Chatterjee, Product Manager, Google
Darrin Clement, CEO, Maponics
Court Cunningham, CEO, Yodle
Geoff Donaker, COO, Yelp
Aaron Finn, President and CEO, AdReady
Matt Howard, CEO. SMBLive
Mark Josephson, CEO, Outside.in
Warren Kay, VP, Local, Fox Interactive Networks
Tim Kendall, Director, Monetization, Facebook
Cyrus Krohn, Director, Online Services Programming, Microsoft
Chris LaSala, Director, Local, Google
Warren Lee, Venture Partner, Canaan Partners
Lem Lloyd, VP, U.S. Partnerships, Yahoo
Scott Moore, U.S. Executive Producer, MSN, Microsoft
Mike Orren, President and Founder, Pegasus News
Geneva Overholser, Director, USC Annenberg School
Meredith Papp, Director, Product Marketing, Google
Jim Pastor, Senior VP, ESPN Local Digital
Kevin Ryan, CMO, WebVisible
Lori H. Schwartz, Senior VP, Interpublic Emerging Media Lab
Doug Scott, VP of Marketing, RMG Networks
Julia Scott, Chief Blogger and CEO, BargainBabe LA
Scott Tobias, President and COO, Village Voice Media
Kinsley Wilson, SVP and GM, NPR Digital
Victor Wong, CEO, PaperG
Michael Yang, Venture Partner, Comcast Ventures

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, if the economics indeed work out this way. 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). They 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.”