Citysearch has just completed a full revamp of its product and strategy that it hopes will position it in the long-term battle for local. Elements of the revamp include a more intuitive interface, an embrace of social media, a major focus on video, some new twists in mobile, and the development of a full-fledged local ad and content network that offers an alternative to Google’s dominant position.

The IAC company’s current ambitions are to be “more local, more social and slicker,” says President Jay Herratti. “We are defensible with our breadth and depth of content. But we can’t grow unless we grow search at the local level.” All the efforts in online and mobile are geared around achieving such growth.

Open APIs are especially emphasized as a key way to open the service to anybody who wants to tap into CitySearch’s deep editorial content , reviews and small business information. Sites like Urban Spoon aren’t pure competitors, says Herratti. “We always try to power them. If their success is great, we’ll make money from that.”

A related piece of the puzzle is the launch of Open IDs, as well as dedicated MySpace and Facebook Connect apps. The Facebook Connect app, in particular, will enable users to develop a friends circle, based on their Facebook profile information. “It gives them a portable identity,” says Herratti. The problem with user generated content is that people intend to publish their reviews, but in the end, eight of ten reviews don’t get up there,” he says. The open IDs replace earlier efforts to register users, which typically resulted in 95 percent drop off of users.

As for the new interface, Citysearch has focused on highlighting its breadth of content and converting shoppers into buyers. In this regard, the new version’s biggest innovation is a compelling breakdown of small business information into “owner” comments, “editorial” comments and “user” comments.

The latter, which has been enhanced by the addition of InsiderPages in 2007, will begin featuring selected reviews to get away from the information overload of 200-300 reviews that are common in certain categories. While some sites suffer from review ghost towns, in Citysearch’s case, there has often been too much of a good thing, especially for restaurants and bars.

The breakdown of editorial comments should also help with search. Google already drives 50 percent all the site’s usage. Citysearch’s extensive network accounts for roughly 25 percent, and its URLs account for the remaining 25 percent.

The site is also moving away from measuring distances from businesses in the maddening “point radius” configuration, which tells users they are “x” miles away from a business (but doesn’t really know where the user actually is). The new system uses Vermont-based Maponics to break neighborhoods into polygonal neighborhoods. The new focus on neighborhood information should also drive additional “longtail” searches that could drive more advertising revenue.

Kicking off the small business “Super Forum” at ILM2008 here in Santa Clara, CA, Jeff Stibel, CEO, Web.com (overachiever alert, he is also a brain scientist), laid out some more ugly facts about the economy — small business earnings not just down but way down, unemployment climbing, credit frozen, don’t even mention the Dow… So he asks, what shall we do, “curl up and hide…or look for silver linings?”

Obviously no one is going to bother giving the “curl up and hide speech” so Jeff argued that things are “not that bad.” There is money out there; for example the Small Business Administration has money to lend. Commodity prices are down.

To the surprise of some, Stibel took issue with some of the conventional wisdom about the demise of traditional media, in particular printed Yellow Pages. He called talk of Yellow Pages being dead “hogwash.” A better way of thinking about it is that “the Internet is becoming part of traditional media.” For small businesses, “the best solution is the balanced solution.”

Also interesting from this session was Paul Ryan, CEO, DoneRight, discussing his use of a printed directory, the Orange Book, as part of his overall approach (remember Insider Pages?). It fit into an emerging theme that it’s not about digital replacing traditional as much as understanding how digital and traditional will coexist and complement one another.

Mark Canon, president of the UK-based Yell.com (part of Yell Group) kicked off ILM 2008 today with an insightful, at times esoteric, presentation that challenged much of the conventional wisdom that has driven organizations making the transition from traditional to digital.

Mark covered a lot of ground, but the headline was his assertion that companies like his need to “get used to paying taxes.” In other words, do not get hung up on ownership of traffic. His point is simply that in an environment like the UK, where Google 86 percent of search traffic, IYPs and others need to “learn to be good ’symbiots” and “focus on engagement rather than ownership.”

Some other choice comments from Canon include:

“Own the context, not the content. You can rent the content.”

“Don’t get hung up on offering an end to end solution.”

When asked to amplify on his “symbiot” comment, Canon said that if you sell to SMBs, then you are useful to Google, since their model doesn’t scale to selling directly to small businesses. “Do a better job for Google than they do for themselves.”

Also, understand that Google is “fanatical about relevance,” so it is critical that your SMB content is “good enough so that it rises to the top of the food chain on Google,” Canon said.
Canon acknowledged that ceding ownership of the user required a shift in thinking: “Ownership is not important, though it helps you talk to your board of directors.”

During Q&A, moderator John Kelsey challenged Canon’s assertion that “voice search and navigation” will soon gain prominence in directories and local search. Kelsey asserted that predictions of the advent of voice recognition have always been too optimistic. Canon’s retort was that “Google doesn’t release software products until they work,” referring to the new Google mobile application.

Kara Nortman of IAC speaking at ILM 08 provided both a dose of reality as well a glimmer of hope of where media companies in the local marketplace are headed. Kara’s view of what is working well include sites that are building great organic traffic rather than relying on paid traffic, offer a unique distribution strategy at a cost efficient price point and offering some level of a self-serve model to attract those customers who cannot be affordably reached on the local level.

When talking about how best to attract and win local merchants, Kara 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 stand point, 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 where they offer an appealing advertising platform and bring together merchants and content development in order to build sustainable consumer traffic which helps local merchants to be successful.  

The Kelsey Group’s Matt Booth kicked off the ILM:08 conference here in Santa Clara, CA with a focus on SMBs perceptions and actions related to their media spend. To help frame the discussion he used examples from psychology, in particular the “herding effect,” to make his point that often times SMBs are basing their advertising decisions based on what others are doing, not necessarily based on what appears to be a better or more obvious path.

Booth cited data from The Kelsey Group’s Local Commerce Monitor that showed that the top influencers for SMBs when making a media buying decision are based on what their business partners or competitors are doing with a close second based on media performance.

Interestingly enough however, those same SMBs who say that media peformance influences their media buying decisions generally don’t track how they received a lead and therefore don’t necessarily track their ROI. For instance, only 3% of SMB advertisers in a recent Local Commerce Monitor study indicated that they used a special phone number to track the source from which a lead was generated.

So, with uncertain economic times, what does that mean for media, particularly interactive local media and, how will SMBs respond? Booth believes that “this period of uncertainty is the fertile ground for the next set of winners” in the interactive local media industry. He reminded conference attendees that paid search began to emerge during the last economic downturn/dot-com bubble bust and began to flourish a few years after the fact. Based on past events and current conditions, Booth sees the following factors as the next important characterists of what’s important for this industry:

- Immediacy - no latency and full transparency (i.e. immediate access to performance metrics)

- Lead tracking - Simple and easy to understand (i.e. deep, but straightforward lead generation reports)

- Pulsed Advertising - on/off or by season (i.e. ability to manage and quickly upgrade or downgrade ad campaigns)

- “Conversation & Reputation Management” - Tools for dialogue between consumers and SMBs and among SMBs

- A blend of content and advertising that work seamlessly together (i.e. platform to enable “advertorial” paid search)

So, just as SMBs need to figure out if during these challenging economic times if they’ll advertise more or less and where they’ll advertise, Booth essentially prodded the audience to think through how their solutions will encapsulate the above-noted characteristics and determine how their solutions will move the herd.

Following up on last week’s post about YouTube’s launch of new overlay ads, I finally saw one today. I managed to get a quick screen shot before it disappeared (see below). It was an ad for Mystery Science Theater’s Star Wars Episode, shown during a YouTube clip of “Chad Vader — Day Shift Manager.”

This seems like a good match, but probably only based on contextually targeting the video tags. We could see less obvious integrations and other indexing technology used to serve ads, such as what EveryZing and a few others are doing with speech-to-text processing.

We’ll keep our eyes open for more ad sightings and what they might uncover about YouTube’s monetization plan.

Angie’s List, the premium, user-paid directory of local business reviews, announced today that it has raised $18 million in new capital from Lighthouse Capital Partners. The site has now raised $66 million in total, including $13 million in 2006 from Battery Ventures, White River Ventures and Aquent, a Boston-based staffing firm. In 2008, the site raised $35 million in additional funds from Battery.

As part of the new announcement, Angie’s List also disclosed that it has 750,000 members in 124 markets, up from 650,000 this summer. There are typically more than two members per paid subscription, so that number translates into an estimate of roughly 324,000 paying members. Members pay from $10 to $67, depending on various factors, but mostly on the number of reviews in a given market.

Angie’s List Founder and CMO Angie Hicks is a featured speaker at Kelsey’s landmark ILM:08 show this week in Santa Clara. She is speaking on a session alongside ServiceMagic Cofounder Rodney Rice.

Yelp is often dismissed as a bar and restaurant site for recent college grads in San Francisco. But site usage released by the company suggests it has rather broad usage and shouldn’t be so readily pigeonholed. The site also says it had 15 million uniques in October, up 200 percent from the same period in 2007, and has now gathered 4 million reviews.

According to Yelp stats, 34 percent of its reviews are “restaurant” oriented, 7 percent are for “arts and entertainment,” and 4 percent relate to “nightlife.” But these categories account for just 45 percent of the site’s overall reviews. Another 23 percent are for “shopping,” 8 percent are for “beauty and fitness,” 7 percent are for “home and local services,” 4 percent are for “health,” 3 percent are for “travel and hotel,” and 3 percent are for “auto.”

The site also isn’t as heavily dependent on recent college grads as is generally thought. 23-to-29-year-olds make up 37 percent of its users. Thirty-six percent are between the ages of 30 and 39, and 12 percent are 40 to 49. The site is also 51 percent male and 49 percent female. But no information was sent about the site’s geographic distribution this time around. Company executives have suggested it is seeing broad distribution in a number of markets.

We’ve written before on how media and blog coverage of Yellow Pages can’t seem to find a fair balance between Pollyanna and Chicken Little. OK, in fairness, there aren’t many Pollyannas writing that Yellow Pages is shipshape with not a worry in the world. But there is no shortage of Chicken Littles declaring that the sky is falling for Yellow Pages. The phone book, we are led to believe, is in its final days.

The latest example is The Wall Street Journal, a respected publication, which published an article this morning with the headline, “Extinction Threatens Yellow-Pages Publishers.” The article isn’t quite as overwrought as its headline, but it essentially argues that the medium’s print business is dying fast and the Internet thing isn’t working out very well.

There are certainly some dubious assertions in the article, such as that Internet Yellow Pages traffic is declining, which seems to be contradicted by a graphic in the article showing IYPs growing faster than comparable pure plays. But the big issue is with the use of the word “extinction” in the headline. This adds to the tone of coverage that tends to be absolutist about Yellow Pages. As in, Yellow Pages are absolutely toast. Maybe they just don’t know it yet.

We have consistently argued that the truth is far more nuanced. Yes, print revenues are declining, due to a mixture of secular and cyclical forces, with the sharp economic downturn putting an emphasis on the cyclical component. And yes Internet revenues, in the U.S. at least, are not yet sufficient to offset these declines. However, Yellow Pages remains a critical source of calls and leads in many categories, and it seems unlikely that small-business advertisers will soon be able to replace these leads with another source, at least not easily or efficiently.

While sometimes it may seem that no one is willing to admit it, lots of people still use Yellow Pages. It’s sort of become like admitting you like ABBA.

And as far as the Internet goes, it is too early to count out the Yellow Pages. The sales channel, while it can be unwieldy, remains a force to be reckoned with, as Google and others still struggle to figure out how to penetrate more deeply into the small-business market.

What vexes the Yellow Pages industry is how to break free of the public relations death spiral it finds itself in right now. Much if not most of what is written is overstated, if not inaccurate. Though it all builds around a kernel of truth, which is that Yellow Pages, along with all other traditional media, is having a rough go of it. It seems, however, that this medium is getting singled out as being worse off than newspapers, magazines, radio and so on, and that really isn’t true.

We’ll be in Santa Clara, California, all week for the Interactive Local Media 2008 conference, which starts Wednesday.

We’ll do our best to cover the world outside the conference walls, but most of the blogging here will be about the things we’re doing and seeing at the conference. Check back here periodically for show news, updates and commentary. Also follow The Kelsey Group on Twitter (username: TheKelseyGroup), for conference-related tweets.

If you’re at the show, pull me or any other TKG’er aside to talk. We’re excited to engage all attendees and to execute the program we’ve been assembling for the past few months. There are lots of new things we’re doing and lots of speakers we’re excited about. We hope to see you there.