Enters Local Search Fray

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Yellow pages publisher Verizon Information Services announced a deal yesterday with paid search provider to put local paid listings on its site.

Under the multiyear arrangement, FindWhat, Fort Myers, FL, will provide back-end support for the service, set to launch in early 2004. Verizon will sell the listings to local advertisers, displaying them on Financial terms of the revenue-sharing agreement were not disclosed.

The offline yellow pages market is worth about $14 billion yearly in the United States. While yellow pages listings cost local advertisers about $1 per lead, online search costs about 35 cents, according to U.S. Bancorp Piper Jaffray.

"There's a large percentage of [small businesses] that spend 100 percent of their marketing budgets with the yellow pages," said Rick Szatkowski, a corporate development executive at FindWhat.

Some estimates have 35 percent of search queries including a geographic element. The thinking is that with always-on broadband in the home, Internet search could take a sizable chunk of the yellow pages market. According to researcher The Kelsey Group, online yellow pages ad sales will top $5.2 billion in 2008. is the No. 2 online directory site, drawing 8.6 million unique visitors in October, according to Nielsen//NetRatings. Only Yahoo's Get Local drew more visitors.'s listings also are distributed on MSN, Ask Jeeves and InfoSpace. Verizon overhauled in September to make it easier to use and add features like map-based searches for multiple businesses.

The Verizon deal is FindWhat's first foray into local search. In addition to a distribution network of 230 mostly small search sites, FindWhat licenses its search platform to portal Lycos through its InSite AdBuyer service and to Mitsui & Co. for a paid listings service to launch early next year in Japan.

Szatkowski said FindWhat's licensing deal solves a major problem for local search: the need for a large sales force. Verizon Information Services has a sales force of 2,600 and boasts of adding 1,000 new business customers per week for its array of services, which include buffed-up business listings, online coupons and Internet storefronts.

"The feet on the street and the advertising relationship are owned by the yellow pages companies," he said.

Local guide site CitySearch has trumpeted its local sales force as a major advantage in its local listings program rolled out in March. The company forecasts it will sign up 50,000 advertisers by next year. Barry Diller, chief executive of CitySearch parent company InterActive Corp., said last month that Google, Yahoo and MSN all have expressed interest in tapping into CitySearch's listings.

Search engines are racing to devise their own local ad offerings. This year, Google and Yahoo's Overture Services have experimented with local search engines. rival has a paid listings arrangement with Google, displaying its content-targeted listings on results pages. The online directory displays ads that Google matches with advertisers based on the content on the results page. BellSouth last month began offering search marketing services to its customers, including paid inclusion listings from LookSmart and listings on BellSouth's online yellow pages.


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