SBC, BellSouth Team to Buy YellowPages.com

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SBC Communications and BellSouth teamed up yesterday to buy YellowPages.com and create a single destination for online directory searches.


Through a joint venture of the two companies' directory affiliates, a reported $100 million was paid for YellowPages.com, which SBC and BellSouth will operate jointly as a destination for local business information. YellowPages.com will replace SBC's SmartPages.com and BellSouth's RealPages.com sometime next year, a BellSouth representative said.


The move to consolidate resources around one Internet yellow pages brand comes as Internet search giants Google and Yahoo pour resources into developing search engines for consumers to find local information.


YellowPages.com, RealPages.com and SmartPages.com separately failed to develop a mass audience. SmartPages.com is the most visited of the three, drawing 5.3 million users in September, according to Nielsen//NetRatings. Combined, the three directory sites drew 7.6 million visitors in September, well behind Verizon's SuperPages.com, which drew 11.5 million.


"We're getting a premier URL, we're combining our customer bases and sales forces and we're essentially creating a national product," said Walt Sharp, an SBC spokesman.


The Kelsey Group estimates that nearly one-quarter of all small businesses advertises through Internet yellow pages. The researcher expects this market to grow to $4.9 billion in 2008, accounting for 23 percent of the overall U.S. yellow pages market.


Google and Yahoo see the offline directory space, which records $14 billion in annual ad sales, as a natural fit for their search engines. Both companies released local search engines this year, along with targeted advertising programs designed to appeal to local businesses.


"Most of the yellow pages providers have good data, but they don't have particularly sophisticated sites," said Greg Sterling, a local media analyst with The Kelsey Group. "The pace of change and development in the search world has really accelerated, and that's setting user expectations."


The YellowPages.com joint venture will be based in Pasadena, CA, with operations in Henderson, NV, where YellowPages.com was based. It will have both companies' local sales forces sell to advertisers in their regions. SBC operates in 13 states, including California and Texas; BellSouth has 2,000 salespeople in nine Southeastern states.


Also, SBC and BellSouth will create a joint national sales force to push YellowPages.com. Sharp said he did not know the size of that sales force. SBC and BellSouth expect their advertising to begin showing on YellowPages.com in early 2005.


Large sales forces serving small businesses is thought by industry analysts to be a major advantage for directory publishers in competing with Google and Yahoo, which have relied mainly on Internet self-service to build their national paid search customer bases.


BellSouth agreed last week to act as a reseller for Google paid listings through its 2,000-person sales team in its nine Southeastern states. SBC and Yahoo's small-business offering sells both SmartPages.com listings and Overture paid search listings. Yahoo Yellow Pages uses listings from both RealPages.com and SmartPages.com.


Charles Stubbs, an executive with BellSouth's online directory unit, will serve as CEO/president of the YellowPages.com venture. Bill Clenney, formerly with SBC's online directory business, is chief financial officer, and SBC's Debbie Slavin is senior vice president of operations.


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