CitySearch Eyes Deals With Search Giants

InterActive Corp. is negotiating with Google and other search engines for them to use its CitySearch property's local search advertising platform, InterActive said this week.

“CitySearch is currently being courted by Google, Yahoo and MSN to have their huge national pipes linked to the local,” said Barry Diller, chairman/CEO of InterActive.

Diller disclosed the discussions during an InterActive presentation for investment analysts. He did not say how far along the talks were. At a conference in October, Diller said CitySearch had spoken with Google about a partnership to supply local search and other services.

A Google representative declined comment.

Keyword search has emerged as the hottest sector of Internet advertising, accounting for 29 percent of all online ad revenue in the first half of the year, according to the Interactive Advertising Bureau. Jupiter Research projects paid listings will bring in $1.6 billion this year. A growing opportunity is seen in linking local advertisers, from pizzerias to plumbers, with searchers.

Los Angeles-based CitySearch was an early entrant to the emerging market of local pay-for-performance keyword listings. The local guide site unveiled a local paid listings program in March, getting a head start on paid search giants Google and Yahoo's Overture Services.

Google and Overture have tested local search services. In September, Google began testing a local search service that serves locally relevant ads after a user enters a search term and ZIP code. In its test phase, searches do not return advertiser links. Overture's local search test operated similarly to Google's, with a small sample of advertisers participating in the test.

The local search market also includes online yellow pages sites like Westborough, MA-based Switchboard, which supplies listings on its own site and affiliates that include AOL. Overture estimates local search advertising could be worth $1 billion by 2008.

“All the national portals, all search engines are saying they would like to attack the local,” Diller said. “The difference for CitySearch is it has invested an enormous amount of money on quality local content. It's one thing to geo-tag things, it's another thing to actually have the data.”

CitySearch has guides for cities in the United States and abroad, offering information on everything from restaurants to hotels to nightlife. The sites drew 3.8 million visitors in September, according to Nielsen//NetRatings.

CitySearch already has ties to the major search players. It supplies entertainment and arts listings to Yahoo's city guides, and it provides content for MSN's local channel. Despite its strategy of avoiding exclusive arrangements with portals, Diller said, “There are circumstances where we'd make a grand alignment.”

Diller said CitySearch would end the year with 25,000 local search advertisers, who pay each time a CitySearch user clicks on their links for such services. He expects the advertiser base to reach 50,000 in a year. By contrast, paid listings Google and Overture boast much larger advertiser bases. Google has 150,000 advertisers, and Overture has more than 100,000.

Diller thinks the scale on which Google and Overture operate actually gives CitySearch an advantage. While Google and Overture use online account management to sell to small advertisers, CitySearch has a sales force pushing its local search ads, as well as online and telephone sales.

“CitySearch is without question a way for them to participate in this area that is a lot of feet on the street still,” he said.

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