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August 19, 2005

Local search developments: Yahoo! Local and Verizon’s pay-for-call

By Charlene Li

I had a chance recently to sit down with Yahoo! Local’s Paul Levine to discuss the new features rolled out on the site this past week. Two features in particular caught my eye. First, virtually every town -- and even neighborhoods in major metro areas – has additional content. Paul described that building such detail by hand would have been impossible, but with a database of geocoded information, Yahoo! Local could do this automatically. The details are obviously richer on the coasts, but I checked out my home town of Riverview, Michigan (a suburb of Detroit), and the results were fairly decent. But then I ventured into Canada, Kentucky, and found almost nothing (there was a photo in Yahoo! Images of the post office). Clearly, a spidered, automatic solution goes a long way to helping organize information, but it doesn’t help if it’s just not there!

This points to the second interesting thing I noticed about the new features – the presence of user reviews. Yahoo! not only exposes reviews, but also encourages site users to rate their favorite hair salon, great dry cleaner, and my tongue-in-check favorite, “honest mechanic”. The lack of good, updated, and most importantly, authentic local content on the Web means that any successful local search site is going to have to get it created. In this case, Yahoo! is using reviews as a starting point. For an example of how far user-generated content can go, take a look at DavisWiki.org – yes, it’s a wiki for Davis, California. Being a college town, it has a significantly higher population that actually knows what a wiki is, but still, this site is impressive, with pages ranging from the Happy Hour Drink specials to a list of Comfy Chairs around town. You can’t get much more authentic than this!

One of the most significant things about the new Yahoo! Local page is that it moves the metaphor for “local” beyond search and into browse. Just as I often browse for general information rather than search for it, there may be specific use cases where local information is better discovered and absorbed through a browsing experience. So looking for a specific business may be well served by search, but if I’m looking for ideas on what to do on Saturday, or a guide to good kite-flying places in San Francisco, I’m much more likely to turn to resources like Daily Candy and goCityKids, respectively. While Yahoo! Local can’t compete against the dedicated editorial and structured content that these great sites provide, it can start compiling that content into these local portals. I believe that to be successful, “local search” will have to start accommodating these broader, localized needs that go beyond simply business listings.

Verizon’s Pay For Call Service

And speaking about business listings, let’s take a few minutes to look at Verizon’s entry into the pay-per-call advertising space. I had a chance to get the details on their new service from Scott Laver, SuperPages.com President, which I think is innovative on three fronts.

First, Verizon will provide businesses the option to have a local phone number, rather than a toll-free number. One of the biggest problems local search and Internet Yellow Pages (IYP) sites have is the high number of national advertisers on the pages – it just ruins the local experience. A key differentiator for a local business is having a local exchange, and existing pay-per-call offerings from companies like Ingenio offer only toll-free numbers. (BTW, note that Verizon’s service is called “Pay For Calls” (PFC) to distinguish itself from Ingenio’s trademarked term, “Pay Per Call”.)

Second, Verizon’s plan to drive calls from its print yellow pages to the top PFC advertisers is brilliant. The print book already drives significant traffic calls to businesses – so why not advertise and capture some of that traffic to the top advertisers in a category? So the florist who is the top bidder will get the xxx-xxxx number that’s advertised in the print book redirected to it. What remains to be seen is if consumers will call a number in a generic ad, especially when that ad has to compete against Verizon’s existing print advertisers.

Third, Verizon plans to distribute and syndicate the PFC ads to other sites on a cost-per-click basis, rather than forcing other sites to create a separate tier for PFC ads. For example, a florist PFC ad may appear on Google as a text ad, with the clickthrough taking the user to a landing page that shows the phone number. Verizon pays for the clickthrough on Google, and then hopefully gets paid for the callthrough to the advertiser – the trick will be that Verizon will have to manage the arbitrage between paying cents for the clickthrough versus getting paid dollars for the callthrough. In many ways, this is the most important innovation Verizon is considering, as it will be important for them to get additional distribution for their advertisers. 

I believe that Verizon is one of the ideal players to be offering this service. As a yellow pages provider, most of its advertisers are in the services business, which typically don’t have Web sites – or if they do, only provide information rather than close transactions on them. For these services business, PFC works great as they can answer questions and schedule the service right away. Verizon also has at its disposal the biggest call through driving service already – the print yellow pages. Combined with its cost-per-click offering, full service support, and soon-to-be-offered paid search buying on Google and Yahoo!, Verizon provides small businesses with a nice, one-stop search advertising solution.

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Comments

Andrew Shotland

While Verizon's PFC can be considered a validation of the PPCall model I am not 100% convinced that they are going to embrace the idea of integrating PFC into their print books. One thing you don't hear the YP industry talking about a lot is how the smaller print advertisers subsidize the larger ones. It's a real estate game where the larger advertisers pay a lower price per square inch than the smaller guys. When the model shifts to pay for performance and the small guys get less performance for their money and the large guys start getting charged more then they are used to paying, things will start to get interesting. At Insider Pages we are focused on delivering value for the small business. I think the Superpages/Yahoo Locals and other competitors of this size are going to find it hard to cost-effectively deal with the small guys, who in aggregate are just as big as the big guys, while trying to please the big guys, who have a lot of buying power individually.

Dan

Verizon and other players are looking at ways they can make phone-based leads work within their business models beyond any one "one size fits all" model.

eStara thinks this flexibility to provide service across different revenue models coupled with the new cost of service benefits offered by VoIP-based services, with Track the Call (www.trackthecall.com) being the first VoIP-based service, will provide the building blocks for growth and expansion of phone-based lead generation/call tracking.

So far, companies including Amazon's A9 Yellow Pages, Europages and Superpages.com are seeing the benefits of these VoIP-based services.

sodani

It seems that Yahoo! is trying to grow their database of local content through the Best of Yahoo! Sweepstakes
bestof.yahoo.com

Francisco P. Gomes Jr

I am 54 black and disabled. My identity was stolen over $2,000.00 was charged to my telephone bill. The Companies have agreed to remove the charges, Verizon will not comply. First they sent me an E-mail saying that the matter was resolved. Then they shut off the telephone. The line is dead. I cannot even call 911, in the event that I need help. I pay for Verizon DSl, but I cannot get on since The line is dead. This is because I kept sending them E-mail asking what was wrong. The President of Verizon knows about this and still nothing is happening. I am sorry I cannot call Verizon brilliant. The disabled and the Elderly have landlines. I believe that this is not the only time Verizon has put lives in danger for money to expand their wireless aims. Enron, Tyco Verizon. Birds of a feather

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