Citysearch Takes Advertisers For a Ride

Citysearch Ad Buyer Beware

Citysearch.com, founded in 1995, is a major player in the local search market. The site now attracts 20,000,000 unique visitors each month, making it one of the most popular websites in the U.S.

Not only is the site highly trafficked, it’s also highly profitable. The company’s “pay-for-performance” ad program generates an average of $500 per month per advertiser, or $6,000 per year, as reported by Ann Meyer of the Chicago Tribune. If accurate, Citysearch, with its 50,000 advertisers, earns $300 million annually.

For clients, Citysearch promises to reach customers who “are looking to make smarter decisions about where to spend their time and money”. The Business Profile has the “look-and-feel of an editorial review” and featured listings help one “stand out from the competition.”

An advertiser pays for views of their profile – presumably highly targeted views, driven by visitors performing searches within the site (e.g. a category and location). While they do offer reports on the number of visitors to one’s profile, Citysearch does not report where those visitors originated.

Cashing in with search arbitrage

Arbitrage involves taking advantage of a price differential between two or more markets. In the case of Citysearch, the two markets are Google’s AdWords and their own “pay-for-performance” program. The price discrepancy? The cost of a keyword and the earnings per profile view.

Citysearch buys keywords using AdWords (as well as with Yahoo! and other search engines) and then directs a visitor, not to their homepage, but to a sponsored listing, offsetting the purchase price of the click and potentially earning a profit.

Industry estimates of the company’s AdWord spending are in the $100 million dollar range. If true, Citysearch spends one-third of its revenues on search. The company releases no information on the revenues garnered from this practice, but it must be hugely profitable - AdWord prices are driven by free market economics; Citysearch is a closed system driven by sales and marketing.

According to Adwords, the phrase, “new york ethnic food” costs an average of $.34. Citysearch earns $.75 for this restaurant profile view – a $.41 profit. More sought after keywords like “new york restaurants” cost between $.62 and .$78. Even if the cost of a click is break-even, any further exploration on the part of a user is gravy. Many clicks on AdSense affilliates (at least in the restaurant space) can be purchsed for between $.10 and $.20.

And because it so effectively monetizes paid-for-views, Citysearch is able to spend with abandon. AdWord clicks are not nearly as targeted as they are within the company’s internal database search. One need only explore Citysearch’s sponsored listings in Google. After a search for “fast food new york” I was directed to a fine dining establishment. A search for “restaurant 10028” yielded a restaurant in the zip code 10036. A search for “restaurant upper east side” led me to an eatery in Tribeca. It would appear that Citysearch is merely sloughing off paid-for page views to max out an advertiser’s budget.

A Citysearch PR Rep discussed the role of paid search listings with Peter Krasilovsky,

“Currently, we have a relationship with Google that not only sends traffic to Citysearch.com but to our customers’ websites as well. This product directly connects our customers’ websites to consumers searching for their type of business across our partner network.”

I encountered the term ‘affiliate network’ on a recent call with a sales representative at Citysearch. While she was quick to highlight the role of keywords in the company’s internal database search, she only mentioned affiliiate advertising after several minutes of questioning. She failed to mention Citysearch’s made for AdWords landing pages.

Seperate landing pages?

If Citysearch had the best interest of its advertisers in mind, they wouldn’t offer separate landing pages for restaurants found organically and restaurants found through Google AdWords. The only rationale for serving up two different versions - to drive traffic to other sponsored listings - runs counter to an advertiser’s best interest.

Made for AdWords listing

Listing as it normally appears

The sponsored results, misleadingly labeled as “Also Recommended for You”, is prominently featured to the right of the AdWords landing page. A user must click “learn more about _______” before seeing the complete profile page with detailed information and easy access to user reviews.

For businesses looking to expand their reach, full disclosure of traffic sources should be a prerequisite for joining the Citysearch network. Traffic driven through AdWords is worth less than traffic driven through Citysearch’s targeted internal search. A made-for-AdWords profile should cost less than a full profile.

For the internet savvy, money is better spent building a website and buying highly relevant keywords through Google.