Citysearch says its pay-for-performance ad program is taking in an eye-popping "average" of $500 per month from advertisers, or $6,000 per year, according to a Sept. 4 article by Ann Meyer in the Chicago Tribune.
If the figure is accurate, that would be a big "wow." Citysearch currently claims 50,000 advertisers, so it adds up to $25 million per month, or $300 million per year. That would be more than Yahoo!’s and Google’s local totals. It would make Citysearch the largest local online Internet company — ever. It would suggest that Forbes magazine should stop picking on Barry Diller’s flawed Internet strategies. It would suggest that Citysearch is beginning to get more per advertiser than the Yellow Pages.
But hold your horses because we have a hard time believing it. Citysearch itself seems a little confused. A company spokesperson confirmed the "average" figure but to add to the confusion then added that this represents the average "cap" for local advertisers.
Oh, boy. Our understanding of such a "cap" is that this would be the ceiling on the amount of paid clickthroughs that advertisers would agree to pay for. I dunno; this doesn’t make sense to me either. If Citysearch had such an incredible incentive to pump up the volume of paid clickthroughs, wouldn’t it be spending its money on driving traffic rather than hiring a horde of new salespeople?
My guess: It is just a communications glitch. Citysearch probably didn’t mean to convey a $500 "average" figure across the board, but rather wanted to note that it is getting $500 a month from advertisers in some of its best categories (spas, restaurants, etc.). After all, its minimum commitment from advertisers is just $49 per month ($588 per year). I bet more fall into this category. $588 x 50,000, by the way, adds up to $30 million, which is none-too-shabby.
But this is just a guess. I’ll talk to Sales EVP Neil Salvage in a couple of weeks at Kelsey’s DDC2006 show in L.A., and we’ll straighten this out.