Should classified services continue to list page after page of listings, or take advantage of search capabilities to spotlight listing matches? That’s a dilemma every classified service has had to contend with.

Advantages of traditional listings are they are easily understood by advertisers and possibly foster a better environment for display ads. The potential advantages for performance-based ads are that they are efficient, and are potentially more lucrative, given the better “conversion” rates that come with matching based on search criteria.

Last week, Kelley Blue Book said it was going to go with the performance-based model for an auto marketplace that will be rolled out in 4Q 2009. “Dealers will realize efficient sales at a fraction of the cost incurred with traditional, subscription-based classified listing models,” noted a release.

Kelley, which has chosen Vast.com as its partner for the performance-based piece, said it will be differentiated from similar offerings by integrating the historical auto research that the company is generally known for. The site, fed by 12 million unique to the main kbb.com site, will also include a “Dealer Storefront” providing consumers with detailed information about the dealership, and will provide dealers with “new lead opportunities, special messaging and merchandising opportunities.”

Kelley CEO Paul Johnson said in the release that “the scale of kbb.com’s pay-for-performance model is a game-changer in the online classifieds business. We expect that this program will be successful in not only matching consumers with cars that they want to buy, but also in helping the industry sell more vehicles at lower per-vehicle advertising costs.”