VentureBeat

Citysearch, an online guide service about local US businesses, has partnered with MerchantCircle, in an effort to hold their own in the increasingly competitive area of local reviews.

The move comes as Citysearch is under attack from newer, fresher sites like Yelp, which offers reviews about locales and is appearing as high, if not higher than Citysearch in search engine results.

Citysearch, a division of IAC, has a large collection of local data that includes 14.5 million business listings, more than 600,000 user reviews, and ratings on more than two million business locations in the US. It has been growing through acquisitions, having purchased local review site Insider Pages earlier this year (our coverage).

MerchantCircle, which has already received funding from Citysearch, has been growing fast. It launched in June of 2006 with 5,000 merchants using its services — today it has 300,000. The Los Altos, California company lets businesses create a homepage with basic business information (including photos and videos), create online coupons, send email newsletters to customers and more. The company tells us its most successful feature is its reputation manager, a tool that automatically aggregates reviews and directory listings about a company from around the web.

The partnership will allow MerchantCircle to aggregate Citysearch data, and take advantage of Citysearch’s local ad network. Citysearch will use MerchantCircle’s software.

Of course, these companies are competing against many other also trying to provide local information more efficiently.

Google, Yahoo, Microsoft and AOL are all working on local search offerings. Google, for example, has both local search and local mapping services that many find useful. Then there are startups like local-review site Yelp and local search engine Grayboxx. Then, there are companies like accounting software company Intuit, which are trying to buy their way into local business. Earlier this week, Intuit purchased business web services company Homestead.

The Citysearch-MerchantCircle partnership will run deep. MerchantCircle will offer Citysearch marketing programs to its members, MerchantCircle will use Citysearch’s local and national ad-sales teams to help sell ads on its site to advertisers, and IAC will get a seat on MerchantCircle’s board.

Besides Citysearch, MerchantCircle has also taken on funding from Rustic Canyon Partners, Scale Venture Partners and Disney’s Steamboat Ventures.

Citysearch, the division of IAC focuses on local reviews of restaurants and other services, has acquired the struggling local review start-up, Insider Pages.

The purchase (amount undisclosed) comes at a time of increasing competition in the race to deliver a compelling local search services. Citysearch’s parent, IAC, has already bolstered its local search offerings, namely with Ask City, a property that packages everything from local search to local maps, reviews, and ticket services.

However, more entrants have arrived to nip traffic away from Citysearch, an early player that has seen its traffic stagnate in recent months. There’s Yelp, Judysbook and Backfence, for starters. Earlier today, we mentioned new competitor Outside.in, another company going after the local community news and events area.

Anne Raimondi, vice president of marketing at Redwood City’s Insider Pages, just informed VentureBeat of the purchase, which will be announced tomorrow. We mentioned the rumor last week.

Insider Pages has about 600,000 user reviews, and they’ll be integrated into the Citysearch’s offering, she said. It has 2.5 million monthly unique readers, she said, based on Comscore and internal tracking numbers.

She would not say whether the purchase price was more than $10 million invested in the company by Sequoia Capital, Softbank and Idealab. She said there were multiple bidders, but that Insider Pages preferred Citysearch because it is complementary. Insider Pages is popular among suburban parents and homeowners, she said, giving it strength in the home, garden, health and plumber review areas. Citysearch is stronger in bars, arts and entertainment. Citysearch will absorb Insider Page employees in its San Francisco office.

Yelp, the Web site offering user-generated reviews of bars, restaurants and other places, has raised $10 million in venture capital from Benchmark Capital.

We recently mentioned Yelp’s wave-making with its parties.

Yelp, like other recent Internet companies, is challenging incumbent sites like Citysearch by developing a community of local reviewers. By encouraging loyalist users to review often, Yelp bets its site will be fresher and more compelling.

It is noteworthy that the venture money comes from Peter Fenton at Benchmark. We recently featured Fenton’s argument that companies should only get funding after they’ve achieved some traction with customers. Yelp had 1.5 million unique users in September, a 200 percent increase from January, the company says. So it fits in the “post-adoption” category, Fenton told us today.

Fenton will join Yelp’s board.

After launching initially in SF, the SF-based Yelp has since launched in Boston, Chicago, Los Angeles, New York, San Jose and Seattle.

Yelp’s other investors include Bessemer Venture Partners and PayPal Co-Founder Max Levchin.

Rather than unleashing armies of people to go out and build a massive repository of reviews, like Citysearch did, Yelp has managed to build a local community that keeps reviews fresh, giving Yelp a more lively feel, says Fenton. And with more reviews, you can begin to parse them in different ways — for example classifying them to show which one are written by 20-year-olds, and which ones by 40-year-olds. That way, users can judge reviews based on their preferences.

Fenton said he made the decision to invest after talking with several locales, including Quince, a restaurant in San Francisco. He asked the waitress if she’d heard of Yelp. “Have I heard of Yelp?,” she asked. “I obsess about Yelp.” Fenton said she described in detail a negative review, and remembered the date the customer visited, and what went wrong that evening.

Fenton says $14 billion is spent each year on yellow page advertising every year in the U.S., and that he Yelp can make money by getting advertising on its sites from local establishments. Yelp is not yet making money.

The company had raised $6 million previously.

When asked about the girl-kissing-girl photos appearing from a recent Yelp party, chief executive Jeremy Stoppelman said the actions weren’t staged, and that the photographs underscore the “festivities and celebration and excitement going on in the valley” right now. The parties help to drive Yelp’s community building, he said.

Besides Citysearch and Yahoo Local, there are also new competitors like Judy’s Book and Insider Pages. Stoppelman said that the relative depth of Yelp’s community is what encouraged Benchmark to invest.

Silicon Valley can be a smug, protected place, and along the leafy streets of studied Palo Alto, quite conducive for dreaming up lines like “do no evil.”

What happens when your platform outgrows this place? We learn that Google has retained the services of DCI Group, which specializes in “corporate-financed grass-roots organizing,” such as setting up front groups to “agitate for a client’s position, placing letters to the editor with key newspapers, and using phone banks to generate calls to politicians.” At least that’s the nice description. Others call it “the phony seed bed for the most noxious astroturf organizing and general baboozlement in contemporary politics.”

The group, generally known for its ties with Republicans, made a YouTube video spoofing Al Gore’s documentary about global warming, and its clients happen to include the multinational oil company ExxonMobil. Notable, of course, given Google’s efforts to stop global warming, which includes supporting a new 100+ mpg hybrid car — and given Google’s other ties with Gore, including the partnership in Current TV. So what happened to Google’s “do no evil” morals? Maybe they’re reading Machiavelli, who once said, “politics have no relation to morals.”

Most start-ups don’t think about the politics of Washington, DC until they are quite big, and Google is the latest to go through this. There’s always the Craigslist model, which we’ll leave for another time.