smalltown.bmpSmalltown, another company seeking to offer a Yellow Pages-like service with a more compelling online experience and community feel, is expanding to cover more cities.

The site launched in the cities of Burlingame and San Mateo in October, and now claims 3.5 percent of populations of those two cities visit its site at least once a week. That may seem small, but this isn’t bad for five months work. The Mercury News, by comparison, enjoys about 25 percent “penetration” in Santa Clara county, down from 45 to 50 percent in the 1970s, and it has been around for more than a hundred years.

VentureBeat wrote an extensive review when Smalltown launched, and pointed to a screencast about how it works. It takes a small time investment to learn how to use Smalltown. Store merchants can pay to upgrade their listings, and local residents can write reviews, leave messages and ask for tips.

Tomorrow, Smalltown announces the coverage of Foster City, Belmont and Millbrae. It also launches a “reply back” feature, which sends an email alert to merchants when someone posts a review on their listing page. Smalltown has also added the ability for people to — surprise! — upload video.

Smalltown has $3 million from Formative Ventures, and its expansion stands in contrast to consolidation happening elsewhere. Insider Pages, which offered local listings was struggling, and was just bought by CitySearch. Also, Smalltown has hired Daniel Payomo to run its sales efforts. Payoma, who has worked at several media companies, including Knight Ridder, was recently at Backfence, another community start-up that just laid off some workers.