merchantcirclelogo.pngCitysearch, 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.