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Verizon Announces SuperPages Spin Off, To Be Called "Idearc"

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Ending several months of speculation Verizon announced yesterday that its SuperPages unit would be spun off as a separate company, to be called, somewhat awkwardly, "Idearc Inc." According to a BusinessWeek article the name is a combination of "idea" and "arc," words that Verizon told the magazine "symbolize how the directory business connects buyers and sellers."

According to comScore, SuperPages was the top Internet yellow pages (IYP) site owned by a traditional publisher and the second in terms of overall traffic (July, 2006):

1. Yahoo! Sites — 23.9%
2. Verizon SuperPages — 20.1%
3. Google Sites — 12.5%
4. Yellowpages.com —12.0%
5. Time Warner Network — 7.7%
6. Local.com — 5.9%
7. InfoSpace Network — 5.1%
8. Dexonline.com — 4.1%

comScore also reported that the IYP category saw 68 million searches in July and had 46% year-over-year growth. SuperPages itself claims more than 2 billion searches annually.

Here are the comScore numbers on market share in the broader "local search" category (IYP + search engines):

1. Google Sites — 29.8%
2. Yahoo! Sites — 29.2%
3. Microsoft Sites — 12.3%
4. Time Warner Network — 7.1%
5. Verizon Communications— 6.6%
6. YellowPages.com — 3.9%
7. Ask Network — 2.7%
8. Local.com— 1.9%
9. InfoSpace Network — 1.9%
10. DexOnline.com — 1.4%
11. All Other — 3.2%

Among the traditional yellow pages publisher sites SuperPages has been the most experimental and innovative, early on embracing PPC and PPCall (in print too), adding user-reviews (an anathema to most YP publishers) and trying to expand the range and usage of the product online beyond traditional service business listings. The company also has a mobile product, "SuperPages on the go."

In July, SuperPages acquired SEM firm Inceptor and did a distribution deal with Google to resell AdWords. SuperPages is not unique, however, in acquiring an SEM firm. RH Donnelley recently bought LocalLaunch. And in February independent yellow pages publisher Yellow Book USA acquired a lesser known local SEM firm ClickFoward.

SuperPages President Eric Chandler, last year, first articulated the concept that the directory publisher was effectively becoming like an "agency" for local advertisers, helping them to achieve broader reach online through simplified search engine marketing and other methods, in addition to selling its traditional yellow pages products.

Online revenues are hovering at around 15% or so of print revenues for the yellow pages industry overall. Much more revenue and profit are offline but growth is almost entirely online.

SuperPages had a reported $3.45 billion in overall revenues in 2005. The new company will have a 7,100 employees, about 3,000 of which are sales people, according to The Kelsey Group.

SuperPages is one of the best-known IYP sites -- it would prefer to be known as a "local shopping" site -- but it faces tremendous competition from not only search engines but a range of stand-alone "local search" sites and directories with user-generated content, such as InsiderPages and Yelp. Hitwise's LeeAnn Prescott found that traffic to "traditional" IYP sites was not growing as fast as that going to these "social directories," as I like to call them.

The spin off will probably be very good for SuperPages, which will have greater freedom to innovate and be able to keep its own revenues, which are traditionally partly siphoned off by the corporate parents of YP publishers for the cash flow.

Once freed, it will be interesting to see how aggressive SuperPages tries to be and how it adapts to a rapidly evolving local-search marketplace.


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