Analysis: Idearc's Purchase of Localsearch.com URL

As my colleague Charles Laughlin has written, Idearc Media has purchased Localsearch.com from American Town Networks and will presumably use it as the foundation of a new local search destination to feed off its Superpages.com site. Under terms of the deal, Idearc is paying $3.3 million in cash for the URL and an unstated interest in American Towns itself, a 10-employee site that has morphed over the years into an event-driven, hyper-local site with a rich selection of publishing tools.

The deal also calls for Superpages head Eric Chandler to join American Towns’ board. In addition, American Towns gets “deferred purchase consideration,” presumably if it becomes a more significant part of the Idearc solution.

American Towns was founded during the first dot-com boom in the late 1990s by Mike Kelly, a longtime media publisher who now runs AOL Media Nets. The company made tentative efforts in 2003 to launch an SEO business for Localsearch.com, using Planet Discover as a vendor. But it was never fully developed, and the company itself has generally been considered something of an also-ran as other hyper-local sites emerged on the scene, such as Yelp, Judy’s Book and Insider Pages. But it has also been a survivor.

Idearc VP Robyn Rose says the purchase of Localsearch.com, and Idearc’s continuing relationship with American Towns, is part of an initiative begun in April “to focus on what consumers want. We look for ways to offer consumers local information.” The American Towns deal “is part of an overall strategy,” she says.

In addition to integrating content from American Towns, other local services offered by Superpages include local Wi-Fi information and a (very cool) new restaurant review application with Facebook. Last year, Superpages started gathering reviews on its own, but without assistance, getting an adequate number of reviews is likely to be an uphill battle.

Idearc actually began working with American Towns in February 2007, providing business listings and content for its hyper-local customers. The site currently gets about 120,000 unique visitors a month, largely driven by search. Most of the users come from areas where American Towns has been operating longest, generally in the suburbs of New York City.

Company Chairman Ted Buerger said he intends to use Idearc’s cash to continue a national ramp-up of the site and its arsenal of publishing tools for local businesses and organizations. In addition to event publishing tools, for instance, the company also provides tools for posting news and press releases, a fundraising tool, and a PR tool that lets community organizations post to other sites.

In doing so, American Towns is competing with sites such as Yourhub.com and Readmedia.com. (formerly Empire Information Services). More than half its revenues come from the use of such tools, while “less than 50 percent” comes from Google AdSense.

Buerger stresses that he expects Idearc to be an active partner and not just grab the valuable URL (which, I would suggest, might have even been under-priced). “Lots of people were interested in buying the URL,” he says. But to American Towns, “the key aspect of the partnership is awareness, peering traffic and content. It all fits together.”