CitySearch says its pay-for-performance ad program is taking in an eye-popping “average” of $500 per month from advertisers, or $6,000 per year, according to a Sept. 4 article by Ann Meyer in The Chicago Tribune.
If the figure is accurate, that would be a big “wow.” CitySearch currently claims 50,000 advertisers, so it adds up to $25 million per month, or $300 million per year. That would be more than Yahoo and Google’s local totals. It would make CS the largest local online Internet company — ever. It would suggest that Forbes Magazine should stop picking on Barry Diller’s flawed Internet strategies. It would suggest that CitySearch is beginning to get more per advertiser than the Yellow Pages.
But hold your horses, we have a hard time believing it. CitySearch itself seems a little confused. A company spokesperson confirmed the “average” figure, but to add to the confusion, then added that this represents the average “cap” for local advertisers.
Oh, boy. Our understanding of such a “cap” is that this would be the ceiling on the amount of paid click-thrus that advertisers would agree to pay for. I dunno, this doesn’t make sense to me either. If CitySearch had such an incredible incentive to pump up the volume of paid click-thrus, wouldn’t it be spending its money on driving traffic, rather than hiring a horde of new salespeople?
My guess: It is just a communications glitch. CitySearch probably didn’t mean to convey a $500 “average” figure across the board, but rather, wanted to note that it is getting $500 a month from advertisers in some of its best categories (spas, restaurants, etc.). After all, its bottom line commitment from advertisers is just $49 per month ($588 per year). I bet more fall into this category. $588 x 50,000, by the way, adds up to $30 million, which is none-too-shabby.
But this is just a guess. I’ll talk to Sales EVP Neil Salvage in a couple of weeks at Kelsey’s Directory show in LA, and we’ll straighten this out.
Here’s a comment from an executive who I won’t identify:
“Great posting! Do you think anybody ever explained the difference between mean, median and mode to the CS PR department?”
I caught up with Neil Salvage, CitySearch’s new head of sales, at SES Local in Denver Sept. 29. Salvage says it is silly to talk about “$300 million” annual revenue, which is way too high. But he notes that advertisers in some categories are, indeed, budgeting in the $350-$500 per month range for the pay-for-click advertising. This figure can be further watered down to account for multiple location advertisers.
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[...] I read Bogatin religiously, but $100 million. Wow! That would probably be many times CitySearch’s estimated earnings. I batted this one up to CitySearch PR to see how they’d respond to that one. Characteristically, the PR folks wouldn’t say how much the IAC division actually spends, or even give me a ball park figure. But they assured me that the number from Bogatin’s sources is “grossly inflated.” [...]
[...] I read Bogatin religiously, but $100 million. Wow! That would probably be many times CitySearch’s estimated earnings. I batted this one up to CitySearch PR to see how they’d respond to that one. Characteristically, the PR folks wouldn’t say how much the IAC division actually spends, or even give me a ball park figure. But they assured me that the number from Bogatin’s sources is “grossly inflated.” [...]
[...] their advertiser base 20% year-over-year. Citysearch generates huge profits with their network of 50,000 advertisers charged, on average, $500 per month. These companies have managed to succeed even in the face of stagnating consumer interest in their [...]