Startup Chatter by Donna Bogatin

Who is bilking who?

IAC’s Citysearch is the latest online PPC provider to face legal charges of “click fraud.” Once again, however, the “plaintiffs” aim low, settling to contest over enthusiastic click counting, rather than seeking to shed sunlight on the disingenuous foundations of the entire auction-based CPC advertising business.

“Citysearch is a leader in keyword optimization services, purchasing more locally driven keywords than any pother organization in the industry,” partner Acroterion hails.

WHY is Citysearch best buds with Google SEM? SEARCH ARBITRAGE, at the expense of Citysearch advertisers.

At a 2006 local search panel in NYC, Kara Nortman, VP M & A, IAC/InterActive Corp. was seated next to Dominic Preuss, Product Manager, Google, and seized the opportunity to give the nod to Google several times for being a “democratizing” force online, which she characterized as a “beautiful thing!” Nortman praised Google’s “self-service portal,” although Citysearch has invested heavily in a direct sales force to presumably compete head-on with Google in local search.

Citysearch makes massive buys of Google keywords with the sole aim of redirecting–reselling at a higher price–the SEM clicks to Citysearch Pay-For-Peformance budgeted client listings in order to draw down committed ad spend.

I have long written that the Citysearch Google-fueled circular business model ill serves both local merchant advertisers and local searchers. Not only are consumers sucked into redirection spirals, paying advertisers end up paying more but getting less.

Local merchants interested in Google SEM ought to economize and optimize by disintermediating the Citysearch middle man to buy direct at Google, for direct referrals to their own Websites, NOT Citysearch!

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