InfoSpace Buy to Reduce Idearc's Need for Traffic from Google and Yahoo

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On the heels of acquiring local and community related properties, Idearc Media Corp. has bought InfoSpace's directory assets including yellow and white pages directory site Switchboard. Idearc, publisher of Superpages.com and Verizon Yellow Pages, has pointed to the $225 million purchase as a means of garnering more organic Web traffic, thereby limiting the need to rely on traffic from search engines.

"We want to be able to control our own destiny," said Idearc President, Internet Eric Chandler, during a press conference call this morning. The acquisition, which will include InfoSpace's mobile application Find It, will provide Idearc with "more high quality organic traffic," he added.

Existing agreements Switchboard has in place with search partners have caps on the amount of traffic that can be driven to its directories. "Once we own the traffic there are no caps for us," said Chandler.

Idearc has traffic acquisition deals with Yahoo and Google, and believes the nature and quality of traffic generated by the newly-acquired directories are similar to what Idearc offers advertisers now. The InfoSpace buy will have no impact when it comes to its agreements with search engines, Idearc stressed.

In Q1 2007, comScore ranked Idearc in second place in terms of search queries among national Internet yellow pages properties, Idearc generated 158.2 million queries compared to Yahoo's 180.8 in 2007's first quarter. Yellowpages Network queries rose around 80 percent in Q1 '07 over Q1 '06, according to comScore, in part because of a partnership delivering traffic from Switchboard.com. The Yellowpages network had 143.8 million queries in the first quarter of this year.

Idearc provides publishing and sales services for more than 1,200 directories in 35 states including Verizon Yellow Pages, Superpages.com and Superpages MobileSM. At first, the traffic boost from InfoSpace will allow the company to offer more performance-based ad inventory, the company said. InfoSpace's flat-fee ad deals may take a bit longer to ramp up under Idearc, according to Samuel Jones, Idearc's SVP of investor relations, who said integration of InfoSpace directories will be "fairly complex," and possibly only one-half or two-thirds of InfoSpace's current flat-fee advertisers will carry over this year.

"The demand for our advertisers is greater than what we can fulfill," said Idearc President and CEO Kathy Harless, who said the firm has over 200,000 Internet advertisers.

Idearc has also exhibited a keen interest in local and community sites. The firm bought the LocalSearch.com domain last week, in addition to investing $3.3 million in AmericanTowns.com, a network of community sites featuring local event information. The firm's Superpages.com property added a restaurant review app to the growing list of Facebook applications and added a merchant comparison tool to its listings.

Stressing Idearc's local search focus, Harless noted, "To be successful in local search, we must have strength in...content, technology and distribution." The InfoSpace buy, she continued, "Is a significant step in strengthening the traffic component."