IAC buys Insider Pages – Huh?

Local by on March 1, 2007 at 1:35 am

Rumors have swirled for a week that a public company was buying Insider Pages, and VentureBeat just announced that Citysearch was the buyer.

I didn’t expect IAC to be the buyer. The Yellow Page companies (who are JUST ‘allowing’ their users to write reviews) are further behind and have a lot more to gain than IAC. Plus IAC has Citysearch, the granddaddy of review sites. However, as I thought about it more, I began to think it “kinda” makes sense for a few reasons:

  • AskCity. Yahoo has been quickly establishing itself as the dominant player in local (certainly from a product perspective). IAC’s assets have been spread across semi-independent companies (Citysearch, ServiceMagic, LendingTree, Ticketmaster, etc.). AskCity was the first step by IAC to bring those sites together (of course, I’ve thought that they were going to build a more coherent experience for several years). Insider Pages brings must-have functionality to Ask (write a review), and helps close the product gap with Yahoo (they still have a long way to go).
  • Citysearch. IAC has little need for restaurant reviews (yelp). Their editorial and enhanced business info around restaurants is unmatched. They have a ton of reviews (around >2M reviews), although they are of poor quality. They will continue to get restaurant reviews in high volume - InsiderPages can help them sort out the quality problem. Citysearch doesn’t have much review content outside of restaurants (where the money is).
  • IAC’s local sales force. Clearly, the buyer needed to have a local sales force. The real challenge in local is figuring out how to make money. Building and scaling a local sales force is incredibly expensive, but an existing sales could begin selling the local inventory immediately. Citysearch was the first company in the local space to build a sales force. It took them tons of capital, but few companies understand selling online local better than citysearch (of course, they’re largely selling Google and Yahoo clicks, not ads on their local properties).
  • Price. The price of the transaction isn’t known, but its rumored to be slightly above the capital invested. Ouch for everyone (investors get money back, employees get nothing, buyer still paying 10M). Its an expensive purchase (rumored around $10M), but that can seem cheap when put up against IAC’s other purchases.
  • Bill Gross.

But still:

  • 600K reviews? Yes, its a lot of reviews and there are only two other sites with similar numbers, but Insider Pages lost momentum in a huge, huge way. I think they were at 500K 12 months ago…
  • More Reviews? IAC is already heavily invested in local reviews - more than anyone. Does growing their review base by 20% really help them much?
  • Price. Could IAC have deployed $10M more efficiently than a company that spent heavily on local sales? Is integration going to be more effort than building from scratch?

Well, I’m curious to see other reactions among the local bloggers.


1 Comment

  1. […] Citysearch turned out to be the buyer of Insiderpages. Terms weren’t disclosed but basically the venture guys get their money back and employees get a job at Interactivecorp. Dave Naffziger, who works at Judy’s Book, has the best analysis of the deal and its implications. […]

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