MySpace Goes Local With Citysearch Deal

Social networking giant MySpace has teamed with the popular online local guide Citysearch to launch MySpace Local, billing the new feature as a “social directory of small business profiles.”

Citysearch, a division of IAC (NASDAQ: IACI), is a comprehensive directory of business listings in cities across the country, featuring restaurant listings, reviews, events guides and other local content, much of which will begin showing up on MySpace over the next few weeks.

There was no shortage of exuberance from MySpace CEO Chris DeWolfe, who told reporters on a conference call that the new local service is “not just a product announcement, but more importantly the defining moment in MySpace’s emergence as a social portal.”

DeWolfe’s vision for MySpace, which has been eclipsed in both hype and total users by rival Facebook, is to bring the social exchanges the site was built to verticals such as music, video and, now, local businesses.

This is the idea of the trusted referral, or the notion that you’re more likely to buy a product or visit a restaurant if a friend recommends it than a stranger. So just as MySpace has staked a firm claim on the social exchange of music, the new MySpace Local will greet users with reviews, ratings and other content their friends have submitted about local businesses.

“We’re focusing on enabling the discovery of content and culture through the lens of your friends,” DeWolfe said. “In the same way they have discovered music and videos in the past, they’re going to be discovering businesses.”

MySpace has tapped into Citysearch’s directory of businesses to fill out its own listings, which will be presented through small business listing pages on MySpace, as well as the pages designated for major cities, called hubs. In the private beta launch, limited to a few test markets, MySpace is only offering listings in the categories of restaurants, bars and nightlife.

The social network, a division of News Corp. (NASDAQ: NWSA), plans to add more categories and stage a nationwide rollout next month. MySpace is also planning to take the service global and integrate the listings and hubs into the mobile version of the site.

When MySpace users write a review, post a comment or flag a listing with a new bookmarking feature, that action will be published in their friend feed, alerting other people in their network. When users visit a business listing, the reviews submitted by their friends show up first.

MySpace has a few strategies for making money from the new partnership. Businesses pay Citysearch to post information like maps and pictures, so when that content gets pushed over to MySpace, the social network will share in the revenue.

There are also numerous branding opportunities on the hubs. MySpace has signed up Coors and Outback Steakhouse as sponsors of the national launch, so their brands can be expected to be featured prominently throughout MySpace Local.

The social network will also be monitoring the interactions closely with an eye for improving the relevance of its ad platform through a strategy it calls hypertargeting. DeWolfe said that the company has about 250 employees who do nothing but work on the “hypertargeting” technology to put the most relevant ads in front of its users.

Monetizing social networks through advertising has proved famously challenging. For years, thriving social communities like Facebook and MySpace have been a tantalizing prospect for merchants looking to join a conversation among friends. However, in many respects, advertising on social networks has not evolved much beyond the graphical banners found across the Web and the text-based ads served up alongside search results.

The ultimate goal of the MySpace Local listings is to spur a word-of-mouth marketing campaign, said Jeff Berman, MySpace’s president of sales and marketing. Just as consumer products pitchmen have for years tried to whip up a viral buzz around their products — think of the housewife of yesteryear telling her friend, “You’ve just got to try this dish soap!” — Berman sees real value for local merchants when people start writing about them on MySpace.

“Whether this ultimately will apply to laundry detergent and orange juice is anyone’s guess,” he said. “But for local businesses,” he added, “it’s a smart bet.”

Businesses will also have opportunities to present MySpace members with coupons on the site.

DeWolfe also hinted at plans for some kind of e-commerce tie-in that could make money for MySpace, but offered no details.