Online media and advertising company CityGrid, the parent company of properties like Urbanspoon, Citysearch and Insider Pages, is announcing a round of layoffs today that will affect about 15% of its workforce. The company, which is part of the IAC network, currently has around 450 employees. As CityGrid CEO Jason Finger told me earlier today, the reason for the layoffs is a general shift from cost-per-click (CPC) advertising in the local space to a subscription-based and cost-per-acquisition (CPA) model. CityGrid, which is made up of some of the oldest companies in this space, based its revenue model around CPC.
As Finger told me, today’s cuts will affect a variety of CityGrid’s groups, but primarily employees in technology and support functions. He stressed that this decision was made in an effort to reduce cost, but “so we can make appropriate investments going forward.” The company wants to “shrink to grow” its CPA-based model and its existing consumer properties. Indeed, Finger argued that today’s layoffs will help the company “accelerate the innovation cycle” and allow it to focus on mobile and social. “We are extremely excited about the opportunity in local and remain committed to investing to grow our business,” Finger said.
Earlier this year, CityGrid, acquired Yext’s pay-per-call ad service Felix for a rumored $30 million. This, said Finger, shows the company’s commitment to the CPA model and CityGrid plans to layer this model on top of the categories it currently serves. Because of the strategic shift in the local advertising market, Finger noted, merchants now want to pay for the actual customers they receive or prefer a high ROI subscription-based advertising model.
It’s also worth noting that when Finger, whose background is in CPA advertising, took the job as CityGrid’s CEO in April, he found a company that had strong assets, but that also still had a significant technical debt due to its reliance on legacy technology. The company has now, for the most part, migrated off these old legacy dependencies.
CityGrid is a relatively new construct inside of IAC. In 2010, the company merged Citysearch, Insider Pages and UrbanSpoon to form CityGrid. According to IAC’s latest quarterly earnings report from July, CityGrid and ServiceMagic, which the company groups together in its report, had revenue of about $84.5 million in the preceding quarter. Compared to other groups inside of IAC, these local services saw lower growth rates than the company’s other segments.
CityGrid Media is an online media company that connects web and mobile publishers with local advertising organizations by linking them through CityGrid, its local content and advertising network. CityGrid Media owns and operates leading local consumer properties including Citysearch, Insider Pages and Urbanspoon. CityGrid Media is an operating business of IAC (NASDAQ: IACI). For more information, visit IAC’s Investors Website.
Urbanspoon allows users to find everything about local restaurants. Users can read user submitted recommendations and reviews as well as from critics. It was acquired by IAC on April 29, 2009 for an undisclosed sum of money. The team will continue to work on Urbanspoon under the new parent. Urbanspoon is a part of the CityGrid Media advertising group.
Felix powers local commerce by connecting consumers with businesses at the moment they’re ready to make a purchase. Felix revolutionizes local advertising by offering the first Pay Per Action phone call product to local businesses. Instead of paying for clicks or phone calls, a business only pays for potential customers. The way Felix does this is deceptively simple and hides enormous complexity from the tens of thousands of local businesses. Felix utilizes over 200 different advertising relationships to place business...
Insider Pages is a recommendation site for things that matter most in people’s life. Users can search by category, business name, key word and location to find local businesses recommended by real people. Searching for a new doctor? Insider Pages’ Doctor Finder feature can help you find the right person by zip code, insurance, years of experience and more. Need someone to help with your lawn care, home life, childcare, personal services, pet care or auto services? Insider Pages...