Over the weekend, the Wall Street Journal ran an article pointing out how Google is increasingly favoring its own properties, in search results over natural results to outside sites which previously commanded the top spots. This practice is especially noticeable with Google Places and local results, but there are other examples as well from product and mortgage search to health search.

We’ve seen these spats before, particularly between Google and Yelp. Citysearch and Tripadvisor are also taking a traffic hit, it seems. Google responded yesterday with a post on its public policy blog titled “Local Search: It’s all about the best answers for users.”

Yeah, right. Don’t kid yourself. It’s all about what is best for Google. How else do you explain the preponderance of Google Places listings in local search results for queries such as “NY Chiropractor” (see screenshot) or “NYC spa”? In each case the top 7 links after the paid ads are businesses which just happen to have a Google Places page.

Is it just a coincidence that the top seven links in a row happen to be businesses with Google Places listings (which you can see by clicking on the Google Places links on the right). There is hardly any room on the all-important first page for any natural results below. What’s more, for the chiropractor search the first two Google Places results are ones with yellow “tags,” which are $25 local-search ad units targeted at small businesses. So even after the regular paid ads highlighted with a pink-shaded background, the next two results are also ads disguised as quasi-natural search results.

The Google Places results don’t always take up nearly the entire first page. Sometimes they come up in a single box with a smaller font, and just two lines each per listing. Try searching for “Columbus mechanic” or “NYC gym” and you will see what I mean.

Displaying local results this way is a little less in your face, but the end result is the same. In both cases, the main link still goes to the businesses’ own websites, but the Google Places links are also prominent. Either way, the message is clear to local businesses: list your profile in Google Places and you will have a better shot at appearing at the top of the first search results page.

Are these results better for users? It depends on how good are the Google Places listings. Some of them are very good, I will admit. But try any local search and I bet you will consistently get Google Places results, sometimes taking up most of page—not always at the very top, but always as a block. They can’t all be better than results for businesses which don’t happen to have a Google Places listing. Remember, Google Places is still fairly new and developing. Google is clearly using its main search page to push Google Places and make those listings more prominent. Over time, it will become a self-fulfilling prophesy and those listings will be the best because businesses will learn that is the most important place to be in order to be found by Google.

No wonder other SEO-friendly local listings and reviews sites such as Citysearch, TripAdvisor, and Yelp are up in arms about this favoritism. They are being muscled out of their previous cosy spots by the search engine which makes all the rules.

Kara Nortman, Senior Vice President of Publishing for CityGrid Media, tells TechCrunch that layoffs are an outgrowth of the philosophical restructuring of the group’s editorial component, “As part of our evolution to CityGrid, we’re moving to a more automated experience on Citysearch, migrating from full time staff into freelance staff.”

The move from in-house to freelance writers reflects the company’s desire to one day become a hub for aggregated local content says Nortman, “Maintaining an editorial staff of the same size doesn’t make sense when we can accomplish the same thing with freelance.”

While Citysearch representatives would not tell TechCrunch exactly how many of its over 400 employees remained in the editorial department, they did emphasize that the layoffs did not extend to the entire editorial team.

Citysearch is still hiring in other branches of the company and traffic in the entire CityGrid Media portfolio is rising, from 31 million to 37 monthly million uniques over the past year.

Ever since the launch of his CityGrid local advertising network at the beginning of the year, Citysearch CEO Jay Herratti has been putting most of his efforts into building out CityGrid as the largest network of local advertisers and local apps. Citysearch is now simply a flagship publisher on the CityGrid network. To reflect this shift in focus, the Citysearch business unit of IAC (which includes CityGrid, Citysearch, Urbanspoon, and Insider Pages) is changing its name to CityGrid Media

All of the local listings in Citysearch are available through CityGrid’s APIs so that anyone creating a mobile app or local Website can grab business listings, addresses, phone numbers, photos, reviews, and more and build their own apps around them. CityGrid also matches local advertisers with these local publishers.

The geo-local market is developing so quickly that Herratti knows he cannot predict which mobile app or approach will win out in the end. Instead, he wants to scale CityGrid to become the largest network of local advertisers and publishers so that no matter what turns out to be the hot Geo app of the moment, CityGrid ads and content will be at the center of it. CityGrid already has 700,000 paying local advertisers, and is on its way to a million. Some Citygrid partners include YellowPages.com, SuperPages.com, Bing.com, MapQuest, and Loopt.

Urbanspoon plans to continue its assault on OpenTable, and its weapon of choice is going to be the iPad. I am not talking about Urbanspoon’s slick iPad app which is already out and is aimed at consumers. I am talking about the RezBook, which is part of Urbanspoon Rez and is aimed at restaurant owners.

When it comes out in June, RezBook will be a full reservation system. Instead of writing down reservations in a paper book, restaurant owners will be able to enter them directly into the iPad, see bookings by time and by table. With a $500 iPad and RezBook, any restaurant will be able to afford a computerized reservation system. It won’t be free. RezBook will charge $1 per reservation, plus a low monthly fee. It will be much cheaper than a dedicated reservation system, and slightly cheaper than OpenTable, which is the company Urbanspoon is really going after.

RezBook works hand-in-hand with UrbanSpoon Rez, an iPhone application that launched last Fall. Urbanspoon Rez helps restaurants promote open tables and add a Rez button to their Websites, their page on Citysearch, mobile apps like Urbanspoon, or to other sites and apps through CityGrid. RezBook takes those incoming reservations and manages them on the backend, and creates a customer database in the process.

The combination of Rez button promotions and the iPad’s off-the-shelf affordability should allow Urbanspoon to target a wider swath of restaurants than the kind you currently find on OpenTable. At least that is the plan. I place RezBook in the same category as Square’s iPad app, which turns the tablet into a mobile cash register. Both of these apps leverage the iPad to bring sophisticated business software to small merchants with the promise of bringing them into the digital age.

When is OpenTable going to come out with its iPad app?

Social recruiting is all the rage right now when it comes to finding new employees to hire. Citysearch CEO Jay Herratti recently told me about a simple but effective way his company is using Facebook ads to hire people. Facebook ads are highly targetable. Citysearch puts up an ad with a picture of the hiring manager and shows those ads only to that manager’s Facebook friends. For instance, the image of the ad at right is the one seen by friends of Citysearch senior VP Kara Nortman, who is introducing social features such as business Tweets into Citysearch.

Since each ad can be “liked,” and thus shared across the social network via the news feed, the ads become implicit referrals. If you know Kara and you see the ad, whether or not you are looking for a job, you might feel inclined to like it and share it with your friends. Or maybe you are looking for a job and since you know Kara or at least are connected to her on Facebook, you feel like you’ve got an in. The ads seem to be working. Kara’s inbox was flooded after the ad ran.

Repeat that across all hiring managers, and companies can create their own homegrown social recruiting campaign. If you try it out, let us know the results.

Louvion most recently served as chief technology officer for online ad sales company Gorilla Nation Media. Prior to that, he held positions with BizRate.com and Shopzilla. In his new role, Louvion will be responsible for CityGrid’s ad and content engine, in addition to Citysearch’s search and data platform.

Citysearch recently launched CityGrid, a set of APIs which makes all of Citysearch’s local listings content and advertising available to other Websites and mobile apps. The APIs include more than 15 million local business listings, 3 million user reviews, and access to 500,000 local advertisers looking to reach people near their places of business.

There’s no denying it. People love to shake their iPhones. It’s almost as if they want to see how much they can shake it before it breaks. But shaking it is half the fun, especially when apps take advantage of the built-in accelerometer to turn shaking into a feature. One of the earliest apps to make shaking a central element of its interface was Urbanspoon, the restaurant recommender. You shake the slot-machine inspired app to find nearby restaurants.

Since launching in the summer of 2008, Urbanspoon’s iPhone app has been shaken more than half a billion times. The app has been installed more than 9 million times, and continues to be popular (currently it is the No. 5 most popular free app in the Travel category, right after Yelp).

Since being acquired by IAC last year (it is now part of the Citysearch business), its Website has also grown. According to Citysearch’s internal numbers, Urbanspoon.com is getting 7 million monthly unique visitors, up 220 percent from a year ago right before the acquisition.

Comscore shows 2.3 million monthly uniques worldwide as of January, 2010, and 1.8 million in the U.S. as of February, 2010, with 129 percent and 83 percent annual growth respectively. (Comscore’s numbers are estimates, but they corroborate the upward trend in traffic reported by Citysearch). Below is the U.S. chart from comScore:

One of the most detailed 3-D mapping apps on the iPhone is UpNext, which lets you click on 3-D buildings and see a list of the businesses and offices inside. Up until now, however, it only covered New York City.

A new update adds three new cities: Boston, Washington, D.C., and Austin (just in time for SXSW, of course). The Austin map won’t be available until later tonight, where it will appear in the app’s city selection screen. UpNext lets you zoom around the city in a very Google Earth-like fashion, search for restaurants, bars, and stores.

You can favorite and bookmark different venues, see Citysearch and Yelp reviews, and broadcast a tip about the place through Facebook or Twitter. UpNext now pulls in local listings data (addresses, phone numbers, reviews,menus, websites, photos) from CityGrid, Citysearch’s local content and advertising network.

And what would an Austin update be without Foursquare integration. Once you log into Foursquare through UpNext you can see where all your friends are checking in. The checkins are overlayed as glowing blue dots on the map.

Here’s a video demo showing off all the features of the app:

Over the weekend, Citysearch pushed out an update to its iPhone app with a much smoother user interface, better local search, and maps are now the default view. I am happy to report that it no longer looks exactly like Yelp’s iPhone app. The improvements should help it close the gap (Yelp is currently the No. 4 free Travel app, while Citysearch is No. 36). In fact, it now does some things Yelp’s app cannot do, the most important of which is that Twitter is baked into it in a very smart way.

Just like on Citysearch’s website, an increasing number of the local listings are associated with what people are saying about those restaurants, bars, and stores on Twitter. In addition to Citysearch user reviews, you can also see recent Tweets about the listings. And the app acts as a limited Twitter client in that you can Tweet out a short review from each profile page. The app prompts you to sign into your Twitter account and autofills a tweet with a link to the Citysearch page of that business. It is still a work in progress though. Right now the Tweets are filled in with an @citysearch handle and thus don’t show up on the Citysearch’s page for that business. By the next update that will change to the @handle of the business, and it the Tweets will start showing up on the Website as well.

Citysearch is building out a directory of business Twitter accounts and is beginning to catch Tweets about its millions of local listings. Within the next few weeks, the Twitter account names will start to become part of teh profile data available to developers via its CityGrid APIs

Some other nice touches to the app include a sliding icon menu bar at the top, which let you filter different types of listings (restaurants, salons, shopping, clubs, bars, cafes, arts & entertainment, banks, gas stations, movie theaters, pharmacies, bakeries, attractions, parking, and hotels). And if you shake the iPhone while looking at a listing, an offer might pop up. The “Shake For Offer” feature isn’t as cool as the augmented reality easter egg in Yelp snuck into its iphone app,

Here’s a video showing off the features of the new Citysearch iPhone app:

Twitter is becoming a serious marketing vehicle for local businesses. Everyone from your local baker to your favorite restaurant is getting on Twitter to talk to customers and draw in new ones. Just last weekend when I was driving to Vermont with my family, I sent out a Tweet asking for a good place to eat lunch. I got more than five responses, including one from a local innkeeper couple recommending two spots in town (not owned by them). That was in Brattleboro, Vermont.

But that was so random. How do you even find out which of your favorite local businesses have Twitter accounts or what their Twitter handles are? Well, CitySearch is doing it for you. The local business guide is starting to build out a definitive directory of Twitter accounts and Tweets about local restaurants, hotels, spas and stores. It is starting small, with about 5,000 business listings currently tied to their Twitter accounts (which businesses can add themselves when they claim their CitySearch page), but its aim is to add Tweets by and about any of the 15 million businesses in its listings.

Every page on CitySerach now prominently highlights a Twitter Buzz widget on the upper right hand corner of the page showing recent Tweets about businesses in your city. If the business has a known Twitter handle, recent Tweets with their @handle (their Twitter name) will show up above the user reviews. These include both Tweets from the business and Tweets that mention the business. For instance, apparently people love @artichokepizza and the “calzones are off the chain too!” Chelsea Piers also gets a lot of Tweets.

“It really lowers the threshold for reviews,” CitySearch senior VP Kara Nortman tells me. It also makes the reviews more immediate, and therefore relevant. I’d much rather know how a chef’s Mahi-Mahi is going over with diners today than last week when a different chef might have ben on duty. Since it started rolling out the local Tweets a couple of weeks ago, engagement metrics are noticeably higher across the site: session durations are up 10 percent, pageviews per visit are up 7 percent, and exit rates are down about 3 percent.

In addition to being able to look up businesses by name, CitySearch has Twitter directories of local businesses by city. So far there are only 820 in New York City and 281 in San Francisco , but CitySearch is just getting going. Any business with a Twitter account can add their account to their CitySearch page. In fact, they can sign up for a Twitter account while they are at it right from within CitySearch and use CitySearch as a Twitter client. Also, right now CitySearch is only showing Tweets that explicitly mention the @handle a business uses on Twitter. Over the next few weeks, CitySearch will start to surface Tweets that mention the business whether or not the @handle is used. So those 5,000 listings should expand quickly.

Nortman says that the Twitter business directory was inspired by CrunchBase, our own directory of startups, people, and venture capital firms. She wants it to become the definitive directory of Twitter business accounts. CitySearch is in a unique position to build this because it already has millions of local businesses in its database. All it needs to do is associate Twitter accounts and related Tweets to each business, and it can slice and dice them by city, neighborhood, or type of business. An update of its iPhone app which is making its way through the App Store approval process right now will double as a Twitter client and let you Tweet out your reviews from the app. It will even have a social tab showing all the Tweets about a business (see leaked screenshot at right). Sentiment analysis is also on its way, which will let consumers see which restaurants and stores are trending with positive or negative vibes lately.

Once the Twitter directory is built out, it and the resulting Tweet stream will become available to developers through its new CityGrid APIs. It could also make it easy for consumers to create Twitter lists of their favorite local shops and restaurants, or curate their own lists and maybe even charge on a clickthrough basis. But maybe it should wait for Twitter to define its advertising rules before committing to any one model.

The momentum around local online advertising is growing, especially with the expansion of the Web to mobile devices and flowering of Geo-mobile apps which need a way to make money. Today, Citysearch is throwing its hat into the local advertising ring with the launch of CityGrid, a set of APIs which makes all of Citysearch’s local listings content and advertising available to other Websites and mobile apps. The APIs include more than 15 million local business listings, 3 million user reviews, and access to 500,000 local advertisers looking to reach people near their places of business.

I sat down with Citysearch CEO Jay Herratti at IAC headquarters in Manhattan to get an overview of CityGrid (watch the video interview above). Citysearch itself is a 12-year-old site which Herratti has been updating, but it is not really growing much anymore and it is feeling considerable competitive pressure from Yelp and, even more so, from Google Local.

To counter that pressure, Citysearch already distributes its local listings content to about 100 sites and mobile apps with a collective reach of 100 million people (about a quarter of that is Citysearch.com). “I thought what if I took all the tools that we put together to build Citysearch and put it on a platter, an API and web services layer,” says Herratti. Specifically, he is referring to all the descriptions of local businesses, the reviews, photos, videos, hours of operation, offers, menus, metered phone numbers, merchant messages, and more. “What if I open that up to publishers big and small?” he asks. “I let them take it and enhance their experience, and get more pageviews.”

You can see elements from Citysearch listings already scattered throughout the Web. A New York City bar like The Ainsworth, for instance, will have a CitySearch page, but the same summary description and reviews will show up in a Bing search, on Local.com (with a Citysearch photo), Urbanspoon, Yellowpages.com, MerchantCircle, and so on. Other existing partners include Mapquest and mobile apps like Loopt and Buzzd.

Tons of Websites and mobile apps would love to have access to this database of content to build out their own sites and apps, and now they can via CityGrid. But much of this content is also advertising. Citysearch operates on a pay-per-action model. Local merchants can sign up to get sponsored spots in search and elsewhere, and they pay for things like every time someone clicks on their menu, a video, their own merchant description, or makes a phone call for a reservation. They are paying for leads, and the same actions trigger payments on partner sites as well. But in that case, Citysearch is splitting the ad revenue with the publisher.

Many of the ads come from other local advertising sites as well, such as Superpages, Yodel, Spafinder, and limos.com. In that case each advertising dollar is split three ways. But ever since Citysearch opened up to those 100 partners, it went from 150,000 paid listings on its own site to 500,000 across its network. “My goal is to get to one million,” says Herratti. Now that it is an open API, he might just reach that goal. Developer who sign up for the API can create local directories on a self-serve basis and will start getting paid once they meet a minimum threshold of ad impressions or actions.

While Yelp’s rise is certainly something to worry about, CitySearch’s biggest competitor is actually Google, which is driving a lot of local search to its own Local Pages and has been making a big push lately to sign up local merchants. Herratti positions CityGrid as a way fro local advertisers to reach consumers everywhere else. There is search marketing on Google and then there is the rest of the Web and mobile apps. Ironically, if you look up the Ainsworth on Google Local, the pictures and some of the reviews are also from Citysearch, but Google isn’t a paying partner (the content is made available through an older deal). It makes money off the search ads on the side.

Hyperlocal business directory MerchantCircle has been steadily growing as an online network and business directory for merchants in smaller towns to advertise to consumers. MerchantCircle has long targeted its site’s features towards merchants versus catering towards the consumer, as sites like Yelp and CitySearch do. Today, the network has hit a milestone by signing up its one millionth merchant. Not too shabby for the business directory, considering there are an estimated 15 million local merchants in the U.S. today.

MerchantCircle provides small businesses with a web page listing, blogging and email newsletter application, and a local business social network that focuses on connecting local businesses with each other. Since launching in 2007, the startup has gained traction in small towns where the larger sites don’t have reach. For example, 50 percent of local businesses in Wasilla, Alaska are on MerchantCircle and actively engage with the site. MerchantCircle has also added features to make the site attractive with consumers, recently launching a question feature that allows consumers to enter a question to merchants about any topic on the platform.

MerchantCircle has also upgraded its social features by creating a mini-social network around the site where consumers can “follow” local businesses for information on promotions, coupons and announcements.

While MerchantCircle may not be as popular in larger metropolises where Yelp and Citysearch are dominant, the startup has a stronghold in the smaller towns and regions. More than 20 million local consumers discover small businesses in their area via MerchantCircle every month. Of course, MerchantCircle still doesn’t see the scale of traffic as its big city competitors, but still has a steady flow of visitors to its platform. For December, comScore reports that Merchant Circle had 5.5 million unique visitors in the U.S., whereas Yelp saw 9 million unique visits and CitySearch saw 11 million unique visitors.

Of course, with its continued success, we think MerchantCircle could be on track to IPO in the coming year.

Say what you will about the quality of the reviews on Yelp or the lengths it will go to get verboten features into its iPhone app, it has made the jump from Web 2.0 darling to a mainstream service. Over the past year, Yelp has nearly doubled its U.S. audience, while incumbent CitySearch has remained flat. In July, Yelp had 8.6 million unique U.S. visitors, up 80 percent from a year ago. Citysearch, on the other hand, literally had zero growth, staying at 15.4 million uniques, although it bottomed at 13 million in April and has come back up since then (comScore).

Yelp also has the No. 1 travel app on the iPhone (it is No. 26 overall). Whereas Citysearch’s similar iPhone app is not even in the top 20 travel apps.

Yelp’s pageviews and average time spent per user on the site are also up 150 percent and 22 percent, respectively. In fact, the 3.3 average minutes per visitor on Yelp is above Citysearch’s 2.3 minute average. But comScore shows a steep drop in both pageviews and average time spent starting in May, with a leveling off in July. Citysearch experienced similar drops. (See charts below). It’s hard to say what is causing these drops. It could be that people are not finding what they are looking for, or the opposite, that they are finding what they need faster due to better site design. I suspect it has something to do with the latter. For instance, a much-improved Citysearch redesign went site-wide in March and Yelp is constantly tweaking its site. Update: Kara Nortman, the executive who runs Citysearch, says that the pageview numbers are down slightly, but not as much as comScore suggests. Part of this has to do with Citysearch actually going through the site and “pulling out pages that are not great consumer experiences,” which hurts SEO, but improves the site overall. Citysearch is also trying to reduce the number of searches it takes ti get to what you want, which also causes pageviews to drop.

I asked Yelp CEO Jeremy Stoppelman about the pageview situation, and he sent me an internal Google Analytics chart pasted at bottom of this post). “As you can see we’ve continued to grow pageviews smoothly throughout the summer,” he says, “so it looks like the effect Comscore is reporting is spurious.” There is definitely a discrepancy there. Stoppleman also says that worldwide Yelp did 157 million pageviews in August (although he thinks that is becoming a less a meaningful metric as Ajax redesigns reduce the need for page refreshes) and more than 25 million unique visitors. (The comScore numbers cited above are only for the U.S.)

Yelp came out with a major update for its iPhone app in April, right about the time the pageviews started to allegedly decline. But Stoppelman doesn’t think that is it either. There might be some shift over to mobile, but he’s seeing the following trends:

Mobile usage for us is lowest early in the week and climbs throughout, peaking on Saturday. Desktop web usage (especially contributions) tends to be highest on Monday or Tuesday (though Yelp.com reader traffic sometimes peaks on Fridays as people plan their weekend in the office .

No matter which way you cut the numbers, though, Yelp is gaining fast on Citysearch. Update “I worry about everyone,” says Citysearch’s Nortman. “I think you’ll start to see some pretty strategic initiatives roll out across the web and mobile. We have this new neighborhood platform in place. We have to fill it up with trusted content.” That is how Citysearch will try to stand apart, by having reviews and other content that is more trustworthy than Yelp’s. Which site do you trust more?

Average Minutes Per Visitor

Total Pageviews

Yelp’s Daily Pageviews (Google Analytics)

It may be in the process of hiring a new CEO, but the MySpace machine keeps on rolling. Last month we got our first look at MySpace Local, the joint project between Citysearch and MySpace that combines the popular social network with Citysearch’s extensive database of business listings. The new property has quietly launched the public, and you can check it out here.

While MySpace is relying on Citysearch’s massive database of business listings (which includes hours, addresses, photos, menus, and videos), it’s starting from scratch on the review side of things. That might have handicapped a smaller site, but given MySpace’s audience, it shouldn’t take too long for the site to get populated: since it went live seven days ago, MySpace users have already written over 60,000 reviews.

At launch MySpace Local is offering reviews on restaurants, bars, and other ‘nightlife’ listings, with more categories coming in the near future. The site is also going to begin to allow users to book reservations to restaurants in its directory.

MySpace is taking advantage of its social graph to personalize the site as much as possible, highlighting reviews left by your friends and syndicating your actions (such as writing a review) back to your MySpace activity steam. Because the reviews are being written by the people you know, you’re more likely to look at them and leave one of your own.

These features are certainly appealing, but why is MySpace creating a new destination site when MySpaceID could presumably do many of the same things (Citysearch integrated Facebook Connect in December)? MySpace says that while MySpaceID is coming to Citysearch eventually, the two sites will likely appeal to two different audiences, which is why Citysearch was on board in the first place. Because MySpace Local is directly connected to the social network, users can jump to it seamlessly without having to worry about logging in. Through MySpaceID, users would still have to go through a brief authentication process, which raises the barrier to entry (and is still a fairly novel concept for most people).

The other reason why MySpace is building out its own product? Advertising. The site allows local businesses to take advantage of MySpace’s self-service MyAds product, which will allow them to selectively display their banner ads to local MySpace users. This opens up MySpace (and Citysearch, which is participating in a rev-share deal) to new sources of revenue from both local establishments and national brands, like Coors and Outback Steakhouse.

Yelp’s version 2.0 of its iPhone app has officially hit Apple’s App store. We reported on Yelp’s focus on the mobile space and its importance here.

As we wrote recently, the new app gives consumers even more ease in automatically reviewing businesses via their iPhone and enhances its existing GPS capabilities. The updated version of the app now lets Yelpers write reviews directly from their iPhone through a Twitter-like “Quick Tips” feature that allows users to create 140 character tips. This was sorely lacking in the original version. The tips will be accessible on the iPhone app and the site itself (if popular) and will also be shown in a feed using GPS capabilities when users search businesses.

Like before, the app leverages GPS in the iPhone to list reviews, tips, and photos written and taken around a user’s location. The app will also feature a Friend Feed feature that will pull in your friends activities. Users can draft a full review of a restaurant, bar or business from their iPhone and then post it later to Yelp.com. Yelp is also upgrading the app to become more compatible in Canada and the UK.

The combination of local reviews and mobile is significant because Yelp now allows consumers to post reviews as they are eating, drinking or visiting a business. Think about the review of a restaurant that had bad service. Likely, the consumer will be emotionally charged about the poor service. Before the iPhone app, the consumer would write the review after the restaurant visit, when he or she had cooled off a bit. Now the new app will allow the angry consumer to enter a particularly distasteful, and emotionally charged review directly from the restaurant’s table.

And the combination of using GPS to see reviews of businesses directly where you are in an area is fascinating. Yelp is making it incredibly easy for consumers to quickly access listings, reviews and ratings of businesses without having to input their location. There is definite potential for this app to become even more popular than its earlier version. Yelp’s previous iPhone app is less than a year old and it already accounts for 5% of Yelp’s overall traffic, which adds up to be around roughly 1 million monthly visitors.

Yelp’s next move should be incorporating Facebook Connect with its site and iPhone app. Currently, you can add Yelp friends on the site and get personalized feeds of reviews from people who are your friends and random people who share your local restaurant or bar tastes. But it would be really cool to be able to see your Facebook friend’s reviews of local businesses, similar to MySpace Local, a partnership between MySpace and CitySearch to combine CitySearch business listings and the MySpace community.

Local review sites like Yelp have irrevocably changed the way consumers find businesses in a particular area, and truly given power to the consumer in finding the best place to eat a meal, grab a drink, etc. And the potential of putting local reviews and listings on mobile devices is immense. Yelp’s existing iPhone app is less than a year old and it already accounts for 5% of Yelp’s overall traffic, which adds up to be around roughly 1 million monthly visitors.

In the next few days, Yelp will be launching a new version of its popular iPhone app which we’ve reviewed. The new app gives consumers even more ease in automatically reviewing businesses via their iPhone and enhances its exiting GPS capabilities. The updated version of the app now lets Yelpers write review directly from their iPhone through a Twitter-like “Quick Tips” feature that allows users to create 140 character tips. This was sorely lacking in the original version. The tips will be accessible on the iPhone app and the site itself (if popular) and will also be shown in a feed using GPS capabilities when users search businesses. Like before, the app leverages GPS in the iPhone to list reviews, tips, and photos written and taken around a users location. The app will also feature a Friend Feed feature that will pull in your friends activities. Users can also draft a full review of a restaurant, bar or business from their iPhone and then post it later to Yelp.com. Yelp is also upgrading the app to become more compatible in Canada and the UK.

Since its launch in 2004, Yelp caught on pretty quickly and has seen consistent growth. Yelp currently has over 5.5 million reviews in the site. Google Analytics says Yelp has had 20.5 million unique visits in the past 30 days. Comscore’s estimate for February was a little more conservative, at around 7 million unique visits for Yelp.com. But Yelp’s monthly unique visits more than doubled from the same month, last year. Along the way, Yelp has decimated most of its competitors. Insider Pages laid off 2/3 of their staff and sold quickly to CitySearch in February 2007, Intuit said “goodbye” to Zipingo in August 2007, and Judy’s Book closed their doors in October 2007. CitySearch remains as Yelp’s lone competitor in the local reviews space. To date, Yelp has raised 31 million in capital.

The combination of local reviews and mobile is so compelling because Yelp now allows consumers to post reviews as they are eating, drinking or visiting a business. Think about the review of a restaurant that had bad service. Likely, the consumer will be emotionally charged about the poor service. Before the iPhone app, the consumer would write the review after the restaurant visit, when he or she had cooled off a bit. Now, the angry consumer can enter a particularly distasteful, and emotionally charged review directly from the restaurant’s table. Additionally, the combination of using GPS to see reviews of businesses directly where you are in an area is fascinating. Yelp is making it incredibly easy for consumers to quickly access listings, reviews and ratings of businesses without having to input there location.

Of course, the transparency and potential negative backlash businesses can suffer from sites like Yelp or CitySearch, has ignited businesses to fight back. Businesses have started anti-Yelp websites and even sued Yelp users for negative or unfair reviews. Yelp lets businesses fight back with a suite of tools to take part in the conversations consumers are having about their businesses.

Yelp’s next move should be incorporating Facebook Connect with its site and iPhone app. Currently, you can add Yelp friends on the site and get personalized feeds of reviews from people who are your friends and random people who share your local restaurant or bar tastes. But it would be really cool to be able to see your Facebook friend’s reviews of local businesses, similar to MySpace Local, a partnership between MySpace and CitySearch to combine CitySearch business listings in the MySpace community.

Here’s a video detailing the new version of Yelp’s iPhone App:

And screenshots below:

The new site will eventually include listing information for all Citysearch businesses via small business listing pages. To start just restaurants, bars and “nightlife” listings are included. Users can rate and review businesses, which is shared via the MySpace activity feed.

Don’t just skip over that last sentence. This is good stuff – users will be able to see the restaurants, bars and other businesses that their friends are interested in, and how they rated those businesses. When you first visit MySpace Local, the first thing you see are reviews from friends.

Listings are grouped into city hubs for all major U.S. cities and include new local search functionality. And eventually, MySpace says, users will be able to make reservations and upload their own photos and videos. Features will also be built into MySpace mobile products.

A demo of the product is here.

It’s All About The Money

Don’t be fooled – the reason for all this local content is to create premium ad space. Businesses will be able to use MySpace’s self service MyAds product to promote these pages. And more importantly, they can place an ad when someone is looking at the competitors or other local businesses. Expect national brands to advertise as well – Coors and Outback Steakhouse are initial sponsors of the site.

Citysearch has already integrated Facebook Connect, allowing Facebook users to pull reviews and other information they leave at Citysearch into their Facebook news feed. MySpace is saying we can expect an implementation of MySpaceID, their version of Facebook Connect, in the near future. But MySpace Local goes a full step further, bringing all this listing data directly into MySpace itself, and creating literally tons of ad inventory for the sales team (and self service product) to sell into.

The terms of the deal aren’t being disclosed, other than that this is a revenue sharing agreement.

Both even share the exact same navigation buttons on the bottom: Nearby, Search, and Bookmarks. Only the first button on Citysearch is different. It shows Featured editorial content from Citysearch editors for the city you are in. Yelp opted for a Recent button instead, which Citysearch places on its Bookmarks page.

The two apps are really similar in look and feel (see screenshots above), but under the hood they are different because they are pulling from different databases. Citysearch is taking advantage of its recent overhaul, which reclassified every piece of data by neighborhood. That helps when you search for a place to eat nearby. You still can’t search by neighborhood (only zipcode and city), but that is coming soon. Also coming soon will be the ability to upload photos and other multimedia along with your reviews.

What is powerful about both of these apps is giving people the ability to rate or review a restaurant or a store right as they are eating or having whatever experience they want to share. Ultimately, the one you prefer will boil down to the one whose reviews you trust the most. (Correction: The Yelp app actually only lets you upload photos, not reviews. So advantage, Citysearch on that one).

But next time you have an amazing meal or have a nasty run-in with a waiter, just whip out your iPhone and tell the world.

Citysearch is finally coming around to replacing its creaking site design with something a little more contemporary. Today, it is launching in a major rethink of its entire site in beta that drills deeper into neighborhoods, uses Facebook Connect as an optional identity system, and lets users vote reviews up and down. The beta will quickly become the default Citysearch experience. During a demo at IAC headquarters yesterday, Citysearch CEO Jay Herratti told me:

We’ve been working on it for 10 months and built everything from ground up. In Q1 we will be turning off every system that operates Citysearch today, and running everything in the new environment.

Citysearch’s engineers stripped out the decade-old proprietary code that runs Citysearch and replaced it with open-source code. By replacing what’s under the hood, they were freed up to make some major improvements that are immediately apparent. The main changes are:

1. Hyper-local content. Citysearch is currently organized by city, so no matter what neighborhood you are looking at you get the same city guide. With the beta, Citysearch has mapped each city by neighborhood and placed each restaurant, bar, hotel, theater, or other local business in a specific neighborhood. So now when you are looking for things to do in a given neighborhood, Citysearch can dynamically create a neighborhood guide complete with restaurants, shops, and other businesses. With this one change, Citysearch is going from 140 cities to 75,000 neighborhoods by the end of the year.

2. Hyper-social content (Facebook Connect). This is one of the biggest changes. Citysearch has only 4 million registered users, but it will now adopt Facebook Connect as an optional identity system. That means anytime someone wants to submit a review or rating who isn’t already a registered Citysearch user will be able to simply type in their Facebook username and password. Any review or rating can then appear on your in Facebook feed, just like with the old Beacon program, except with Facebook Connect it’s all opt-in. (Citysearch was an original Beacon partner, but it shut that down long ago). “Friends love to talk to other friends about local businesses,” notes Herratti.

Even better, anytime you see reviews for a particular restaurant or business,reviews from your Facebook friends will show up first. We were wondering when Facebook Connect partners would start announcing their implementations.

3. Rebalancing the power between reviewers, merchants, and editors. Instead of highlighting Citysearch’s editorial voice, the design has been tweaked so that underneath each entry thereare now three columns representing the voice of the business owner, the Citysearch editor, and the user reviewers. Citysearch reviews have become so crucial for many restaurants and bars that they’ve also become suspect in that many businesses try to game the system. Herrati says:

We are looking to restore the balance of content in the local space. By that I mean we feel UGC has been so powerful in this arena, but it also comes with a bag of issues.

So not only do business owners now have their own more prominent column to promote their business, but the reviews are now voted up or down so that the community can self-moderate the most obviously abusive comments.

4. A better mobile experience Finally, since everything has been remapped by neighborhood, Citysearch is well positioned for mobile apps. But Citysearch is also working hard to optimize the experience for mobile browsers. It is using the geo-location API in Google Gears to surface nearby results for anyone using a phone running Windows Mobile 5 or higher. For everyone else, it remembers the last destination you specified by typing into your phone. t is also working on specific apps for phones with GPS chips. An iPhone app will come later this quarter, and Android and Blackberry apps are also in the works.

Overall, Citysearch is taking some big steps in the right direction. Facebook Connect is going to be huge for the site. With the turn of a switch, it now has social features it would have been nearly impossible to build on its own. Who wantsto become someone else’s friend on Citysearch? But if you can find your existing friends there, that is one more reason to use it.

In practice, it still has a ways to go in terms of bringing up the best results at the neighborhood level. At least that was the case for my neighborhood in Brooklyn. The top result for dining brought up a restaurant that went out of business a long time ago. Too bad you can’t vote search results up and down.

In terms of Citysearch’s business, though, the hyperlocal results will really help with its local search business. The one part of the new Cityseearch that is not open-source is Citysearch Pay, its pay-for-performance ad engine that turns up sponsored results on a neighborhood-by-neighborhood level. In teh future, it will introduce “event variable price per lead.” Basically, that means businesses will be able to bid on how much they are willing to pay for different types of leads. Viewing a geo-proximate ad on a mobile phone could be one type of lead, texting an address to a friend could be another, as could playing a video profile of a business or making a reservation.

And these types of ads would not be limited to its own site. Citysearch also operates an ad network for partner sites looking to bring more local content. Herrati explains:

Between a quarter and at third of revenues comes from the ad network. If you look at impressions and uniques, it crushes our network.

The ad network’s reach crushes it by ten to one. According to comScore, Citysearch brought in 14.6 million unique visitors in the U.S in October, compared to 143 million uniques across its ad network. (Yelp, by the way, did 6 million uniques). By doing abetter job mapping all of its data on local businesses, Citysearch should be able to boost the relevance of its search results and therefore how much it gets paid for them. Maybe Barry Diller should start breaking out results for Citysearch now that IAC is a smaller entity.

Los Angeles based law firm Kabateck Brown Kellner, LLP has filed a class action lawsuit against Citysearch, accusing it of promoting click fraud. The suit was filed on behalf of plaintiff Tom Lambotte, who has charged that Citysearch has failed to recognize or reimburse him for the clickfraud that took place on an ad he placed between December 11 and 31, 2007. The suit also applies to anyone who has used the click-based Citysearch ad program.

The lawsuit says that Citysearch promotes click fraud by paying its salespeople a commission based on the number of clicks their customers’ ads generate. It also states the Citysearch fails to take any steps to prevent click fraud, and does nothing to help victims.

The plaintiff’s claim is as follows:

“Lambotte’s Citysearch ad received a total of 7 clicks (plus two more that he generated) between December 11 and 25, 2007. On December 26 he received a response from Citysearch to his December 22 request to cancel his ad. Suddenly, his ad began receiving 12 to 16 clicks a day, for a total of 69 clicks between December 26 and December 31, when his ad was finally canceled. He received in these five days 10 times as many clicks as he had received in the previous two weeks. Despite this, Citysearch refused his repeated requests to reverse these charges.”

Basically there was an increase from less than one click per day to around 10 per day. The increase is significant percentage-wise, but the click rate was very low to begin with – any increase would represent a huge gain. On the other hand, if the plaintiff can identify a trend of neglect in Citysearch’s actions, then the class action suit could have some merit.

Kabateck Brown Kellner recently won multi-million dollar settlements involving advertisements on Google and Yahoo, and has recently filed a class-action lawsuit against Google’s AdWords program. With that kind of history it’s clear that the firm knows what it’s doing, but the case might be perceived as just another cash grab.