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)

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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.

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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.

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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:

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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.

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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.

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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.

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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.

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Yelp is also boasting some impressive stats: 8.3 million uniques in the past 30 days and over 2.3 million reviews (with the 1 million mark being reached on May 2007) (these are internal Google Analytics stats that the company shared with us). Yelp is in a competitive space with InsiderPages (acquired by Citysearch), and YellowBot. The real competition, though, will eventually be Google Local and Yahoo Local.

With this latest round, DAG joins previous investors Max Levchin ($1 million, Summer 2004), Bessemer Venture Partners ($5 million, Q4 2005), and Benchmark Capital ($10 million, Q4 2006). The company has now raised a total of $31 million. Revenues are rumored to be sub $10 million/year.

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The size of the transaction is not being disclosed, although our understanding from a source close to the deal is that the price is in the $13 million range. The company had previously raised approximately $9 million in venture financing from idealab, Sequoia Capital, and Softbank Capital.

Insider Pages went through a round of heavy layoffs in late 2006 in the face of intense competition from Yelp, Judy’s Book and others. The site has 2 million unique monthly U.S. visitors according to Comscore.

Update: The WSJ is now reporting this as well.

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