When In Doubt, Buy Someone Out


With the ink still dry on its wacky deal to sell online advertising for Google, BellSouth has topped itself by announcing an Internet yellow pages joint venture with SBC Communications. And if that isn't enough, the new joint venture has announced that it is finalizing a deal to acquire Internet start-up YellowPages.com. The dust hasn't settled sufficiently to know if the new joint venture will also be selling online advertising for Google, but hey, why not?

What's going on here? Great question. Having had limited success selling to their own home markets, these two regional giants will combine forces so that they can enjoy limited success selling online advertising in their combined home markets. The press release announcing the joint venture proudly notes that it will have "50 million monthly consumer searches, giving advertisers increased traffic." Actually, the new joint venture's Web site will certainly get increased traffic, but the local auto body shop in Macon, Georgia isn't likely to, and therein lies the rub: yellow pages owes all it success to advertising from local businesses serving local markets.

The big yellow pages publishers have always been long on cash and ambition and short on creativity. That's why it's not all that surprising that when they want some fresh new ideas, they pull out their checkbooks and buy some. In this case, the fresh ideas are being supplied by YellowPages.com, a seven-year old Internet start-up, which is being acquired for possibly as much as $150 million, according to some press reports. Do the math: even yellow pages publishers wouldn’t pay that much for a domain name. What they’re really trying to buy is a clue.

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