CityGrid Lays Off Most Of Staff, Vows To “Streamline”

CityGrid is IAC’s main local property (along with HomeAdvisor, the former ServiceMagic). IAC says CityGrid has 1.5 million local advertisers (most through third-party partners), 15 million local business profiles and more than 350 Web and mobile publisher and ad network partners. The division also houses Urbanspoon, InsiderPages and pay-per-call platform Felix (acquired from Yext).

Today, the company announced that two-thirds of the headcount associated with CityGrid were laid off. Urbanspoon and Insiderpages were not part of the layoffs. The company offered the following statement, putting a positive spin on the radical surgery:

The layoffs will increase operating efficiency, reduce costs and have a meaningful impact on the company’s future profitability.  By streamlining operations, we expect to grow the CityGrid Network and increase returns for both publishers and advertisers.

The creation of CityGrid was a reaction to the decline of Citysearch as a local online destination in the face of intensifying competition from Yelp and Google. It was launched as an ad and local content network in 2010 by then CEO Jay Herratti.

Conceptually, the move was brilliant: provide content, local ads and traffic to third parties and publishers eager for quality alternatives to Google. However, execution has proven to be uneven.

Following Herratti, Seamless founder Jason Finger was brought in to run CityGrid. It appears that IAC had made the decision to sell CityGrid and Citysearch and charged Finger with that task. However, the company was unable to sell the property, and Finger resigned or was ousted earlier this year. He was replaced by Ron LaPierre. LaPierre’s current status is uncertain.

CityGrid employed a direct sales force. My guess is that will be a casualty of these layoffs. Advertiser churn had reportedly been very high in recent months.

To the extent that IAC retains CityGrid I suspect the company will try to retool as a local traffic provider and automated distributor of mostly third-party ads. I also suspect the efforts to sell the division will continue. A number of local media companies might be interested if the price were right.

Postscript: I was informed that pay-per-call division Felix has also been moved out from within CityGrid and was not impacted by these layoffs.