Why Yellowpages.com Paid $3.85MM for YP.com

According to TechCrunch, AT&T’s Yellowpages.com paid $3,850,000 for the YP.com domain when they purchased it from LiveDeal last month.  Here’s the SEC filing.

So what does this mean for you?  My guess is there was not a lot to the YP.com domain other than its ability to rank for different searches around the term “yellow pages”.

Here’s some data from the Google Adwords Keyword Tool for the avg. monthly search volume, cpc and est Google Rank of Yp.com for some of these terms:

yellow pages                     6,120,000, $0.72, 16

yellowpages                      1,000,000, $0.54, 10

yellowpages.com                450,000, $0.51, 11

yp                                               301,000, $0.59,   1

yellow page                           165,000, $1.01, 12

www yellowpages                135,000, $0.60,   5

www yellowpages com       110,000, $0.55,   5

Assuming YP.com can get 1% of the monthly clicks from Google for these terms, these seven keywords alone could be producing more than $700K/yr in value to Yellowpages.com.  On top of this I would expect to see some additional benefit to Yellowpages.com from linking from YP.com.  I haven’t read the filing, but if YP.com had any kind of revenue/advertiser base, then this seems like a no-brainer deal for AT&T.

So what does this mean for you?

If you are reading this blog you likely are involved with a site that has the ability to rank for similar terms as YP.com either at a local or national level.  The reason why local search is attracting so many players is because it consistently generates some of the highest CPMs in the business due to the targeted nature of the content/users.  Compare this to the CPMs you could get on Facebook.  Whether you are a national, regional or local player, there is still huge amount of this keyword territory that has yet to be staked out.  What are you waiting for?