Skip to content and MerchantCircle are teaming up to leverage’s appeal as a provider of “premium” SMB services, and MerchantCircle’s appeal as an introductory-level provider of SMB services that is more oriented toward building traffic and selling advertising. is a publicly owned SMB marketing giant that includes premium Web site development and search engine marketing via its division. It has 267,000 active accounts. MerchantCircle is a free directory service that upsells a variety of SMB online services to SMBs after they register for its directory.

Partially owned by IAC, MerchantCircle has more than 900,000 SMBs registered for its directory, and reports that it has converted “high single digits” to paying accounts with search services and other advertising. Although positioned as a social network, MerchantCircle also reports 20 million unique visitors per month, which would make it the fifth-largest Internet Yellow Pages.

The deal between the companies has multiple components. will receive leads from MerchantCircle’s large base of SMB registrants for its premium services, which include SEM, premium Web site building, e-commerce and analytics. At the same time, MerchantCircle’s various free and premium tools are being provided to customers as a way to boost their presence throughout the Web. The tools include a “verified by MerchantCircle” page for reputation management, blog and newsletter software, and coupons.

Initially, 100,000 accounts will be offered the MerchantCircle services; the remaining 167,000 accounts are indirect accounts via affiliate relationships and may be added later. Presumably, both companies will receive bounties for any business they hand over, although arrangements aren’t being publicly discussed. Brown only says that “money will flow in both directions.”

The deal obviously limits the horizons for both companies as they shrink their focus to existing strengths — both companies had previously been providing the full range of SMB services. But that isn’t being described as a negative. “The way we look at it, the market is so big that this partnership is one of the ways to create more value for our customers,” says Chairman and CEO David Brown (who is assuming full leadership of the company as President Jeff Stibel prepares to step down at the end of September).

Brown says the deal positions both companies to take advantage of the decline of print Yellow Pages and get a jump on providing enhanced services and related advertising to SMBs. “As [print YP] shrinks, we are seeking a mass adoption of services and the adoption of value-added products,” he notes. “Once SMBs see the Internet work, they’re willing to pay for it.”

Brown adds that pay per click, search engine optimization, e-mail and a variety of e-commerce have been growing “at a much faster clip than traditional Web site products” during the past three quarters. In fact, they now accounts for 30 percent of revenue.

MerchantCircle VP of Marketing Darren Waddell tells us the deal is a perfect fit for the company’s current positioning. Increasingly, MerchantCircle is focusing on providing simple and efficient “self serve” products for SMBs and targeting the great volume of SMBs that still aren’t marketing on the Web.

This week, for instance, announced a deal with Demand Media to provide a category-based article and video package to SMBs for $9.99 per month that would form the basis of an instant Web site. As an example, a lumberyard could provide a variety of articles about pressure treated lumber. Demand Media has developed a rich body of information on every conceivable subject, says Waddell.

Monetizing the directory via Google AdSense is also a major consideration for MerchantCircle, given its heavy traffic. The company has built out 15 million SMB pages, but just 900,000 have been claimed, notes Waddell. “A lot of traffic goes to pages that haven’t been claimed.”

“We’ve chosen to focus more on what we’ve been doing,” Waddell adds. “When a merchant really wants a consultative approach to building out their Web presence, that’s where we end.”

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