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March 22, 2005

New Research by The Kelsey Group and ConStat Indicates 70% of U.S. Households Now Use the Internet When Shopping Locally for Products and Services

Findings also suggest the Internet is poised to surpass newspapers as a local shopping information resource.

Princeton, NJ (March 22, 2005) -- According to a new study by The Kelsey Group and ConStat, Inc., 70 percent of U.S. households now use the Internet as an information source when shopping locally for products and services—an increase of 16 percent since October 2003. This puts the Internet on par with newspapers as a local shopping information resource, with the Internet likely to surpass the impact of newspapers in the very near future.

“Use of the Internet as a shopping resource is already changing the face of local advertising,” said Neal Polachek, senior vice president, The Kelsey Group. “Traditional local advertising media must find ways to evolve or risk losing dollars to the new advertising options available to local and small businesses.”

“Most of the Internet’s growth for shopping research can be attributed to large search engines such as Google, Yahoo! and Ask Jeeves, the usage of which increased significantly, from 47 percent in 2003 to 55 percent in 2005,” said Tim Trickett, vice president of business development at ConStat. “Further, the research shows that the increase in usage of the major search engines has been powered by broadband users exclusively.”

The Kelsey Group will present additional findings from this survey at its upcoming local search conference, “Drilling Down on Local: The Online-Offline Opportunity,” taking place April 18-20, 2005, at the Santa Clara Marriott, Santa Clara, California.

The conference will provide several opportunities for close examination of the future of newspapers in the local advertising space. Day 2 of Drilling Down on Local will feature a keynote address by Lincoln Millstein, senior vice president and director of digital media, Hearst Newspapers. Millstein’s keynote will be followed by a panel session entitled “Newspapers: Sleeping Giants or Just Asleep?” This panel will explore whether newspapers, with their powerful local brands and unique local content, can overcome internal organizational and cultural issues to compete online for local users and SME revenues.

Sponsors for Drilling Down on Local: The Online-Offline Opportunity include Acxiom Corp., AgendiZe, Amacai, Aptas, CallSource, DCCI, eStara, Fast Search & Transfer, Geosign, Ingenio, Interchange, IPIX AdMission, MapQuest Business Solutions, MarketingVOX, OKS Group, Pay Per Click Analyst, SEMPO, Telcontar, TrafficLeader, TrueLocal, Yahoo! Local and YPsolutions. For information on sponsorship opportunities, contact Nanci Karas by phone at (609) 921-7200 Ext. 21 or by e-mail at [email protected]. To register for this conference, contact The Kelsey Group by phone at (609) 921-7200 Ext. 10, or register online at http://www.kelseygroup.com/dd2005/..

Survey Methodology
This is the second wave of the User View survey conducted jointly by The Kelsey Group and ConStat. Wave 1 was conducted in October 2003; Wave 2 was conducted in February 2005. Five hundred respondents were interviewed by telephone—250 from the top 20 Metropolitan Statistical Areas (Tier 1), and 250 from the top 21-100 MSAs (Tier 2). Tier 2 markets were weighted down slightly. To qualify, respondents needed to be 18 years or older and have purchased something (besides groceries) from a business in their local area in the past six months.

About ConStat, Inc.
ConStat, Inc. is a research firm that specializes in the Yellow Pages and information technology industries, with offices in San Francisco and Denver. ConStat has served clients in the telecommunications, media, advertising, wireless and high-technology communities for more than 10 years. For additional information, ConStat can be reached at (510) 267-3100.

About The Kelsey Group
The Kelsey Group is the leading provider of strategic research and analysis, data and competitive metrics on Yellow Pages, electronic directories, small-business advertising and local search. Beginning in 1986, the company has built a reputation as the leading analyst firm covering the directory publishing community, providing advisory (The Kelsey Report® and Interactive Local Media), publishing (Global Yellow Pages™ and Local Media Journal™) and consulting (more than 300 individual assignments).

For more information contact:

Eileen Pacheco
(781) 556-1026
[email protected]

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