Vertical listings - the good, the bad, and the upshot for local SMBs
THE GOOD
Vertical listings cast a wider net, some Internet users will still get to a vertical listing site before using a search engine
Vertical listings are ranking factors in local search, because they signal authority (business is legitimate)
THE BAD
Vertical listings, like all non-property sites, - controls/owns the prospect data.
You typically have to pay a commission on leads (not sales, just leads)
And unlike other off website channels (such as Facebook Places, or Yelp listing), you have much less control over message or even access to user data
For example, if you're a contractor, www.servicemagic.com is a vertical listing that makes sense to be listed in. Below is a "how it works" graphic, and list of benefits for contractor (bold italics are my own comments)
Targeted leads
Only pay for leads that are received
Less time and money spent on marketing (not true, after rise of local SEO)
Automated instant connections with prospects (no control, servicemagic routes prospects)
Credibility with ServiceMagic membership, with user reviews (again, rise of local SEO like Google Places is infiltrating vertical listing biz model of credibility and authority signaling)
UPSHOT
Free vertical listings are recommended - casting wider net, helps local SEO because serves as authority ranking factor
Paid vertical listings should be last resort - they represent the old way of local internet marketing for services. Discovery, credibility, and authority are now in the cross-hairs of SEOs like Google Places, review properties like Yelp, and social platforms like Facebook. Using these resources are all free (albeit take time to manage) and give you much more control in driving conversion that you own (phone call, website visit, contact form on your website, etc).