It plans to invest £14m in establishing the company in the UK and Ireland this year before expanding into mainland Europe next year.
The classified ads accompany 118 118's free text response service and its online enquiry service. Advertisers will also be offered a call tracking service 'Call Whisper', which pre-announces incoming calls as coming via 118 118.
The move pits the company against Yell, the phone and web directory enquiries service linked to Yellow Pages.
Greg Bryce, sales director of 118 118//Media, said: "Our new classified business is merely a reflection of the changing way in which people expect to carry on their daily transactions in the new media age we live in.
"As the UK's most popular provider of directory assistance services...118 118//Media's difference is its ability to connect businesses with more high value consumers actively seeking their product or service category."
118 118 promotes its consumer service with its familiar brand icons, the moustached twin runners.
According to Marketing, 118 118 is planning to divert a portion of its TV and radio advertising spend into direct and digital marketing and is searching for an integrated agency.