Yellow Pages’ Shows Tell It Like It Is
Each year the ADP midyear convention and ADM annual meeting are held in the same location with the overlap of a giant industry-wide cocktail reception one evening and a joint general session the next morning. Since the Yellow Pages Association holds a board meeting before the cocktail reception, many of the industry leaders end up at this combined affair. What this does is give the annual attendee a chance to gauge the industry temperature. Each of these events had well thought-out agendas, executed smoothly with a clear call to action. The only disappointment was that attendance wasn’t higher.
Richard Zurawski of Telmetrics, who often asks penetrating questions that get to the heart of the matter, asked me what I saw that was different this year. In my view, there is now an overwhelming acceptance of new technologies and recognition by even the smallest of publishers and agencies that to succeed, maybe even to survive, they need to offer Internet Yellow Pages and online services to their customers.
Sieg Fischer of Valley Yellow Pages has long been a holdout in the electronic world, but he is now working with Information Pages and has all 46 of his books online. His particular approach is to charge advertisers 10 percent of the print price for an electronic ad. In a short period of time, electronic now accounts for 4 percent of his total revenues. Sieg, who is the current ADP chairman, told the audience that he has gone “from the ultimate cynic to a true believer” in online services. His leadership role and enthusiastic commitment has made every publisher sit up and pay attention.
The same message came across from Stuart McKelvey, chairman of the ADM and CEO of TMP Directional Marketing. Stuart said that “this is the place where we come together to network, to redefine the CMR communities’ understanding of local search and to put a stake in the ground to develop a plan to adopt and survive in a fragmented and rapidly shifting world.” Using the research that TMP conducted with comScore, Stuart drove home the importance of every company making a commitment to technology. For TMP, the Internet accounts for 17 percent of revenues and 25 percent of profits.
I heard much less about internal competition and much more about the challenge of Google, Yahoo!, the verticals and other Web sites trying to steal the advertiser’s dollar. The Kelsey Group has long believed that the single greatest challenge we face is the perception of Yellow Pages on the part of the advertiser and the end-user, particularly younger consumers. Based on these two trade association meetings, it appears that there is more agreement about the substantial mutual benefit of cooperative action and/or the aggregation of resources.
The Kelsey Group’s conference on the Future of Yellow Pages, Sept. 17-19, in Reston, Virginia, is going to build on these messages.
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The theme of this past week’s ADP convention is “An Evolving Marketplace: Understanding Your Future.” John Kelsey was the Keynote, and I was one of four members who took part in several sessions examining just how the Internet fits into the world of yellow pages (or is it vise-versa?). It was very well attended, which I think shows a high level of interest from this primarily Independent publisher audience.
The Internet has already demonstrated that it can eliminate the healthy growth which publishers have enjoyed for so long; it’s just a matter of time before significant usage, market share and profits erode as well. Currently, less than 10% of all directory revenues come from online.
Recently, Microsoft’s Bill Gates offered his predictions that within the next five years print yellow pages usage for those under the age of 50 would drop close to “zero.” This predicted demise of the printed Yellow Pages has actually been circulating for more than a decade. I remember back in the days of Prodigy and the “BigYellow.com” (the first main-stream IYP in the US) print directories were often given a five to ten-year lifespan. Today, 11 years later, it’s clear they’re not going anywhere that quickly. Strong predictable revenues, healthy profits and continued usage will ensure that. At the same time I don’t think there’s a Directory Publisher in the U.S. that would disagree with the fact that the Internet has not impacted their sales efforts and ongoing growth.
The impact can currently be illustrated most dramatically across the tier-one U.S. markets where broadband penetration has grown the quickest. As this wave continues and local search volume continues to grow the remaining markets will also transition. Charles Laughlin recently summed up the future of yellow pages well: “it is transitioning from a high-margin, print-centric medium to one that is lower margin and multi-channel.” In other words, adapt and evolve!
Yellow pages publishers have several real advantages over newspaper, direct mail and other advertising sales organizations – the largest of which is their “directional” nature. The “reach ready-to-buy customers” story is just as relevant today with online search as it has been for the directory businesses for over a century. It’s all about connecting “buyers” with “sellers” – reaching consumers when they are actively shopping for specific products or services…locally.
Yellow pages companies also possess the competitive advantage to launch Internet-based initiatives. Local search products, including search engines and IYP, work for advertisers in the very same way print directories do – and can be even more cost-effective and accountable. This also means established YP Sales Reps ramp quicker; they understand the local advertising game. They also understand the whole “accountability” thing (metered phone lines have been used in print directories to prove value for over 20 years).
Other facts that pair print directories with online search: more than 80% of consumers searching (in print or online) follow up with a contact (phone call, email, on-site visit). There is no other advertising medium that can make this claim; it’s the key directional advertising advantage. Combine this with the fact that 56% of all local search revenue is currently from locally owned business (not national) – and less than 10% of all SMBs are online, you can see why local search revenues are predicted to grow from 3.5 billion dollars in 2007 to between eight and eleven billion in 2011. These are businesses which need to be met with, consulted with, educated and sold.
A July 2007 Wall St. Journal article noted that 14% of US print YP advertisers currently purchase online ads from their yellow pages companies, and within four years they predict that number will be 30%. Much of this, unless the independent publishers ramp-up, will come from the incumbent publisher side; they have the resources to build and monetize their own online destinations. But getting your advertiser’s content online in a searchable format is just the beginning – distributing it across the local web within your market is the next natural step. Even leading local sites like Local.com, Superpages and YellowPages.com rely on search engine and IYP partnerships; it’s an important lesson. Partnering enhances your own brands and drives traffic. Offering PPC, SEO and website services can also be of value to current customers.
The Internet cannot be viewed as the enemy, or as a threat to the yellow pages’ continued existence and growth. I’d argue that when you package the refined directional advertising expertise of the yellow pages with the explosion of local online search options it’s an opportunity. The yellow pages sales structure consists of experts who are the perfect catalyst for bringing the SMBs online. Google, Yahoo, Ask, MSN and numerous niche local properties should be viewed as additional “distribution channels” for advertiser content – much like ValPak will leverage Google Maps to deliver their coupons to local searchers. YP sales teams are highly-trained, understand SMB goals and objectives, relate to the challenges and offer time-tested consultative solutions. They work smart, and work hard. They understand the importance of “keeping it simple.” Bundled packages, up-sell discounts, “guaranteed” clicks packages, budget-buy offerings, fixed-price, pay-per-click and print tie-in products are just some of the other considerations. Many helpful technology companies and industry providers can be found online at: http://www.LocalSearchSolutions.com.
My own first-hand experience has confirmed this opportunity, and I’ve learned that there are multiple benefits to embracing the Internet’s opportunities. Representing high-profile online properties has opened new doors and presented opportunities to sell our entire directional advertising services, both print and online. The fact is cold calling and penetrating non-advertisers is much easier for a “multi-media” Sales Rep than the “same old yellow pages guy.” By offering the complete “circle” of directional media products we also stand out from the competition, and new, incremental online budgets are taken off the table. An added bonus; we’ve strengthened our existing client relationships and minimized decreased/cancelled revenue by delivering greater value as a whole.