By Sharon Hill
As we write this, Idearc stock
has fallen from a high of over $30 to a low of two cents — yes, not dollars,
cents. As the owner of Verizon’s SuperPages.com and one of the largest Yellow Pages
providers, its financial struggle is symbolic of the battle within the entire YP
industry — and the newspaper industry as well — to evolve from print
to multimedia.
The Yellow Page industry, despite its poor stock exchange showing may well have
the jump on newspapers — not necessarily in its robust online directories
but at least in its aggressive outbound approach to new business advertisers.
We recently attended a Webinar presented by Dick Larkin, president of Weblistic, Inc., an online marketing firm created by the
inventors of YellowPages.com and now owned by SpotRunner. Weblistic specializes
in local search engine marketing, video creation and saturation, and mobile advertising.
Webinar speakers included Neal Polachek, CEO of consultancy Kelsey Group; Nancy Augustine, SVP of the Association of Directory Marketing; Larry Small, Director
of Marketing for the Yellow Pages
Association; and Gordon Borrell, CEO of Borrell Associates.
Borrell delivered a slide presentation about the attempts of the various legacy
media to convert a portion of their revenue to the Internet. The Yellow Pages industry,
he demonstrated, was the most successful at doing so.
“[The Yellow Page industry has] made the transition to the Internet a lot more quickly
and effectively, in being able to sell their print advertisers to the Internet,
and, as we’re beginning to see now, reach out to a new customer base that is not
in the print book,” said Borrell. “That’s a significant sign of this industry being
able to grow its business. The others are trying to do that too — the newspapers,
TV and radio stations.
“In 2004 there was $2.7 billion spent in local Internet advertising. Yellow Pages
got 18.4 percent, papers got 44 percent. By 2007 newspapers have shrunk to 27 percent.
What is really happening is that even though their total dollar volume has increased
(papers got $3.3 billion from the Web) they’ve been losing share quite a bit and
it’s primarily because they’ve been selling one basic product and upselling their
current print advertising base — and that base is actually in a bit of a decline.”
Neal Polachek talked about the new behaviors of local small and medium business
(SMB) owners. “These that have opened since 2002 have been born, bred and raised
on the Internet,” he said. [Since 2002] what I’d argue is that there is a radically
different set of SMBs out there that are buying advertising and think about how
to market their businesses and using a considerably wider range of ad platforms.
They are using more and more ad platforms and making significant shift to performance
media and specialized directories and media. Why performance? Because you get what
you pay for and you can turn it on and off. Why specialized media? Because businesses
believe that you get more qualified customers who are ready to buy and make decisions.
And that is the holy grail for SMBs. Call volume is a great thing but qualified
calls are what SMBs are really after.”
Polachek showed statistics of a Kelsey Group August 2008 study that indicated not
only an upward turn in the SMB propensity for online advertising over print, but
in these business owners’ decision to advertise despite any economic downturns.
In 2002 nearly 79 percent of these business owners were going to maintain their
online ad spend, 16 percent were going to increase and five percent planned on a
reduction. In 2008, however, 32 percent were increasing their online advertising
budgets and 62 percent were maintaining their current online ad spend. “They are
more savvy, they know that shutting down their ad plans in a downturn is counterproductive
though somewhat intuitive and there are lots more media options that they can turn
on and off — e-mail, direct mail, SEM, SEO.”
“We don’t think that YP is dead but we think we’re at the birth of a new century
of directional advertising. [Directional Advertising] is where we believe the world
is evolving to, with listings and local ad content but additionally with user and
expert reviews and rich and engaging media,” said Polachek. “And that will be available
to consumers any time anywhere.”
Larry Small pointed out a weakness in the Yellow Page strategy. “The businesses
that understand what to put in the ad — the copy points, the headline, all
the things that consumers are looking for — are the ones that do well,” he
said. “They are the ones constantly taking a look at their own and their competitors’
ads. The data show that [YPs] still have great products, still deliver great value
— we just have to work a bit harder to help advertisers realize the full potential
of the products. What that means is that our sales reps have to become more involved
in their advertisers’ business strategies.”
So, what do we now know that can help newspapers evolve and compete with Yellow
Page multimedia advertising? We know that the YP folks are counting on newspaper
ad reps to do a poor job of reaching new advertisers. We know that SMBs are more
willing than ever to advertise online but seek interactive bells and whistles such
as user and expert reviews — and they want performance-based pricing. We also
know that Yellow Page advertising sales staff are not consultative enough in their
sales approach to help their advertisers succeed as well as they might.
To learn even more about selling against the Yellow Pages, register for the February 19 joint Retail and Classified
Alliance Webinar, “Fight Yellow Pages and Win.” It’s free to all active 2009 SNA
members.