BIA/Kelsey: More Than Half of All Ad Spending Is ‘Local"

[praized subtype=”small” pid=”66afa9c1b5e4cd2f613f200ec61d955d” type=”badge” dynamic=”true”] just released their forecast for US Local advertising revenues for the 2009-2014 period.

Highlights:

  • U.S. local advertising market will grow to $144.9 billion in 2014 (CAGR: +2.2%)
  • Spending on traditional media will decline from $115 billion in 2009 to $108.2 billion in 2014 (CAGR: -1.2%)
  • Spending on online/interactive media is projected to grow from $15.2 billion to $36.7 billion (CAGR: +19.3%)
  • Meaningful recovery beginning in 2012
  • 55 percent of all ad spending is with local media

BIA/Kelsey is also preparing their next conference MarketPlaces 2010. Happening at the [praized subtype=”small” pid=”a998a4e65a611a1cd4e2711025422ec1″ type=”badge” dynamic=”true”] from March 22 to March 24, the theme of the conference is “local verticals”.

Presentations I’m most looking forward to:

  • Opening Keynote Address: Jon Brod, Executive VP, AOL Ventures
  • Google @ Marketplaces 2010 Sam Sebastian, Director, Local & B2B Markets, Google
  • The New Content Aggregators: Rick Blair, CEO, Examiner.com
  • Keynote Address: Andrew Mason, CEO, Groupon
  • The New Directory/Marketplace Plays with SuperMedia, AT&T Interactive, Local Matters and Merchant Circle
  • BIA Kelsey: 10 Takeaways from Marketplaces 2010

I will be attending the conference. If you’d like to meet, ping me at sprovencher AT praizedmedia.com.

In Orlando Next Week For The Kelsey Group DMS '09 Conference

I will be in Orlando next week for the Kelsey Group DMS ’09 conference. I haven’t missed many of those great events over the years and I’m looking forward seeing my industry colleagues in person.

Here are the presentations/panels I don’t want to miss:

Tuesday Sept. 22, 2009

  • “Moving Multiproduct Selling Beyond Bundles”. The interesting challenge directory publishers face today is to transform their sales organization into one that’s able to sell online advertising-only, not just print/online bundles. There’s also the new real-time Web which will create opportunities to launch time-sensitive offers and coupons, requiring multiple touch points during the year. That’s something directory publishers need to improve. See this conversation between Michael Taylor and myself on Linkedin (you need to be a member of the Kelsey Group Linkedin group to see it)
  • Kelsey’s User View and Local Commerce Monitor. Always interesting data points on users and advertisers.

Wednesday Sept 23, 2009:

  • The keynote from David Swanson, Chairman and CEO, R.H. Donnelley. As RHD prepares to exit bankruptcy protection, it’s going to be interesting to see how RHD is expecting to reinvent itself.
  • “The Global Yellow Pages Leadership Forum: Answers to the Tough Questions”. This should be the highlight of the three-day conference. Six global industry leaders will discuss the opportunities and challenges of the local industry. I wonder who will replace John Kannapell from AOL who was just let go.
  • “Mobile Search & Yellow Pages: The Business Model”. Four senior mobile managers from directory publishers talk about the importance of mobile, their strategy, and the business model. Curious to ask them about their “big ideas” around mobile.
  • The second keynote of the day, David Krantz, President & CEO, AT&T Interactive.

Thursday Sept 24, 2009

  • The keynote from Donat Rétif, CEO, Truvo. I saw him speak at the EADP conference back in May but given that Truvo wants to be innovative in the directory space, it’s going to be interesting to get an update from them.
  • “Print Yellow Pages 2013: Critical Changes to the Core Product”. Very curious to see if we will finally hear about real print innovation.

The conference is held at the [praized subtype=”small” pid=”79b0fad769b11f4b8998b682a0374edd7f” type=”badge” dynamic=”true”]. If you’d like connect in Orlando, send me an e-mail sprovencher AT praizedmedia.com

In Orlando Next Week For The Kelsey Group DMS '09 Conference

I will be in Orlando next week for the Kelsey Group DMS ’09 conference. I haven’t missed many of those great events over the years and I’m looking forward seeing my industry colleagues in person.

Here are the presentations/panels I don’t want to miss:

Tuesday Sept. 22, 2009

  • “Moving Multiproduct Selling Beyond Bundles”. The interesting challenge directory publishers face today is to transform their sales organization into one that’s able to sell online advertising-only, not just print/online bundles. There’s also the new real-time Web which will create opportunities to launch time-sensitive offers and coupons, requiring multiple touch points during the year. That’s something directory publishers need to improve. See this conversation between Michael Taylor and myself on Linkedin (you need to be a member of the Kelsey Group Linkedin group to see it)
  • Kelsey’s User View and Local Commerce Monitor. Always interesting data points on users and advertisers.

Wednesday Sept 23, 2009:

  • The keynote from David Swanson, Chairman and CEO, R.H. Donnelley. As RHD prepares to exit bankruptcy protection, it’s going to be interesting to see how RHD is expecting to reinvent itself.
  • “The Global Yellow Pages Leadership Forum: Answers to the Tough Questions”. This should be the highlight of the three-day conference. Six global industry leaders will discuss the opportunities and challenges of the local industry. I wonder who will replace John Kannapell from AOL who was just let go.
  • “Mobile Search & Yellow Pages: The Business Model”. Four senior mobile managers from directory publishers talk about the importance of mobile, their strategy, and the business model. Curious to ask them about their “big ideas” around mobile.
  • The second keynote of the day, David Krantz, President & CEO, AT&T Interactive.

Thursday Sept 24, 2009

  • The keynote from Donat Rétif, CEO, Truvo. I saw him speak at the EADP conference back in May but given that Truvo wants to be innovative in the directory space, it’s going to be interesting to get an update from them.
  • “Print Yellow Pages 2013: Critical Changes to the Core Product”. Very curious to see if we will finally hear about real print innovation.

The conference is held at the [praized subtype=”small” pid=”79b0fad769b11f4b8998b682a0374edd7f” type=”badge” dynamic=”true”]. If you’d like connect in Orlando, send me an e-mail sprovencher AT praizedmedia.com

AT&T Advertising Solutions 2Q 2009 Results: Operating Revenues Down 12.5%, Income Down 27.5%

AT&T released their second quarter 2009 results yesterday morning. Like Greg Sterling did, I had to dig down in the Statements of Segment Income (excel) document to find detailed information about their directory business. No information was directly provided in the press release.

Directory operating revenues were down 12.5% in Q2 2009 (vs. the quarter one year ago) at $1,231 million and segment income was down 27.5% (also vs. Q2 2008) at $314 million. No online advertising data was provided.

AT&T Yellow Pages Q2 2009 results 

In related news this week,

  • Yahoo! announced a partnership with AT&T Interactive (read YellowPages.com) to start selling Yahoo! local display ads to Yellow Pages advertisers. As the release says, “The agreement between AT&T Interactive and Yahoo! is the latest addition to the longstanding strategic relationship between AT&T and Yahoo!, which runs across many Yahoo! products and services, including portal and mobile services, as well as powering Yahoo! Local with advertiser content from YellowPages.com.”
  • YellowPages.com introduced a new version of YP.com, the URL they acquired from Livedeal late last year. They’re experimenting with a more user-focused online directory site there, but nothing ground-breaking yet.
  • Finally, in a strange and ironic twist of editorial fate, the Yahoo! Small Business blog was explaining to its readers yesterday “When to Pull the Plug on Yellow Pages Advertising“. Bad timing guys!

Why Social Media is Not Just About Merchant Reviews

Merchant review functionalities and sites are all the rage currently in the Yellow Pages industry. In the last 2 months, amongst others, we have seen:

  1. Truvo launch their own social site under the Truvo.com URL
  2. Eniro launch a beta social site under the Rejta.se URL
  3. AT&T Interactive announce the launch later this year of a social Yellow Pages site under a different brand than YellowPages.com
  4. Herold, the Austrian directory publisher, make an investment in Tupalo, a Yelp-like destination site.
  5. Canpages, the independent Canadian directory publisher, acquire assets from ZipLocal, a Canadian merchant review site.

Often called Social Yellow Pages sites, the biggest representatives of that category are Yelp (US, UK, Canada) and Qype (most of Western Europe). Both are independent, venture-funded companies. As of June 2009, more than 22 million people had visited Yelp in the past 30 days according to published internal numbers. Yelp users had written over 6 million local reviews. Qype had 9M+ unique users in May 2009 (+350% in 12 months) and 1M+ reviews.

Impressive usage numbers but an important challenge remains for these sites: monetization. For example, even though Yelp has been extremely successful from a user point of view, revenues are still low in proportion. Articles from 16 months ago mentioned Yelp’s revenues were “rumored to be sub $10 million/year” (I discussed Yelp’s monetization strategy here.)

On the other side, directory publishers, even though they’ve had for the longest-time advertiser-focused web sites, have been extremely good at generating revenues out of their web sites. For example, Yellow Pages Group (Canada) generated $C 247 million in online revenues in 2008. Over the same period, Pages Jaunes Groupe (France) achieved 471 million euros in online revenues. In the US, Yellowbook’s online revenues were up a spectacular 97.5% to $US 227 million in the last fiscal year.

Why is that? Yes, we could obviously underline the fact that these publishers represent trusted media brands, that they have large sales forces and that regular merchant contacts all play a big role in their financial success. But I would posit the moment in the consumer purchase decision process when online directories are used plays a bigger role in monetization potential.  Looking at the traditional decision process (see diagram below), online directories are clearly used when consumers are doing information search and evaluation of alternatives. Consumer reviews only happen at the end of the whole decision process, at post-purchase evaluation. Consumers will obviously look at past reviews as a proxy when doing information search but I don’t think it’s as attractive a real estate for advertisers.

buying_decision_process

Figure: Consumer Purchase Decision Process (source: Tutor2U)

I’m definitely not saying consumer reviews are useless from a strategic point of view. Consumers love to provide feedback and they love to read comments on merchants to make up their mind. I’m saying directory publishers should see reviews as one of the elements on which they build their social media strategy and one that happens at the end of the purchase cycle. It should be integrated within a more complete social media consumer purchase decision process strategy.

The filter of the consumer purchase decision process is very powerful to see who’s competing against you and to identify opportunities. Google, for instance, is clearly used by consumers when they do information search and comparing alternatives. This explains why the search giant from Mountain View is perceived as a serious threat by most directory publishers.

Enter Twitter and Facebook, the new juggernauts of the real-time conversation and real-time search world. Where do they fit in that purchase decision process? They’re definitely used for information search as well. If you search on Twitter for “Can anyone recommend” or “Looking for“, you’ll see that, every day on Twitter, thousands of people are asking for recommendations and advice. That’s why, by the way, we implemented a social media broadcast mechanism in our Praized-powered Local Answers module (used here by Yellow Pages Group in Canada) to send consumer requests to Twitter and Facebook. But I think what’s even more powerful with this new real-time conversation world is the fact that people are now actually expressing needs to the world. More than 100 people per day on Twitter say:

All these consumers are facing major life events (or know someone that are facing one) and are amazing advertiser leads for any publishers that can corral them. Consumers now want to express their needs/problems and have people/companies come to them with solutions. As I expressed in my “I have seen the future of local media” blog post, this is a new and important consumer behavior online. That’s why I believe every local media publisher will be introducing locally-relevant real-time conversation and real-time search tools within their Web sites in the next three years. That’s why I believe social media lead generation, customer and reputation management tools will become more prevalent in the next few years. That’s why publishers will introduce social ratings/reviews functionality to allow consumers to close the purchase loop after expressing needs and shopping for options. But be aware that Twitter and Facebook will certainly go after this market. This is probably the biggest opportunity directory publishers have seen since the arrival of the world wide web but it needs to be a complete strategy. Merchant reviews alone do not make a social strategy.

AT&T to Launch New Social Yellow Pages Site

According to this Forbes.com article, AT&T is preparing to launch a social Yellow Pages site to compete against Yelp and likes.

Later this year, AT&T plans to roll out an alternative brand for local search, geared primarily at younger users. The site will feature the same core data–listings and advertiser information–as Yellowpages.com, but differ in how it presents information and how it uses user-submitted information. While Yellowpages.com returns data based on advertisers’ profiles, similar to a directory, the new site will prioritize results based on a user’s social connections and recommendations, says Yoo.

On this new site, a search for a sushi restaurant could pull suggestions from a broad group of friends. A more targeted query, such as one for a pediatric dentist, would be handled differently. Rather than search a user’s entire social network, the site would only provide recommendations from friends and relatives who currently have kids.

What it means: As David Yoo,chief product officer for AT&T Interactive, says in the article, they’ve realized that the Yellow Pages brand appeals to older consumers (Yoo calls them “professionals in their late 30s or older”) but that they need another brand to maintain their relevancy with a younger crowd. They also need a “play” to compete against Yelp who has managed to capture a good share of mind and usage in some of AT&T’s major markets (like San Francisco). It’s not always obvious to launch a new brand but I think it’s becoming more and more evident that it’s needed.

AT&T's Directory Operating Revenues Down 10% in Q1 2009

via the official press release found on Yahoo! Finance.

AT&T Inc.  today reported first-quarter results highlighted by improved postpaid wireless growth with a substantial step up in integrated device penetration, double-digit increases in revenues from IP-based and strategic business services, and further AT&T U-verse TV subscriber gains. Advances in these areas and solid cost management largely offset continuing economic pressures on consumers and businesses.

AT&T’s first-quarter revenues totaled $30.6 billion, net income attributable to AT&T was $3.1 billion, diluted earnings per share totaled $0.53 and cash from operating activities totaled $7.9 billion.

What it means: you have to read through the whole release to find specific directory publishing data in the AT&T Q1 2009 results but once you find it, you see that Yellow Pages operating revenues in Q1 were at $1.249 billion, down 10.7% from Q1 2008. At a quick glance, no other information related to that side of the business can be extracted. I’ll try to listen to the analyst call.