As I get prepared for two exciting days at London’s sold-out Local Social Summit 2011 this week, BIA/Kelsey just released an early taste of their latest U.S. Local Media Annual Forecast.
- Total local advertising revenues for 2011 will be $135.9 billion, down from the $136.2 billion it forecast earlier this year
- Traditional media segments such as Yellow Pages and newspapers are experiencing the largest downward revisions
- U.S. local online/digital advertising revenues will rise to $23.3 billion in 2011, compared with $22.3 billion predicted earlier this year
- Local online/ digital advertising revenues will be 17.2 percent of total local advertising revenues in 2011, up from the earlier forecast of 16.4 percent. By 2015 that share will increase to 25.4 percent, up from the 24.7 percent originally predicted
- The overall local media market will grow slowly over the next five years, at a compound annual growth rate of 1.7 percent, reaching $149.4 billion by 2015
The rest/details of the forecast will be revealed at their next conference ILM West 2011, in downtown San Francisco, December 12 to 14. I will be attending the conference. BTW, I just reserved my hotel using Hotwire and I found a 4-star hotel within walking distance for $109/night. See you there!
I’m a little late covering this (the news was announced on Monday) but the Yellow Pages Association just announced a rebranding as the Local Search Association.
From the release:
The Yellow Pages Association (YPA) today unveiled a new name – Local Search Association – alongside a new visual identity, reflecting the industry’s transition from print publisher to a provider of local search services to small businesses and their consumers.
The announcement is an important step in the right direction for the industry but is not surprising. Major directory publishers had started making the transition from “directory” to “local search” as early as 2002-2003 (I was part of the team that made the change at Yellow Pages Group). Most of them now behave like large local search agencies who also own media properties. So, the name fits perfectly the new strategy (by the way, anyone else thinks it’s amazing that the name was still available?)
I would have liked to be at their conference this week, to take the pulse of the attendees regarding the change. As I told Neg Norton, the Local Search Association president, when we discussed the announcement, the real litmus test will be when new local search industry stakeholders become members en masse on both sides of the spectrum. First the big players like Google, Microsoft, Facebook and maybe Twitter. And then, small local search engine marketing agencies. These guys will infuse new cultural strains and help propel the association forward. But a clear “what’s in it for them” needs to be presented and event/membership competition in the very sexy geo-space is fierce (I counted at least 12 different geo and local conferences in 2011). I think they can do it but there’s a lot of work ahead.
Yellow Pages Group, Canada’s biggest directory publisher, will introduce an opt-out mechanism for their print business directory in 2009. Quoted in this morning’s Metro newspaper, Annie Marsolais, Director of Communications at Yellow Pages Group, said they would launch the initiative “since some people have expressed the desire to stop receiving our directory” (translated from French). Details will be made available in the next few months. Opt-out mechanisms allow consumers to remove their address from print directory distributions.
Michael Oldewening, Director of Marketing at Canpages, the second largest directory publisher in Canada, was also interviewed for the same article. He mentioned that people who didn’t want to receive their directory could always call them “but they did not receive many calls to that effect”
Finally, Jean-Pierre Gosselin, General Manager – Marketing at Mediapages, a recent player in the directory space backed by the powerful Quebecor Media empire, explained that “they were thinking of a strategy to bring back unwanted directories in the multiple Quebecor Media offices and stores”.
As the year ends, here are, in my humble opinion, the most important news and trends of the year in local search and social media (in no specific order):
- The major challenges of the newspaper industry. Declining print readership, challenges with monetizing the Web, user fragmentation, lay-offs, stock value decline, etc. 2008 was a very difficult year for the newspaper industry and I don’t think 2009 will be easier with the slowdown in ad spending.
- Mobile, iPhone & the app store. The launch of the iPhone 3G and the arrival of new “iPhone-killers” devices signaled the beginning of a real tipping point in mobile local search and social media usage. The launch of the iPhone app store also created a new ecosystem leveraging the iPhone’s installed base. At the end of 2008, building an iPhone application is as “hot” as building a Facebook app was a year ago.
- Social Media (Facebook, Twitter, Friendfeed, LinkedIn). Continued usage/buzz growth in social media especially around these four Web properties. Social and user-centric functionalities are a must-have today. Some difficulties around monetization of social media inventory though.
- Identity (Facebook Connect, OpenID, Google Friend Connect). With the rise of social media come major challenges around personal identity on the Web. Large social properties want to become that official provider of identity. Will explode in 2009.
- Local video. This was the hottest new ad product at directory publishers everywhere. I’m convinced that the technology is now a commodity but I’m wondering if the product itself will also become a commodity in the near future (i.e. you need videos in your local search site like you need maps, URLs and click-to-talk buttons)
- Sobering presentations from directory publisher executives at each Kelsey conference in 2008. More realistic, a clearer view of opportunities and challenges in the industry (great assets, local search industry is booming but erosion in major metro areas, etc.). What used to be said behind closed doors is now mentioned openly.
- Drastic drop in directory publishers stock prices. Deadly combo of credit crunch, slowdown of the economy, too much debt and market perception. Idearc is delisted after losing 99% of its value. RHD also loses 99% of its value. Similar (although less drastic) situations in Europe and Canada.
- Microsoft’s failed Yahoo takeover (a proposed buy-out at $31 a share) occupied a good portion of tech news early in the year. This would have a created a very interesting company to compete against Google (desktop technology + social media + search). Jerry Yang, Yahoo!’s co-founder, made sure the deal wouldn’t go through. Yahoo!’s share is now hovering around $12.00.
- AOL buys into the social-networking game with Bebo. A cool $850 million…
- Geolocation in browser (geode, loki, Google Gears). We’ve seen the first elements of this in 2008 but this is a potential game changer, transforming every web site into a local destionation
- Facebook replaces their own classifieds with the Oodle platform. In a move I found very surprising, Facebook outsourced local classifieds clearly showing that they don’t realize they’re in the local search space.
Matt Booth, Senior VP and Program Director at [praized subtype=”small” pid=”66afa9c1b5e4cd2f613f200ec61d955d” type=”badge” dynamic=”true”] started the ILM ’08 conference in Santa Clara with some very interesting insights and thoughts around local advertising’s perceived ROI and the herding (bandwagon) effect. One thought was that the perceived ROI of print business directories is not very good vs. other types of local advertising like e-mail marketing and pay-per-click search advertising even though actual ROI is still very good.
This lead Matt to describe what he thinks will be the characteristics of winning ad products in the future:
- Immediacy (no latency and full transparency), i.e. better perceived ROI
- Lead tracking (easy and simple to understand). Don’t expect advertisers to do it themselves.
- Pulsed advertising (on/off by season). Required flexibility.
- “Conversation & reputation management” tool. Tools to capture/manage the dialogue between consumers and SMBs.
- A blend of content and ads that work well together (almost advertorial)
Online business highlights from [praized subtype=”small” pid=”2bc67fd4fc5e5f4c5d9bb21407657a4729″ type=”badge” dynamic=”true”]’s Q3 results conference call (from Seeking Alpha)
We reported year-to-date Internet revenue of 223 million, a 6.2% increase compared to the same period in 2007. we reported Internet revenue of 75 million in the third quarter, which is an 8.7% increase compared to the same period in 2007. With respect to Internet revenue, we indicated on our last call that we anticipated getting to double digit growth in the third quarter. With growth of about 9%, we didn’t quite get to that level as the transition from fixed-fee advertising to performance-based advertising products continued.
On the sales reorganization:
The new sales organization consists of 15 geographic regions plus a dedicated internet team.
On their online exec team:
Briggs Ferguson, a former [praized subtype=”small” pid=”c6512f599b9a1b7e6a250deaf060b9fdcf” type=”badge” dynamic=”true”] executive, who joined Idearc in April, continues as President of our Internet Business. Briggs’ focus is on executing Idearc’s complete digital strategy as rapidly as possible.
On product penetration:
In addition of the 800,000 clients we have, over 90% of the existing clients are print clients, less than one-fourth are Internet clients
On SEO successes:
In the search engine optimization arena we have seen a 32% increase in SEO traffic to Superpages.com translating to 11 million new page views. We have optimized business profiles for search engines an increase unique visitors by 213%
What it means: reading the whole transcript from Idearc’s Q3 results, I’m struck by the low growth percentage in their online business. According to the latest [praized subtype=”small” pid=”230b2717220fa8377d38b6934a47690022″ type=”badge” dynamic=”true”] Internet Advertising Revenue Report, online ad revenues in the first half of 2008 were up 15.2% versus the same period last year and search revenues were up 24%. If I remember correctly, Superpages had a price skimming strategy 5-7 years ago. This means that they quickly grew their online revenues with high-priced online products (web sites, priority placement, etc.) but on a lower amount of customers (smaller penetration). I think that this strategy might have made them vulnerable to the increasing use of online advertising by SMEs. They now need to convince their online non-ads to take the plunge with them. I think performance-based products serves that purpose but growth might not come as quickly as with fixed-fee products.
In “Yellow Pages ‘Paper Termites’ Are Winning“, Michael Taylor from [praized subtype=”small” pid=”66afa9c1b5e4cd2f613f200ec61d955d” type=”badge” dynamic=”true”] covers a speech Ken Clark gave at the [praized subtype=”small” pid=”9648614a31d6cb42c082429e62d735b092″ type=”badge” dynamic=”true”] mid-year convention. Ken gave “a close-up view of how negative PR in print and online is eroding the perception of the Yellow Pages industry.”
Clark, formerly VP Business Development at the [praized subtype=”small” pid=”85bbe9714ba1f95167e8691d35364b0a8c” type=”badge” dynamic=”true”] and current editor at YP Talk, is always on the frontline to defend the value of Yellow Pages products, especially as it relates to the print version.
He issued a challenge to directory publishers by asking them to:
- Rally their employees by supporting companies that support Yellow Pages and help to put a local face to the brand by showing the good the company does in the community and for the environment.
- Fight fire with fire by dealing quickly with bad PR and implementing a fact checking group to help set the record straight within their communities.
- Use the advertiser and consumer base as a means for getting out the facts with e-newsletters and Web site content, and highlight how people and companies are benefiting from the product.
- Use the product itself to make the point on bag messages about the environment and value of Yellow Pages, in directory content and even in green-friendly sections within the book.
Clark also proposed some tactics including:
- Offering a third-party opt-out clearinghouse to get under the opt-out movement.
- Offering a win-win proposition to print detractors by allowing the White Pages product to be all online so the print product could be eliminated.
- Doing a better job of showing the eco-friendliness of the product in relation to other forms of advertising such as direct mail.
What it means: one of the things I learned early on in my career is that “perception is reality”. Once people start thinking “Yellow Pages are dead” (BTW, they’re not and stop quoting Bill Gates!), they believe it’s true. I get weekly calls from financial analysts and fund managers asking me questions about the industry and they almost have trouble believing me when I tell them I’m convinced the print Yellow Pages will still be present in 5 years (it will, I’m ready to bet on it!). I know the directory publishing industry is doing a lot of things behind the scenes to fight the bad image that’s spreading in various blogs and financial media but it hasn’t properly joined the conversation in my humble opinion.
One of my proposed answers: each directory publisher should start blogging and address the various issues raised by old and new media. Join the conversation on an equal footing, be proactive and react quickly when a new issue arises. You’d be surprised to see the positive reaction of individual bloggers and social media users when so-called “mega-corporations” reach out to them to discuss their concerns.
Let me end by quoting two of the theses from the Cluetrain Manifesto which seem to apply here. “Corporations do not speak in the same voice as these new networked conversations. To their intended online audiences, companies sound hollow, flat, literally inhuman.” Yup. “Companies that don’t realize their markets are now networked person-to-person, getting smarter as a result and deeply joined in conversation are missing their best opportunity. ” Yup again. Go! Join the conversation!
Olivier Vincent, CEO of [praized subtype=”small” pid=”58d245fd7e8f20800dee0ecd3af21f08″ type=”badge” dynamic=”true”], a Canadian independent directory publisher, took a bet with his staff that he would shave his head if Canpages.ca reached 1M unique visitors or more in May 2008.
He seems to have lost…
You can see the results here (short version) and here (long version) on YouTube.
Source: press release
Jeff Jensen in the latest issue of [praized subtype=”small” pid=”3273f7915f0576b2012bc817a11a7f683a” type=”badge” dynamic=”true”] takes the defense of the latest animated Star Wars movie, one that was universally panned by critics. In his article, he explains a concept which I had never heard of, “transmedia properties”:
“The movie is a small pleasure, which is only a problem when you expect huge things from a Star Wars film. Today’s kids have no such expectations. For them, Star Wars is a stream of content — books, comic books, toys, micro-cartoons, videogames, DVDs, and, soon, a TV series. This new generation sees no distinction between movies and their merchandise, and that’s just fine with them. Expect to see more of it. After all, the biggest movie franchise (Harry Potter) and the most-talked-about youth TV show (Gossip Girl) are literary franchise accessories. In Hollywood, the buzz phrase is ”transmedia properties,” where movies are but one of many separate conduits for a story. It’s a tricky, in-process idea, one that, if executed creatively and with integrity, portends an inventive new form of storytelling in its own right — and Star Wars is leading the way.”
What it means: if the Yellow Pages brand is seen as a “story”, then you stop thinking its a medium-specific product (i.e. only print directories). IYP, local search, instant messenger, voice, mobile, social media, Facebook, blogs, interactive television are all separate conduits for the brand “story”. But, the big question is: “What is the Yellow Pages brand story?”…
On Tuesday, at the Kelsey Group conference, Sami Kassab, Analyst at [praized subtype=”small” pid=”9c5b00e196fcc352a39089955ee0db0496″ type=”badge” dynamic=”true”], presented us the financial market’s point of view on directory publishers. As most of the Praized blog readers know, stock markets have drastically punished directory publishers in the last 12 months. Kassab offered us his very relevant analysis on what investors want to see from the industry and what he thinks is the future of directory publishers.
What investors want to see?
- Repair balance sheets and avoid default through costs reduction programs like closing of locations and titles, headcount reduction and outsourcing and offshoring
- Asset disposal but he indicated few buyers and limited financing available. He gave as example Truvo’s disposal of its Dutch business in July 08 and rumored disposals of Telegate/Thomson by Seat or Yell’s exit from Latin America.
- Improve revenue growth performance through
- Defense of print revenues (via new product launches, long-term contracts and new pricing policy)
- Increased online revenue growth (via higher usage, improved monetization and new products like classifieds or video)
- Leverage sales force (via new SEO/SEM products and maybe outdoor advertising)
What he sees in his crystal ball?
- Usage and revenue decline of print likely to accelerate with further growth of broadband and mobile technologies and as witnessed for old legacy media products in other media industries
- Usage and revenues of online assets likely to accelerate
- EBITDA margins under pressure from changes in revenue mix and additional investments. Growth of 2-4% for best in class players, decline for other players.