Global Yellow Pages: Entering the "Presence, Performance, Permanence" Era

This is a post about the Kelsey Group’s DMS ’09 conference which happened last week in Orlando.

In a presentation titled “Global Yellow Pages: A Prescription for Future Success”, Charles Laughlin and Neal Polachek from BIA/Kelsey (the new name of The Kelsey Group) exposed important trends and offered a new way to look at the future for directory publishers.

Current trends:

  • Over time, print Yellow Pages usage (as an advertising vehicle) is down for SMBs
  • Advertiser volume (i.e. the total number of advertisers with a relationship to a directory publisher) is decreasing
  • Average average revenue per advertiser (ARPA) is up (i.e. squeezing more money out of current advertisers) but EBITDA margins are down
  • Share of revenue coming from online products is up (10% of total directory publishers revenue in North America, 25% in Europe)

Future trends:

  • Publishers will sell leads instead of products (i.e. need to move away from print/online nomenclature)
  • The business model will evolve (blends traditional and performance-based advertising + fee-based services)
  • There will certainly be a change in the publishers’ cost structure (when revenues go down, margins go down also)
  • We will see a changing sales force (training, recruitment, smaller channels, outsourcing)
  • We will see a changing core print product (more local, more vertical, smaller, less categories)

Neal then exposed what I think is a revolutionary new way of seeing the world and coined a new era for the Yellow Pages business: ” Presence, Performance, Permanence”

Kelsey BIA Presence Performance Permanence

“Presence” is defined as “Be found”. It’s usually fee-based. It includes product like signage, listings, print, banners, search/SEO, digital outdoor, door hangers, radio, cable TV and mobile TV. I think we could also include things like website building, Facebook & Twitter profile management, etc.

“Performance” is all about driving leads. It’s performance-base and includes clicks, calls, forms submitted, store visits, inquiries, etc. It could also include coupons exchanged.

“Permanence” is to help the advertiser retain customers. This works on a fee for service business model and includes ratings, reviews, online reputation management, online booking, customer reminders, customer updates, retention strategies, telephone training, etc.

The list of business opportunities Neal presented was certainly not exhaustive but I like how this model helps organize product initiatives under large umbrellas. I also like the fact that social media is now part of the overall Yellow Pages strategy via things like ratings, reviews and reputation management. The whole industry seems to be waking up to the disruptive power (opportunity and threat!) of social media I think we’re just seeing the tip of the iceberg there.

Where Will We Be In Five Years?

Mike Boland over at The Kelsey Group’s blog posted highlights of the “The Change Imperative” panel in which I was a participant. I was joined by Geoff Avard, GM, Strategy, Sensis, Perry Evans, President, CEO, Local Matters and Ken Ray, CMO, AT&T Publishing & Advertising.  Every question asked by Charles Laughlin and Neal Polachek started with “In five years, …” and all statements were designed to get a reaction out of the panelists and the attendees.

Examples included:

  • In five years, SEM bid pressure will rise to the point that advertisers will see more value in print advertising.
  • In five years, small businesses will use self service online advertising like AdWords to a much greater degree.
  • In five years, Like many of the rumors that continue to circulate, Google will have bought a yellow pages publisher to gain a direct local sales channel.
  • In five years, no one under 30 will be using the yellow pages.
  • In five years, more listings will be accessed by mobile than on the PC.
  • In five years, what will follow the iPhone as the next big thing?
  • In five years, where will you be?

You can see of our answers in the Kelsey Group blog including the one related to where I think I will be in five years…

Highlights from Kelsey’s Drilling Down 2008: The Kelsey Team Intro and the Strategy

Very interesting first half-day yesterday at the Kelsey Group’s Drilling Down on Local ’08. The theme of the conference is “Marketplaces”. It regroups products such as classifieds, auctions and vertical sites. Here are highlights from the first two sessions:

As an introduction, the Kelsey Group’s team provided us with some background information on “Marketplaces”. Neal Polachek first described the local end game as “better search, discovery, and engagement”. He even quoted the Cluetrain Manifesto’s “Markets are conversation”. He also talked about their latest global ad revenue forecast for 2007-2012, stating that the biggest category winner would be Internet and the biggest loser would be newspapers. As I wrote last week, the Kelsey group believes that Verticals will capture a large chunk of online advertising by 2012. Matt Booth then talked about three specific verticals (travel, automotive, home services) that have had a tremendous impact on offline/online business and media spending. For example, Matt showed two juxtaposed graphs showing the decline of newspapers’ automotive revenues vs.’s revenue increase. Peter Krasilovsky finished the intro by stating that it’s now time to “uncouple” print and online media bundles. As print revenues decline, you need to have online-only ad products to compensate. Peter added that you also want to “verticalize” your offer to expand your revenues.

Kelsey Drilling Down 08 Neal Polachek

The second session “Remaking the Los Angeles Times (Online)” starred Rob Barrett, Senior VP of Interactive Media, GM, He started by mentioning that most of what he’s currently working on is not very visible online now. He spent the first couple of years at the LA Times refocusing the online business. His main focus has been to build the display ad business (as opposed to classifieds). It’s going to generate $25M in revenues this year. Barrett says it’s now “time to finally break the newspaper paradigm online”. The LA Times’ online strategy needs to be local as opposed to national as it will allow them to differentiate their offer versus other “national” newspapers like the New York Times. They’ve realized that local users are key to online revenues as they generate more monthly page views and twice the display revenue per page views. Their product approach is “we want to own Los Angeles”, i.e. be integral to life of Angelinos, be the source of news and information about Los Angeles to the world and be an information retailer by creating, aggregating and curating LA content.

Los Angeles Times - News from Los Angeles, California and the World

The web site is slowly transforming itself into a hyperlocal social network. All content pieces are going to be tagged and indexed by category and geography. By targeting on demographics and on geo, the LA Times is hoping to raise their average CPMs and improve ad effectiveness. They are creating the best targeting machine for the LA DNA. Barrett then showed us pilots of various new vertical sections that are very promising:

Global Print Directory Market Continued Growth

(Via the MediaPost blog and the Kelsey Group press release)

According to The Kelsey Group’s Global Directories Forecast 2007, advertising revenues from print Yellow Pages, Internet Yellow Pages and Local Search will grow from $30.6 billion in 2006 to $38.9 billion globally in 2011, representing a 4.9 percent compound annual growth rate. The forecast expects the print Yellow Pages segment of the global directories marketplace to grow from $26.5 billion in 2006 to $27.8 billion in 2011.

Charles Laughlin, senior vice president and program director, The Kelsey Report, said “Bucking the trend of some other traditional media, the global print Yellow Pages market will grow slightly through 2011, driven by aggressive and innovative publishers.” The online segment is expected to grow from $4.1 billion in 2006 to $11.1 billion globally in 2011, a 22.3 percent compound annual growth rate.

Neal Polachek, senior vice president, The Kelsey Group “Our outlook for Internet Yellow Pages and local search is supported by our annual research of small and medium-sized business advertisers… While (small and medium-sized businesses) continue to utilize traditional media, they are increasingly turning to targeted, vertical electronic media.”

Thumbnail Summary from the Report (U.S. $):

  • The global print and online directory market is expected to grow from $30.6 billion in 2006 to $38.9 billion in 2011.
  • Global print revenues will be $26.5 billion in 2006 compared with $27.8 billion in 2011.
  • Global online revenues will grow to $11.1 billion in 2011.

In the United States:

  • Internet Yellow Pages with traditional sales channels will grow at 30.7 percent (compound) through 2011.
  • Internet Yellow Page revenues will grow from $624 million in 2006 to $2.3 billion in 2011.
  • Local search revenues will increase from $922 million in 2006 to $2.6 billion in 2011 .

What it means: according to the Kelsey Group, the print directory business will continue to grow in the next four years. I’m not surprised. It’s still a great business. I’m obviously biased but directory publishers have tremendous assets: sales force, usually a great brand, distribution, users and advertisers. It’s a great ecosystem! If you operate in the local search space and you brand yourself as a “Yellow Pages Killer”, you’re missing out on major opportunities to partner with these guys.