Growth of TV Advertising Superior to Growth of Online Display Ads in France

As some of you, I’m coming back from a great vacation in the south of France. I was mostly offline for the duration of the vacation but still regularly picked-up French newspapers while I was there, most notably Le Monde (for national and international news) and La Provence (for local news). I kept a few articles that I think were blog-worthy and I’m going to share those with you in the coming days.

The first article titled “Rebond du marché publicitaire français en 2010” (Advertising spending in France bounces back in 2010) was published on October 1st in Le Monde (paid link). The article discusses ad spending in France in the first semester of 2010 by various media vehicles. Data comes from Institut de recherches et études publicitaires (IREP) and data can be found here (.pdf).

I found the following interesting data points:

  • Television is the number one media in terms of ad spending (by far) with 1.7 billion euros and a growth of 12.8% over the same period last year
  • “Internet”, it seems, only takes into account display advertising (i.e. banners)
  • “Internet” gets 264 million euros in spending, a growth of only 9% vs. same period last year. Outdoor advertising growth is almost as much with 7.3%.

What it means: a couple of observations. First, television still rules in terms of ad spending. That media hasn’t (yet!) been hit hard by the Web and still benefits from huge ad budgets. The atomization of TV programs (think on-demand online streaming) is still in its infancy and will not impact TV’s numbers drastically for at least 3-5 more years. Second, I’m not surprised display ads are not growing as fast as we would expect the Web to grow. Even though it is still the preferred method for online advertising, I’m not a big believer in its future. Third, I’m surprised IREP doesn’t do a better job at tracking online advertising in general. PagesJaunes Groupe, the French Yellow Pages, saw their online revenues grow by 6.7% just in the second quarter of 2010 (see press release in .pdf) for a total of 263.9 million euros. That’s an equal amount to what’s recorded by IREP for “display ads”!

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.

The Globe & Mail Goes Negative on Yellow Pages Group

Saturday’s Globe & Mail’s business section has an in-depth article about [praized subtype=”small” pid=”7ac08d444f37191c8a97699e6530751c” type=”badge” dynamic=”true”] (YPG). The article clearly has a negative tone talking about revenue erosion, the rise of social media and the company’s debt-load. They quote Marc Tellier, YPG’s CEO, extensively but they don’t seem to believe him.

Highlights:

Talking about the positive reputation YPG has in the market, the article says “But that halo has now gone the way of carbon paper”

Talking about revenues, the Globe adds: “Yellow Pages’ 2.3-per-cent drop in the first half of this year seems minor by comparison – except for the fact that the company is carrying $2.5-billion in long-term debt, much of it added during the glory years to make acquisitions. While some paper boats are sinking, Mr. Tellier is trying to keep a heavy vessel afloat, managing a century-old company whose main product is a clunky paper directory…”

Talking about the cut in dividend distribution, “There were a lot of people who felt management said one thing and did something else. Investors hate that.”

About online competition, “The Googles of the world, the Yahoos of the world, local search engines, bigger brands branching out, I don’t believe Yellow Pages can sustain itself”

About online revenues, “The online side of Yellow Pages still accounts for less than one-fifth of the business. It could reach 20 per cent by year’s end if management’s guidance is correct. But the question isn’t whether Yellow Pages’ Internet presence is growing; it’s whether it’s growing fast enough to make real money. On the Web, no one holds a monopoly. As is the case with newspapers and magazines, it’s far from certain whether the Web will be enough to compensate for Yellow Pages’ print losses.”

About social media, “And Yellow Pages faces a threat from another dot-com behemoth: Facebook. Social media is chipping away at the directory’s credibility, click by click. (…) That wasn’t bad for Yellow Pages as long as people were just talking to their neighbours over the backyard fence. But now, social media has made it easy for consumers to swap stories and recommendations on public forums. Word of mouth spreads faster than ever before.”

Tellier’s answer on the social media threat, “Marc Tellier argues that’s not enough. “You can’t run a business on word-of-mouth alone,” he says. “In some categories [the shift to online] is going to happen in two or three years. In others it’s going to take 30 years … I would have lost all my hair at the ripe old age of 41 if I believed a lot of what we’d been reading in terms of the pundits – you know, print is dead and so forth. It’s not true.” Many observers disagree. Much as he would like to, Mr. Tellier can’t separate himself from declines in the rest of the print industry.” YPG’s CEO adds later when talking about the last time he used the print directory: “Could I have solved that problem on Facebook? I don’t think so,” he says. “This is a growth industry … The business is remarkably healthy.”

The article concludes by saying: “Now he’ll just have to convince investors of that fact, make them believe his book isn’t a dinosaur on the brink of extinction. That could be the toughest sale of all.”

What it means: Ouch. I think it’s the first time an important Canadian media writes a very negative article on Yellow Pages Group. To be fair to YPG, I believe the Globe’s business section has always been bearish on the company. So, I’m not really surprised the first article of this kind comes from that news source. I also don’t like the comparison to newspapers. We’re definitely not talking about the same business dynamics. I do have to give kudos to the Globe & Mail for mentioning social media as a credible threat to directory publishers. I obviously don’t agree with Tellier when he says he could not have found the business he was looking for using his Facebook friends. Thousands of business references are being shared on social media sites every day and those contribute to market fragmentation in an already very fragmented world. I do agree with Tellier when he says word-of-mouth is not a strategy in itself but directory publishers need to be able to corral all sorts of leads for small merchants including word-of-mouth (social) ones.

10 Things to Focus on When Building a Great Mobile Local App (Peter Schwab – Idearc Media)

This is a post about the Kelsey Group’s DMS ’09 conference which happened two weeks ago in Orlando.

In a presentation titled “Idearc Mobile Growing Revenue”, Peter Schwab, Director of Mobile Product Development at Idearc Media (Superpages), offered 10 things developers should focus on when building a great mobile local application.

10- Focus on growing your user base (build a great product which offers a simple utility plus a “Wow” factor)

9- Embrace location ( location makes mobile its own medium)

8- Give users a voice (through reviews/ratings and real-time input)

7- Remove barriers (build features and pursue channels that get you closer to the user. “On Deck” model still makes money but has too many barriers. Focus on app stores.)

6- Embrace the hardware (camera, compass, video, voice)

5- Explore alternative distribution channels (take your content where the users are today. He gave the example of Sp411 on Twitter. )

4- Measure everything (measure for mobile, not online)

3- Drive non-Yellow Pages revenues (CPM ads, coupons, sponsorships)

2- Are you a “painkiller” or a “vitamin”? (become an ally of your user, users respond to deals. For example, Idearc ranks superguarantee merchants on top of the search results on mobile)

1- Experiment and grow as mobile grows (no silver bullet yet, don’t be afraid to move beyond Yellow Pages. Land lines are dying and mobile is becoming the primary Internet access. Social brings a new engagement model)

As an interesting note, when asked “how much does it cost to build a mobile application?”, Schwab replied “if you’re spending more than $25,000 to build an iPhone application, you’re over-paying”

What it means: reading between the lines, Schwab teaches us two important lessons: 1) adapt to the mobile experience (i.e. don’t simply put your web site on mobile). Hardware is different, usage is different, business models are different; 2) the “perfect” mobile local application has not been invented yet. Iterate quickly, try things and go social.

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.

Sean Greene: Bridging Traditional And Online Media as RHD's SVP of Interactive

A few weeks ago, RHD announced that Sean Greene, their SVP of corporate strategy and business development, had just been named SVP of interactive. Greene who will be moving to Santa Monica to lead the interactive team (the former Business.com team) brings 17 years of print and online local search experience with him. I caught up with Greene a few days ago to discuss this announcement. 

Sebastien Provencher: Tell me about yourself and your new role.

Sean Greene: I joined RHD in 1993 starting in sales, after which I worked in a variety of roles in marketing and sales planning. In 2003, I became responsible for interactive strategy (after spending two years at a startup). At the time, BestRedYP (seen here on Archive.org) was already running. I orchestrated the acquisitions of LocalLaunch and Business.com who were strategic both from a technology and resource perspective. In my new role, I will have leadership of the whole online team, about 150 people altogether: 125 in Santa Monica (the Business.com office) and the rest in Denver.

SP: What are you bringing to the online team?

SG: Interestingly enough, I’m viewed as the Internet guy within RHD but I’m viewed as the print guy in Santa Monica. This gives me a unique understanding of print & online but also a strong knowledge of Yellow Pages sales. This allows me to put in perspective the need of both consumers and advertisers.

SP: What are the current strengths of RHD’s online offer?

SG: I really like Dex Net, our search marketing product. Our goal is to find the best click we can get for advertisers.The Dex brand (and DexKnows.com) is also really strong in all our markets. Finally, our advertiser relationships with 500,000+ advertisers is also a major strength of our organization. 

SP: What are your main opportunities for improvements?

SG: Our legacy around fixed-fee products (print and Internet). Those products don’t scale well (upwards and downwards) when usage volume change and, because of that, we’ve been hurt by recent cyclical and secular changes.

SP: What is your short term and long term focus?

SG: Short term: educating both sides of the fence. On the traditional channel side, we need to let them know what products and features we’re working on. On the Business.com side, we need to make sure the team understands how sales works. Longer term: I want to bring greater synergies between  consumer & advertiser products, to integrate our story more tightly. We also want to continue working to attract online talent in our office in Santa Monica. We’ve been voted three years in a row one of the “best places to work in Los Angeles” by the LA Business Journal and we want to continue remaining an employer of choice for online talent.

SP: what do you think of social media as an opportunity?

SG: We’ve been looking at it but I’m disappointed we’re not further along. For example, Work.com is all about consumer generated content and could be a great entry into social media. Next phase: how do we integrate social media in our big opportunities.

SP: What about mobile?

SG: I’m now very bullish on mobile and I hadn’t been until now. The arrival of the iPhone, the ability to develop applications that solve the needs of the person have changed that. I think we will soon learn from mobile and incorporate those thoughts in our Web strategy.

SP: One last question. I’m curious to know, why don’t you split print and online revenues in your quarterly conference calls?

SG: As I mentioned before, our strategy is to offer the best leads to our advertisers wherever it’s coming from. It could be print, online, voice, Dex Net, etc. We provide local marketing solutions to SMEs. It wouldn’t serve our long term vision to split revenues that way.

SP: Thank you!

On a related note, RHD reported second quarter 2009 results last week. Net revenue was $566 million , down 15% second quarter 2008. Adjusted EBITDA in the quarter was $293 million , down 20 percent from second quarter 2008. 

Sean Greene: Bridging Traditional And Online Media as RHD's SVP of Interactive

A few weeks ago, RHD announced that Sean Greene, their SVP of corporate strategy and business development, had just been named SVP of interactive. Greene who will be moving to Santa Monica to lead the interactive team (the former Business.com team) brings 17 years of print and online local search experience with him. I caught up with Greene a few days ago to discuss this announcement. 

Sebastien Provencher: Tell me about yourself and your new role.

Sean Greene: I joined RHD in 1993 starting in sales, after which I worked in a variety of roles in marketing and sales planning. In 2003, I became responsible for interactive strategy (after spending two years at a startup). At the time, BestRedYP (seen here on Archive.org) was already running. I orchestrated the acquisitions of LocalLaunch and Business.com who were strategic both from a technology and resource perspective. In my new role, I will have leadership of the whole online team, about 150 people altogether: 125 in Santa Monica (the Business.com office) and the rest in Denver.

SP: What are you bringing to the online team?

SG: Interestingly enough, I’m viewed as the Internet guy within RHD but I’m viewed as the print guy in Santa Monica. This gives me a unique understanding of print & online but also a strong knowledge of Yellow Pages sales. This allows me to put in perspective the need of both consumers and advertisers.

SP: What are the current strengths of RHD’s online offer?

SG: I really like Dex Net, our search marketing product. Our goal is to find the best click we can get for advertisers.The Dex brand (and DexKnows.com) is also really strong in all our markets. Finally, our advertiser relationships with 500,000+ advertisers is also a major strength of our organization. 

SP: What are your main opportunities for improvements?

SG: Our legacy around fixed-fee products (print and Internet). Those products don’t scale well (upwards and downwards) when usage volume change and, because of that, we’ve been hurt by recent cyclical and secular changes.

SP: What is your short term and long term focus?

SG: Short term: educating both sides of the fence. On the traditional channel side, we need to let them know what products and features we’re working on. On the Business.com side, we need to make sure the team understands how sales works. Longer term: I want to bring greater synergies between  consumer & advertiser products, to integrate our story more tightly. We also want to continue working to attract online talent in our office in Santa Monica. We’ve been voted three years in a row one of the “best places to work in Los Angeles” by the LA Business Journal and we want to continue remaining an employer of choice for online talent.

SP: what do you think of social media as an opportunity?

SG: We’ve been looking at it but I’m disappointed we’re not further along. For example, Work.com is all about consumer generated content and could be a great entry into social media. Next phase: how do we integrate social media in our big opportunities.

SP: What about mobile?

SG: I’m now very bullish on mobile and I hadn’t been until now. The arrival of the iPhone, the ability to develop applications that solve the needs of the person have changed that. I think we will soon learn from mobile and incorporate those thoughts in our Web strategy.

SP: One last question. I’m curious to know, why don’t you split print and online revenues in your quarterly conference calls?

SG: As I mentioned before, our strategy is to offer the best leads to our advertisers wherever it’s coming from. It could be print, online, voice, Dex Net, etc. We provide local marketing solutions to SMEs. It wouldn’t serve our long term vision to split revenues that way.

SP: Thank you!

On a related note, RHD reported second quarter 2009 results last week. Net revenue was $566 million , down 15% second quarter 2008. Adjusted EBITDA in the quarter was $293 million , down 20 percent from second quarter 2008.