Dave Swanson: "Facebook and Twitter are Both an Opportunity and a Threat to Directory Publishers"

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

Dave Swanson Photo

Day two of the DMS ’09 conference saw a brilliant keynote from Dave Swanson, Chairman and CEO of R.H. Donnelley (RHD). After hearing sobering thoughts from European Yellow Pages leaders at the EADP conference in May (see The Wake-Up Call: “Unless We Change, on the Long Run, We Are Doomed to Disappear” (EADP 2009)), I was really looking forward Swanson’s keynote given the situation RHD found itself in (they filed for Chapter 11 protection in May) after having an amazing stock market ride in the last few years. the Kelsey Group “wanted someone who has had his butt kicked” for this keynote, someone who could explain what happened and what’s ahead for the industry and he didn’t disappoint.

Here’s what happened according to Dave Swanson:

  • The economy
    • “It changed everything for everybody. If you look at the timing of ad sale declines, it compares exactly with the economic contraction. If you index Google’s financial results with RHD’s, you realize they have suffered as well. We’ve seen broad-based sales compression. We had enjoyed the longest growth period in history, but it created unsustainable bubbles: housing bubble, advertising bubble, credit bubble (with mergers & acquisitions and leverage buyouts). It was an unsustainable situation because we needed to refinance regularly. There was no money left after the financial bubble burst. When I’m asked “Dave, do you regret this strategy?”  I answer, “no, absolutely not. RHD might not exist today.” “
  • Secular changes
    • “Print competition is intense. We keep pointing out the shortcomings of each other’s products. Other local media companies (i.e. newspapers) pitch “against” Yellow Pages also. Media Fragmentation didn’t help as well. Finally, the media trumpeted “no one uses the Yellow Pages anymore” and we became an “environmental hazard” for a segment of the population. We have been very good at shooting ourselves in the foot.”
  • Execution
    • New products did not deliver and had a high rate of churn.

Where are we?

  • “I hope the freefall from the economy has stopped but I think that we’re a long way to go before “main street” joins the current Wall street rally”
  • ” We need multi-platform solutions, more creative pricing, more transparency”
  • “Competitive environment is intense. We could see a shake-out. For RHD, the worst is behind us. Financial house must be in order.”
  • “We need to challenge the premise of our business”. He gave as example: “do we need separate Internet Yellow Pages platforms and ventured to answer “I don’t think so”.
  • “We will never dominate consumer usage as we did in the past.”
  • “We need to become have a service-centric model vs. product-centric model.” RHD’s objective is to be the number one provider of directional services in the eyes of the SMBs in the market they serve. Yellow Pages publishers are provisioning more keywords on search engines with small businesses than anyone else. Because of the channel, this has been a natural extension of their existing product.
  • “Execution hasn’t been very good, but we’re getting better and we’ll dominate”
  • “Publishers have to look at micro-strategy, geo-vertical opportunities. It’s not one large homogeneous search business.”

Swanson observed it would be very easy to be pessimistic but his philosophy is that when things are going very good, something very bad is about to happen and vice-versa. The next several years will be all about climbing out of the hole but “it’s going to be a hell of lot more fun than the last two years”.

Following his keynote, I sat down with Dave Swanson for an exclusive interview.

On print innovation

I asked Swanson if he thought there was innovation left in the print product, what he thought a print product would look like in 5 years. He said he thought the print book really works in smaller markets and that he didn’t see much change needed there. But he confirmed he thought the format wasn’t right for urban centers. He suggested limiting geography (smaller scopes), having more relevant information in the books (possibly a subset of headings instead of all of them) and more specialty products. But he also added Yellow Pages were not supposed to be glamorous. They have to be efficient.

On online innovation: verticalization & micro-strategy

I then asked RHD’s CEO where he thought DexKnows.com, their main online property, was going. He said he was extremely happy to have Sean Greene heading their RHD Interactive division (I interviewed Sean a few months ago), bridging print and online culture. He mentioned DexKnows’ future lies in two directions: verticalization and Micro (which I would call hyperlocal)

Verticalization is the improvement of high-potential verticals within Dexknows.com. It means depth of content, aggregate categories/headings and a combination of expert and user content. He gave the example of “wedding” as a meta-category, an interesting vertical.

Micro is recreating a community, a subdivision, a neighborhood within Dexknows.com (or maybe more “local” brands. He wasnt’ allergic to trying other online brands for this initiative). User recommendations would play a big role there. When asked about aggregating hyperlocal information that’s not directly merchant-related (classifieds, neighborhood information, municipal government info, etc.), he remarked that a lot of community information already appears in the print Yellow Pages and said there’s no reason why it shouldn’t appear online.

On social media

Swanson acknowledged that social media has the potential to be a big disruptor in local search (which made me very happy as I’ve been saying that for a couple of years). He called social media “word of mouth on steroid”. He confirmed that Facebook and Twitter are both an opportunity and a threat to directory publishers.

On combating the negative industry press

RHD’s CEO wasn’t too optimistic about industry-wide efforts to combat negative press. He suggested we change the way directory publishers market themselves and start talking to SMBs more to improve their image (instead of doing consumer advertising to garner usage).

What it means: perfect tone for the Swanson’s keynote. Things are not going as well as they used to in the Yellow Pages industry and it doesn’t serve any purpose to hide it. “We will never dominate consumer usage as we did in the past” is most realistic statement I’ve heard in industry recently. At the same time, the industry has tremendous assets it can leverage starting with the direct relationship publishers have with small advertisers. Very happy that RHD is looking at improving the print product in large urban areas. I believe there’s a lot of leg left in a print product that’s tailored to an urban consumer. Ecstatic that Swanson is talking seriously about social media. I sometimes felt like I was preaching in the desert in the last two years… We’ll have to follow RHD closely as they come out of Chapter 11 in the next few months.


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

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. 

RHD Releases DexKnows iPhone App

I’m a bit late writing about this news (Greg Sterling wrote about it here and the Kelsey Group guys here) but RHD has just released a series of DexKnows mobile apps & services.  I recently had the opportunity to connect with Deborah Eldred, Director of Mobile at RHD, to discuss the new offer.



  • Developed by MobilePeople
  • Covers the whole mobile “value chain”: text messages, mobile browser version, downloadable client applications, iPhone application
  • They looked at ComScore data to focus development on the most important phone models/carriers
  • They developed a specific search “taxonomy” by looking at top categories in a mobile context. They also regrouped categories in three most-used metacategories called Gettin’ Grub (food & restaurants), Havin’ Fun (entertainment), Goin’ Places (travel)
  • Search results are ranked by centroid, currently the center of the city, but eventually the user geo-location

I asked Deborah how the Dexknows offer was differentiated from other offers out there. She mentioned the following:

  • Focused on relevant experience for mobile users (as opposed to advertiser-focused)
  • Most important mobile categories have been grouped and surfaced on the home page
  • People search (data provided by Whitepages.com)
  • RHD covers the whole mobile value chain, from text messages to iPhone app
  • They have great content in their in-region territory.

You can go to m.dexknows.com to use/download the various versions and a short video shows the various features.

Update: Yellow Pages Group in Canada has also released applications for the iPhone and Blackberry. Canpages had released an iPhone app about two weeks ago.

What it means: happy to see that directory publishers are releasing new mobile apps. Obviously, in the medium/long term, it is a critical component of the distribution mix. But I think, in the short term, it plays an important perceptual role with the sales team and advertisers.

The New DexKnows Site: Simpler User Experience and Improved Results

Had the opportunity this week to sit down (virtually) with Jeff Porter (VP / General Manager DexKnows.com at RH Donnelley) and some of his team members to go through the various features/functionalities of the new DexKnows.com site. The new site was designed and built by the Business.com team (which was acquired by RHD in 2007). It’s using Lucene open source search technology. The site is currently in beta and offers multiple improvements over the last few versions.

Dex Yellow Pages- Online Phone Book Directory for Local Business Listings

Main areas of improvements include

  1. A simplified user interface (more search engine-like)
  2. A clear focus on breadth, depth and quality of local data
  3. Better drill-down results both from a hyperlocal and hypervertical point of view

I jotted down the following random notes on what struck me as interesting with the new site:

  • Introduction of geo-taxonomy (love that word!). The site offers users different levels of geographic drill-down including metro, city, neighborhood and landmarks.  One of the challenges of local search sites is “guessing” the user geo-intent. Is the user searching for the specific city or for the metro area? In this case, the team decided that they would return multi-city metro results in a refine page showing users additional geo-refining options. For example, a search for Pizza in Seattle assumes by default that you’re doing a metro-area search. It leads you to a metro page showing you very basic listing information and all the metro city options. Those simplified basic listings remind of Google local search results. Depending on headings (think restaurants or lawyers), you can also drill down on “specialties” (think “family-friendly” for restaurants or the types of lawyers). If you select individual cities within a metro area, you get to a city page with more detailed business listings. You can then drill down to specific neighborhoods.
  • Category suggestions based on keyword entered (not the same as keyword suggestions!). It allows for a better mapping between unstructured keyword search and structured results.
  • As usual, each business has a profile page. I really like the integration of Google Street View in there.  Makes me think this business profile would be tremendously valuable in mobile situations (think Dexknows iPhone app).
  • If you search for service categories where work is usually accomplished in your home (plumbers, electrician, etc.), you get a service area map instead of the specific location of the merchant. The scope of the merchant service area is determined by the print directories in which they advertise.
  • You can do brand search (try “Nintendo in Denver“) but you can’t combine keywords (try “Nintendo used games in Denver”, it should return you this merchant but results in a failed search). It’s really the only place we’re I was truly disappointed with results.
  • I have to mention they have a very nice admin section for their advertisers where they can manage their listings and profiles, view their different products and get an estimate of the traffic they should be getting.

What it means: I really like what the RHD team has done with their new site. In the online directories arms war, the game seems to be focused on two main elements: simplified usage and quality of data. And the RHD online team is definitely focused on those elements, the same way we were at Yellow Pages Group when I was there. But it also made me realize that the industry is still very much looking at Google (or Yahoo or MSN) as the local search benchmark.  Instead of doing incremental innovation, how do you leapfrog search engines? In other words, what is keeping Google up at night? The answer to that question leads to a possible new strategic direction.  Community, humans, social interactions, marketplaces are what’s keeping Google up at night. Facebook and Linkedin (for example) have built up amazing identity and social graph connection systems, which they can (and will) leverage as much as they can. And we will get to ask ourselves the age-old question: who do we trust most? Man or Machine?

Update: the official announcement.

Approaching a Perfect Storm in the Print Directory Space?

As the stock market keeps punishing directory publishers’ stock worldwide, we’re starting to see more articles about “how no one uses the print Yellow Pages” anymore (see Boston.com, CNBC, or WickedLocal.com). People in the industry know it’s not true, the Yellow Pages Association (and individual publishers as well) have data to back it up but I fear we’re letting public opinion run loose with that preconceived notion.

The whole industry needs to work on this. I’m afraid we’re getting close to a perfect storm where the stock value drop is associated with usage drop permanently. As I suggested in the Kelsey Group blog yesterday, “One way to re-join the conversation would be for directory publishers to start blogging. They all have very smart CEOs and VPs, who usually have a lot to say, but we only communicate behind closed doors or in industry conferences. It’s time for the industry to get back its share of voice and I think it would help to address the media bashing that’s currently happening.”

The good news is that people are reacting. Dave Swanson, CEO of R.H. Donnelley Corp. appeared on CNBC’s Fast Money to counter the argument that “Yellow Pages are dead”. He did a great job. We need more of that.

Dave Swanson RHD CNBC Yellow Pages Are Not Dead

(click here to listen to his interview)

Six Takeaways from Kelsey ILM 07

Last week, I was in Los Angeles for the latest Kelsey Conference (ILM 07). We heard presentations from many interesting speakers, most notably Jake Winebaum from RHD, Jay Herratti from Citysearch, Chamath Palihapitiya from Facebook, Stuart McKelvey from TMP, John Hanke from Google and the always interesting Jason Calacanis from Mahalo.

Kelsey ILM 07

Once again, I had the opportunity to meet and discuss with many of my local search and directory industry peers, making this conference a must-attend if you’re in the local search industry. It took me the a few days to come up with takeaways from the conference, not because there weren’t any, but because they were embedded deeply in the zeitgeist of the whole conference and needed to be extracted. After a “disappointing” 2006 (as reported in this post from SES Chicago), I think we’re at a new inflexion point for the local search industry. It was almost as if every stakeholder in the room had realized that things were not as they had seemed to be and that they were being more realistic and pragmatic about online local search.

Without further ado, here are my takeaways from Kelsey ILM 07:

  1. People are finally realizing that it is very difficult to “do” local. Both advertiser and user markets are very fragmented and local initiatives do not always scale. If you’re not “native” to the local search market, the learning curve is huge.
  2. Clearly, the online local market has not been cracked yet. There is no clear winner yet and we’re still many years away from glory days.
  3. Local is going to be huge online but the various stakeholders need to work together. Players have to identify where are their core strengths and weaknesses and partner to fill the gaps (either through aggregation of technologies, content or sales). M&A should be on everyone’s mind as well. Expect a very active 2008 on that front.
  4. We heard the second reality check coming from a directory publisher in a couple of months. Time is running out and it’s now time to execute.
  5. Verticalization is starting to happen. People are realizing that there are user & advertiser differences between yellow pages headings. We might finally see some real segmentation in the industry (headings-based pricing, vertical sites, specific ad products and content, etc.) .
  6. Call-tracking/pay-per-call is now a strategic pillar of local. To solve the media fragmentation issue, this offers a unified business model to aggregate various products together and simplify the sales process.
  7. Mobile is still the holy grail of local search, coming soon, but not in 2008. Maybe 2009.

Jake Winebaum: “An Incumbent’s Brand, Scale and Business Model are Both Blessings and Curses”

Jake Winebaum, President, RHDi, CEO, Business.com, took the stage yesterday afternoon with a very interesting keynote address at the Kelsey ILM 07 Conference in Los Angeles. Winebaum joined RHD three months ago following the acquisition of Business.com by RHD in July and he offered his first observations on the local search market and the blessings/curses of being an incumbent publisher.

On the blessings and curses of being a media incumbent, he listed “brand”, “scale” and “business model” as both blessings and curses with the only differentiator being strategy and execution.  RHD has a great brand with Dex but that brand does not necessarily mean local search.  Scale (especially in sales) can make you very successful but at the same time can be very bureaucratic. The yellow pages business model is an amazing one as it is an pure advertising model with great cash flow and margins but it’s tempting not to question it and protect its large margins.  He added that incumbents usually start with a defensive strategy when competitors attack and that they need to attack their own business in order to be win in the long run. He concluded that the strategy needs to be focused on offense, that it needs to take into account the needs of both advertisers AND users and finally that execution has to be efficient and crisp.

On his first observations about local search, he listed the following challenges:

  • Local search is fragmented from both a user and advertiser point of view.  To compete effectively in local search, companies have to aggregate a critical mass of local queries and local advertisers to create a true performance-based ad marketplace.
  • The IYP user experience is compromised by selling rules as it is built on print model and rules. It needs to become relevancy-based.  Companies that create a better match between users and sellers will create more loyal users and generate better ROI for the advertisers.

He also listed the following opportunities:

  •  The yellow pages advertiser base and sales force offers unmatched market coverage and advertiser penetration.  Companies that effectively leverage their existing sales force and advertiser base will be winners in local search.
  • Ad dollars follow usage. As the local search market is in its early stage of development, local usage currently exceeds local advertiser adoption. Companies that make it simple and easy for SMEs to harness the Internet efficiently and effectively will be winners.
  •  Vertical user experience. Current local search user experience is generic. Companies that can aggregate deep vertical local content and create unique vertical user experiences will be winners.

What it means: again a very honest look at the local search market from one of the top executives in the US directory industry.  I had the same feeling when I listened to Scott Pomeroy at the last Kelsey conference in September.  I think Winebaum is right when he says it’s now time for clear strategy and crisp execution.


Kelsey ILM 07 Conference: Next Week!

I am attending the Kelsey Group’s ILM 07 conference next week in Los Angeles (e-mail me at seb AT praized.com if you want to connect). Taking a look a the various speakers and presentations, here are the ones I’m most looking forward to:

Kelsey ILM 07

Wednesday November 28

1) Industry Overview by the Kelsey Group Analyst Team. Always interesting and insightful.

2) Jake Winebaum, President, RHDi, CEO, Business.com. I’m dying to know how RHD will leverage Business.com in their core strategy.

3) Jay Herratti, President, Citysearch. Will Citysearch’s strategy change with Herratti on board?

Thursday November 29

1) Chamath Palihapitiya, VP of Product Marketing & Operations, Facebook. Will we learn about Facebook’s local strategy?

2) The “Localized E-Commerce” panel. I’m a strong believer in the “last-mile of local search” (local product inventory, in-store navigation, tuangou, etc.) but it’s very difficult to execute.

3) The “Future of Local Mobile” panel. As local and mobile is on the verge of exploding, this will either be an incredible panel or will be very boring.

4) A Conversation With Webpreneur Jason Calacanis. Now, this should be fun!

Friday November 30

1) Marchex and The Vertical Opportunity in Local. Marchex has some amazing local assets (localized URLs, VoiceStar, SEM platform, etc.). I’m always interested in learning more about their local strategy and how these assets work together.

2) Injecting ‘Social’ into Local Media. It’s the theme of the Praized blog…

For people attending, see you all next week!

News Grab Bag: ContactAtOnce!, Bret Taylor and Jim Norris, DexKnows.com, New Headings in Canada

A selection of some of the praized-worthy news in the last few days:

1) ContactAtOnce!, a provider of presence-aware solutions (click-to-call, IM, etc.) just announced that BargainNews.com, one of their customers, improved the conversion rate of its auto classified website by 77% after adding the ContactAtOnce! service (see screenshot below) to their enhanced advertising packages.

BargainNews Listing Contactatonce

2) Bret Taylor and Jim Norris (both seen below), two of the masterminds behind Google Maps and several other Google products, have joined Benchmark Capital as “Entrepreneurs in Residence.” This gives them paid positions to hang out at Benchmark’s offices on Silicon Valley’s Sand Hill Road and think through starting a business. They have a specific idea in mind, but are secretive about it, telling VentureBeat only that it’s a “consumer Internet” company. I’ve had the chance to work closely with Bret when Google launched their Local site in Canada and it was great fun. I wish them both good luck! (via VentureBeat)

Bret Taylor Jim Norris Google Maps

3) R.H. Donnelley officially launched DexKnows.com, their new local search web site powered by Local Matters (previously known as Dexonline.com). It now includes comparison shopping, a better mapping experience and some personalization tools.

DexKnows.com home page

4) Yellow Pages Group in Canada released their latest heading modifications. It’s always interesting as it gives us a perspective into changes in culture and society. Amongst others, Pilates, Organic Products, Geothermal Energy, Tapas, Brunch, Vegetarian & Vegan Foods are in. Telephone Booths, Shoulder Pads, Chewing Gum and Buttonhole Makers are out.