Yesterday, [praized subtype=”small” pid=”7ac08d444f37191c8a97699e6530751c” type=”badge” dynamic=”true”] (YPG), Canada’s largest directory publisher, presented their Q4 2008 and 2008 yearly results. I think they surprised the market with better-than-expected financial results, especially in their directory operations. Total revenues for the whole company for the whole year were $1,696,713,000 million. Christian Paupe, YPG’s CFO, had three key messages:
1) Strong growth in the Directories category. “We continue to lead the industry both operationally and financially” said Marc Tellier, YPG’s CEO and President. Combined print and online revenues were up 3.5% for the year. For the full year, revenues in Directories reached $1,377 million and EBITDA was $822.8 million. EBITDA margins were 60.1% compared to 59.2% in 2007. An important indicator is print revenue growth/decrease. In Q4, print revenues were down 0.7% (Q3 was also down 0.5%) which gives them flat print revenue growth for the year.
2) Trader, their Vertical Media business (i.e. classifieds), is definitely challenged by economic environment. Combined print and online revenues were down -1.8% for the year at $320.7 million. 2008 EBITDA was better with $108.2 million (an increase of 6.1%) due to “cost containment efforts”. Trader’s EBITDA margin in 2008 was 33.7% compared to 30.8% in 2007.
3) Their online organic revenue growth was very strong in 2008. Online revenues for Directories and Vertical Media combined increased to $246.8 million in 2008. This represents organic growth of 43.5%. Q4 online revenues in Vertical Media were up +60%.
YPG introduced two new noteworthy online products in 2008. The first is an improved version of their blockbuster Directory Plus product called Enhanced Directory Plus. It now includes Google Adwords. The second one, the Showcase Bundle, is a complete multimedia solution including a quarter column print ad, a bold alpha directory listing, our online video product Profile Plus and all the components of Enhanced Directory Plus. The Profile Plus product allows them to collect key local content like brands offered and hours of operations.
A couple of slightly negative news:
- Customer count was down to 405,000 (couldn’t find last year’s numbers). Christian Paupe explained that they had tightened credit checks and taken a firmer stand on denied advertising (40% higher in this environment).
- Online traffic measured in unique visitors was down in Q4 ’08 vs. Q4 ’07. Online reach was down from 42% in Q4 ’07 to 38% in Q4 ’08. This was caused by a change in technology platform powering Canada411.ca and by lower traffic on AutoTrader.ca (less people shopping for cars in the current economic climate). Tellier did say YellowPages.ca, their core site, was up 15% for the year though, due to organic traffic growth.
- Tellier reports that current sales (January 2009) are in-line with their expectations. As expected, large urban markets are more challenging but they’re seeing more online growth there. He mentioned that they didn’t see any change in their very-high customer retention rate (above 90%)
- There was some discussions around the re-scoping of the Toronto books (going from two to four books)
- From a regional perspective, BC and Alberta are suffering while Quebec, Manitoba, and the Atlantic provinces are doing well
- Anecdotally, Tellier said “competitive intensity is down” in all markets.
- Tellier also disclosed that substitution from print and online was occuring at Trader but not in their Directories operations
- Their Management’s Discussion and Analysis document states that ” During the last six months, we have observed a more cautious behaviour from advertisers due to the adverse economic conditions they are experiencing. We have in the past demonstrated our ability to sustain stable and consistent growth during economic downturns and as a result, our revenues continue to grow despite the protracted economic and market environment highlighting the resilient nature of our national directory platform.”
I’m just coming out of the last session of this year’s DDC conference organized by the Kelsey Group. Again, a very good conference with interesting topics and multiple networking opportunities. Here are some random data points from the various speech and panels I heard in the last two days.
- Print media still represents 90% of total directory industry revenues
- 60% of SMEs do at least half of their business with other businesses
- 21% of SMEs have embraced cell phones and VOIP lines (instead of the traditional phone company land line)
- 34% of SMEs ad budget is dedicated to online media (including web site expenditures)
- Automotive represents 60% of Trader Corp’s revenues (Trader Canada)
- Jingle: at least 90% of their revenues come from national advertisers. 5% of their queries are category-based. They have close to 100,000 advertisers.
- White Directory Publishers will generate $3-4M in online video revenues in 2008.
- The optimal length for an online local video ad is 45 seconds.
The Kelsey Group’s blog reports on a possible sale by Sensis of their Trading Post classified property.
After being one of the first directory companies to enter the classified market, Telstra’s Sensis has placed its Trading Post property for sale. According to a report in The Age, “Sensis paid $636 million for the fading publication three years ago, but after continuous revenue declines and senior executive departures, The Trading Post is back on the block for a price believed to be no higher than the telco paid in March 2004.”
The motivation to sell the property seems to have come after the departure of John King, who appeared to be the last major supporter of the venture. This is startling news given Sensis’ much touted strategy of bringing together businesses and consumers in an open trading environment. Sensis has had the golden touch with most of its ventures, so the failure of The Trading Post seems at odd with the company’s goal of being the local media of choice in Australia.
The The Age article adds:
It it is clear that revenue from the publication has been declining, despite growing revenue in the wider $10 billion Sensis empire. Sensis said revenues at The Trading Post were down 7 per cent in the six months to December. The sale of The Trading Post will be the latest in a long line of unsuccessful attempts by Telstra to diversify, including a number of dot-com ventures and troubled joint ventures in Asia. (…) Sources close to the company said attempts to centralise management functions at the previously independent publication had backfired. Broking analysts believe the group did not have the management skills to shift customers online from the weekly print publication.
James Kirby, editor of Eureka Report, adds in an editorial: ” With the planned sale of The Trading Post, Telstra is acknowledging it does not have the expertise in traditional media to recreate the publication as a successful print/online hybrid, which it must become to survive.”
What it means: in a really surprising move, Sensis seems to be interested in selling back their classified division they bought just a few years ago from Trader Corp. It’s a move I don’t understand. Did they paint themselves in a corner by promising to double revenues by 2010, a tall order indeed? In any case, in a world where the winner will be the
one who controls the data, this is, IMHO, not necessarily a good move by Sensis.
Yellow Pages Group (in Canada) has just released a new content feature in their main local search site YellowPages.ca. Buyers can now access Autotrader.ca dealer inventory content via merchant listings and merchant pages.
When searching for car dealers, users are able to view the inventories of thousands of auto dealers throughout Canada by clicking on the “Auto Inventory” in-listing link. See the following example:
Yellow Pages Group acquired Trader Canada in June 2006.
What it means: it’s a powerful combo for both users and advertisers and it marries perfectly business directories content (long shelf-life) and classifieds content (short shelf-life). (Disclosure: I work part-time for YPG)