Kelsey Show Review: YP Brands Can’t Compete

The Kelsey Group’s Directory Driven Commerce conference in Denver Sept. 27-29 saw Yellow Pages executives accepting that they’ll never have the brand power of a Google or a Yahoo. “The cat’s out of the bag,” said Dex CEO George Burnett. “We’ll never have the brand of the portals.”

Burnett could have gone further. He could have noted that Yellow Pages aren’t effectively reaching key demographic groups, have failed to prove that their Internet efforts have separate value; and suffer from a 20 percent decline in overall listings due to unlisted cellphone and VoIP numbers. More critically, they are barely enhancing their deep business profiles, which have been their unique advantage over the portals.

But Burnett and his Yellow Pages colleagues think differently. They tend to focus on their genuine success in keeping revenues up, even as usage has demonstrably gone down. Only by merging print lookups with IYP searches does the industry’s usage show growth.

Printing More Currency

Going forward, their approach is basically to print more currency. They will do this by increasing distribution; adding new products such as companion directories and direct mail; integrating what they call the “electronic” product; and partnering with Google and Yahoo by selling for them, instead of letting them sell directly to their customers.

They are also more focused on proving a better Return on Investment to their advertisers with better research, and guarantees of more leads via dedicated phone numbers that track Yellow Pages leads, Pay for Performance, and Pay-Per-Call.

“Building a better bridge to the Internet” is one theme that came out during the conference. Verizon SuperPages President Kathy Harless used this phrase often during her remarks. While non-American publishers such as Australia’s Sensis, Sweden’s Eniro, Italy’s Seat and Canada’s Yellow Pages Group have become truly Internet-focused, Harless noted that it would be short-selling the industry to make any dramatic turns away from print.

Indeed,Verizon expects that print will remain the dominant media for Yellow Pages for at least five more years. “It’s all about real leads,” said Harless. And today, those are primarily coming from print.

While Verizon fully supports Superpages.com, the second largest Internet Yellow Pages brand after Yahoo!, she implied that the company’s real focus is its continuing invasion of non-Verizon territories. After a setback in Atlanta and some other markets last year, where it was simply “unprepared,” Harless said that Verizon is redoubled in its commitment to a national footprint, creating “100 books in 40 markets.”

Such a national strategy might help national sales, but it is unclear whether it will ever become a critical revenue stream. This is especially true since national advertisers typically require broad penetration of groups that Yellow Pages are failing to reach, such as Hispanics and young people. Currently, national sales make up less than 12 percent of revenues.

A national footprint also doesn’t appear to be operationally necessary or offer real economies – unless the company’s goal, like archrival Yellow Book, is to be sold or spun-off. But Harless argued that it “fills in holes and fosters growth,” while supporting the growth of superpages.com.

The Innovation Debate

One of the major debates at the conference concerned the importance and definition of innovation. To Simon Greenman, who leads Dex’s Internet effort, innovation is all about providing services on multiple platforms. Dex tries to be focused on “connecting customers, wherever they may be,” including “mobile, telematics, even direct mail,” he said. Dex will also work with all kinds of partners, including ostensible foes, such as Google.

The key, says Greenman, is to “own as much of the eyeball as possible” by keeping Google away from forming direct relationships. You also want to “add value wherever you can.”

Other publishers are looking at beefing up their vertical sales. Yellow Pages Group CEO Marc Tellier, meanwhile, noted that YPG has partnered with a home improvement magazine to develop a home improvement section that is 40 topics deep. YPG gets higher readership and usage, while the magazine gets to extend its full page, glossy ads.

Tellier said he is also happy to work with an assortment of partners, so long as they don’t touch his sales account. He gives portals such as Yahoo!, Google and eBay full credit for building their brands and creating compelling data. “But they haven’t figured out how to replicate sales channels. If you are in (eBay CEO) Meg Whitman’s board room, it would seem like a hell of an impact on earnings if (she) went out on a global basis to build sales channels and extensions.”

Other publishers at the Kelsey show, however, made clear that their innovation efforts will focus on increased distribution via additional copies of the core book, adding smaller “companion” versions, and boosting their Internet Yellow Pages usage.

Maggie LeBeau, Dex’s Senior VP of Marketing, said that usage studies show that distribution really was key to the industry’s success. When you go into consumer homes, “Directories are all the time next to PCs,” she said. “There are multiple stacks of directories,” often from numerous years. “There is one in the kitchen, one in the living room, It is because we are only delivering one per household. That supports the use of a (smaller) companion directory,” she said.

There is also a clear business case for companions, LeBeau added. “The incremental calls of advertising in the companions exceed their cost, she said.

Yellow Book CEO Joe Walsh, however, said he was highly skeptical of such “innovations” because they confuse the customer. In fact, he sees a backlash from the clutter of products being offered. “It’s the next sticky ad on the cover thing,” said Walsh. “I don’t get it. Ultimately, advertisers look at the total spend. They don’t break it out by product.”

It is in Yellow Book’s interest to focus on a single, core product. Unlike the incumbent books, Yellow Book’s titles haven’t matured. But Walsh said “The test is not whether you can sell them. It is whether you can provide value.”

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