I recently attended the Kelsey DMS2009 conference to learn more about they YP space. There is certainly a lot to learn. I am very interested in better understanding how the real estate industry’s relationship with YP has evolved over the years. I am sure that many reading this will have first hand knowledge. I would appreciate your comments! Here is the post in its entirety which can also be found on the StepRep blog.
Changes are coming to the world of advertising and media. Given these changes we have immersed ourselves in the world of advertising and in particular the YP space. Here are some observations, facts, thoughts, predictions and opinions. We hope you find them interesting. We’re relatively new participants in the YP business which gives us a unique perspective to develop paradigm shifting solutions for the YP Industry. If you are an industry participant please feel free to let us know if you think we ‘ve got it right or if we’ve got it wrong – either way we want to know.
The Origins of YP
Sometimes to understand something you have to go back to its origins and roots and looking to the origins of YP explains a lot. Back in the early days of the telephone in North America, Governments passed legislation requiring that white page (Telephone books) be delivered free of charge to every land line address. Today (with few exceptions) this law is still on the books. This allows YP companies to work in conjunction with Telco’s to either combine the yellow pages with the white pages or at the very least piggy back delivery.
There was a time when the Yellow Pages were everything. In this time before Internet there were few ways for consumers to find businesses and services they needed. They could ask a friend, check the newspaper, listen to ads on the TV and radio, see a billboard or bus sign, or, they could pick up the Yellow Pages where they could “let your fingers do the walking”. The truth of the matter was that for most business categories the Yellow Pages were a must have, and so for years, the cost of Yellow Page advertising was almost inelastic. Businesses were born and thrived, at least to some extent, on the strength of their position and size of their ad in the Yellow Pages. As an advertiser you could not reduce your spend or you would lose your important position at the front of the directory. To be sure, the Yellow Pages produced real, valuable and tangible results for businesses. An ad in the Yellow Pages connoted trust and consumers turned to the Yellow pages to find business and services they could trust. Consumers used the Yellow Pages because they were the easiest, fastest, most complete and trusted source of information.
YP Industry Today
Today things have changed. The Internet has become the ubiquitous and de facto starting place for global and local search. Consumers prefer the Internet because it makes search fast, efficient, mobile and is increasingly convenient. Most importantly it has become the most information rich and trusted source of information. An Internet search can provide more and better results. Results have richer information like maps, directions, hours, descriptions, photos and videos. Most importantly Internet results provide trust. Ads in the Yellow Pages are simply words created by the advertiser. Internet results provide expert reviews, peer ratings, rich content like photos, videos and descriptions from customers. These are things that print alone cannot provide. The Yellow Pages were once considered as the most complete source of business listing data but this is no longer true. For these reasons consumers are migrating online at an amazing and increasing rate.
As consumers migrate online both advertisers and publishers follow. Traditional media have made attempts to create online properties but have generally failed to innovate and leverage the benefits of the Internet to their greatest advantage. They are impeded by valid concerns such as cannibalizing traditional revenue while maintaining or growing their current share of SMB (Small and medium businesses) advertising dollars. Further, traditional media organizations are saddled with infrastructure costs, outdated pricing models, and publishing cycles that true pure play Internet advertising plays need not consider.
The current state of the economy has only added fuel to this fire. The economy drives advertisers to question the value of all spends and media spend are no exception. The transparency and pay for performance nature of online media is raising expectations for accountability across all media.
This environment has caused traditional media revenues to decline and most markets are experiencing consolidation and rationalization as they struggle to find ways to maintain their share of current advertising revenue from SMB’s.
As seems always to be the case, the impact of the Internet on an Industry is overestimated in the short run but underestimated in the long run. This holds true for YP and we believe that any revenue gains for Yellow Page print media are due to inertia. Customers are not just moving online, the fact is that most have already moved online and will continue to do so to the detriment of print.
It should be noted that there are a number of stats that indicate that consumers still use the Yellow Pages when it comes time to purchase. We suspect, and anecdotal observations confirm, that consumers still use the Yellow Pages from time to time as a method of phone number lookup, that is, in the same manner as the white pages, but not as a method of discovery or choice.
The Yellow pages to date have only just begun to feel the sting of advertiser’s migration to online advertising sources. Some, unbelievably, still attribute the revenue decline to only the current economy. A few others hold on to revenue growth, obtained through innovative sales techniques and a well trained cadre of feet on the street sales people, as proof positive that no such online migration is occurring. However, the majority of Yellow Page operators at the C level are savvy business professionals that can read the writing on the wall and understand the sea change taking place, even though they may lack the motivation or tools to make the necessary changes.
How the YP Industry has reacted
All of this would seem to point to a dismal future of the YP industry, but there are some powerful positives. Decades of being the heavy weight incumbent for SMB’s advertising dollars have left the YP industry with some very valuable assets. The YP industry has perhaps the largest, best trained, motivated and skilled advertising sales force in existence. For decades they have established and cultivated relationships with SMBs. It should be noted, too, that Yellow Page advertising for many verticals or segments still works and has a very positive ROI. While many business segments, such as travel, have all but disappeared from YP other segments have grown. The YP sales force has done a great job of targeting and cultivating high value segments such as legal and dental.
YP has also begun to embrace accountability. The use of “Pay for performance” call tracking once only used for non-traditional and rescue accounts has now come into general use in many areas. The sales process has become increasingly multi product, digital and explicitly performance based. Many YP sales teams are leveraging their relationship with SMBs and are embracing a consultative sales approach and delivering a wide range of products such as SEM, SEO, web presence, analytics, and reputation management tools. At the same time YP companies are very interested in developing self service models for low value segments as consultative sales is costly and labor intensive.
On the consumer front, YP has done a better job than their newspaper counterparts. They have migrated online faster and have begun to embrace user generated content such as photos, videos and ratings and reviews to improve the consumer experience but still lag far behind their pure play Internet counterparts and particularly in verticals such as real estate and automotive. YP has not truly embraced the “Social” aspect of the web beyond providing links to share or publish via Facebook or perhaps Twitter. The true value of Social Context has largely been unexplored. YP has done a decent job of leveraging their mass of local business data to provide mobile solutions but could still do far better particularly with respect to location and social context.
Prescription for the future
Clearly the advertising spend for SMBs is changing. This August for the first time the number of SMB’s using the Internet to advertise (77%) was higher than the number of SME’s using traditional advertising (69%). However, the full weight and enormity of this has not yet been felt as a disproportionate number of dollars were still attributed to traditional advertising. That, however, is about to change. In fact, Internet Advertising which is currently the third largest spend is expected to surpass the Newspaper spend before 2013 – Newspaper currently being the biggest advertising spends overall today. Unless Newspapers react with products other than print, we think this day will come as early as 2011 or 2012.
Much of this shift is happening as SMB’s shifting their advertising spend from traditional media to their own online presences, pure play verticals and Google adwords. The YP industry is in a truly unique position to take advantage of this opportunity and potentially even grow their share of SMB advertising spend.
A successful future for YP will include evolutionary changes such as transitioning online to IYP, embracing transparency, pay for performance, user generated content, publishing cycle changes, pricing model changes, and sales process changes. However, revolutionary change will need to be embraced to truly seize the opportunity. The YP industry will need to think back to their origins and rediscover the essence of what made them the most valuable source of advertising to their customers. Before the Internet the Yellow pages were:
- The most trusted and complete source of business information.
- A business model that was incontrovertibly the best ROI available.
- The most convenient, fastest way to engage local businesses.
Here is our prescription on how Yellow Pages can attain the above:
- Become the most trusted source by providing Social Context to consumers visiting the directory.
- Become the most complete and richest source of business listings by allowing all businesses to provide complete and rich data and participate in the online directory for free.
- Provide an incontrovertible ROI by embracing a new advertising model in which advertisers set their own advertising fee and only pay based on a successful transaction, and, use this model to leverage the advertisers spend on their existing web presence.
- Become the most convenient, fastest way to engage local businesses by providing consumers with an Interactive system to communicate with advertisers on a one to many basis.
We would be remiss if we did not tell you that VendAsta has developed the set of tools that can help YP companies do exactly that which we have described.
Using the VendAsta platform the Yellow Pages can once again attain this position of advertising dominance. Yellow Page companies have both the sales force and means to take advantage of the shift of advertising dollars from traditional print to online models.