Yellow Pages and Wasting Local Business Advertising Dollars
The Yellow Pages have two core advantages that the entire business model is based on. 1) They have consumer behavior that has been continued for decades. 2) They have a sales model where scale matters and one of the only effective channels for selling advertising to millions of merchants. Both of these advantages are about to break: Consumer behavior is moving online with an always connected environment. The Local Internet is beginning to deliver as more than a critical mass of Local consumers are on the Local Internet looking for Local Merchants. From SMS search with www.4info.net to local news from www.Topix.net to rich local data from Yahoo Local and Google local, consumers are finding a better experience online---and now that better experience is accessible. Advantage number 1 is about to end. There is enough money in local advertising on the Local Internet that the industry is looking for an alternative to the "mafia like" tactics of these massive and slow Yellow Pages companies. (most of which are owned by private equity firms trying to extract as much cash as possible out of hard working honest local businesses with little to know results) The tactics the Yellow Pages use are NOT consistent with selling the high performance, inexpensive, and highly effective advertising that the Local Internet delivers. People who sell FEAR like the Yellow Pages can not sell the Hope that the Local Internet delivers. Of course they will try and any major ad network has to look at them as a channel for now because they are the only game in town. (They also have to do things like ride along and sales audits to make sure the Yellow Pages are not ruining the powerful internet brand as the Yellow Pages push to accomplish what so far have been miniscule results in terms of bringing local businesses online to use the Local Internet) A new channel for selling advertising from the Local Internet will be built in the next 5 years. It will be built because a $60B Local Internet advertising market depends on a low cost of acquisition channel for bringing 10M small merchants online. This new channel is going to destroy the second advantage of the Yellow Pages. Building that new channel is what we are working on at www.merchantcircle.com. With both of these advantages destroyed, the Yellow Pages industry is going to shrink by 90% and in the end they will not be able to afford their sales force. In 10 years, the major ad engines will be selling ads in print yellow pages (because it will be cheaper for them to do it) and the print Yellow Page business will be absorbed by the companies who control the Local Internet Advertising market. Also check out: http://www.leverageblog.com/leverage_the_internet/2006/04/the_death_of_th.html#comments http://battellemedia.com/archives/002524.php#comments thanks, Ben
posted by
MerchantCircle Staff
at
4/29/2006 12:45:00 PM
,
7 Comments:
Well I take exception to some of the statements made here and would like to address a few of them from an online digital directory point of view. I am Martin Snytsheuvel the CEO of http://www.getyp.com I would like to say there are some interesting points made from this blog post and by no means do I discredit what is said here.
Your first advantage that you say is that the traditional brick and mortar model is:
They have consumer behavior that has been continued for decades.
Very true the typical consumer has looked to the yellow pages directory for over 100 years now and currently has a behavior that appears they will continue to look to the yellow pages for their consumer and business products and services. I believe that this form of advertising will never change. It is proven for both the customer and the merchant so where there isn’t anything broken why fix it. What has changed is how are the consumers going to access this information and how is the typical SME going to make this information available?
They have a sales model where scale matters and one of the only effective channels for selling advertising to millions of merchants.
This is a true statement but I do believe the one item that is actually forgotten here is the fact that they have a captive typically LOCAL SME client base with open channels with their feet on the streets it were. This cannot be discounted easily.
What you do say and quite eloquently is that LOCAL SEARCH matters. In fact advertising revenues from print, Internet Yellow Pages and Local Search will grow from $30.6 billion in 2006 to $38.9 billion globally in 2011, which represents a 4.9% compound annual growth rate. This same forecast expects the print Yellow pages to grow from $26.5 billion to $27.8 billion in 2011.
In contrast the online segment is expected to grow from $4.1 billion in 2006 to $11.1 billion globally in 2011 which is a 23.3% compound annual growth rate. This is why the network of our digital directories are currently establishing an excellent base in this industry. Yellow Pages Nationwide, Inc is a yellow page publisher with no Print directories. This company has only an Internet and digital presence. Like yellowpages.com before the buyout in 2006 for a reported $100 million proves the value of an online domain name. Currently they are part of the huge conglomerate AT&T.
You comment: A new channel for selling advertising from the Local Internet will be built in the next 5 years. It will be built because a $60B Local Internet advertising market depends on a low cost of acquisition channel for bringing 10M small merchants online.
I agree with this and so does the Yellow Pages industry FINALLY. Our strategy has always been local search with over 73 Local Metros ie: www.yellowpageschicago.com and numerous Vertical directories. Local business must be brought online and in large numbers.
I like your point here: and the print Yellow Page business will be absorbed by the companies who control the Local Internet Advertising market. This is exactly what we as well as your company is trying to accomplish. We welcome the 2.0 mentality and embrace positive partnerships.
Excellent Post Ben!
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I just had a phone call from sales rep of Yellow Pages, trying to sell me this $399 plan for my free classified ads site http://www.Jihoy.com
My business is extremely low margin, need roughly 200 visitors just to make $1 in adsense ads. There is no way I can break even using that advertising model. In factor, companies, funded by hedge funds in my industry, are offering not just free advertising, but are paying people to just advertise on their site. YellowPages will have to face the blunt of the online advertising media sooner or later.
free classifieds
I agree with this and so does the Yellow Pages industry FINALLY. Our strategy has always been local search with over 73 Local Metros , Local business must be brought online and in large numbers.
There is no way I can break even using that advertising model. In factor, companies, funded by hedge funds in my industry, are offering not just free advertising, but are paying people to just advertise on their site. YellowPages will have to face the blunt of the online advertising media sooner or later.
I totally agree with you. With the increase in online marketing and selling, the impact and effectiveness of the Yellow Pages is expected to decline. business plan writer
That was very interesting, they have a sales model where scale matters and one of the only effective channels for selling advertising to millions of merchants.
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