Time For Yellow Pages to Flip the Script?
Perry Evans' great blog on the evolution (and potential reinvention) of print directories presented grim stats on stock price declines of directory publishers Yell and Idearc. Just the other day, Idearc Media replaced Kathy Harless as CEO with John J. Mueller, the board's chairman prompting a 10 percent drop in a share price that was already nearly 80% off of its 52 week high. And a quick peek at R.H. Donnelly shows a decline of 78% from $84 to just under $18. While I think it's premature to say that the print industry is dead, the long-term outlook for yellow pages in their current state looks ominous. From a consumer perspective a recent Nielsen/NetRatings survey tells us that 78% of respondents said they used the internet more today than 2 years ago, as opposed to 2% who used it less. With print directories, only 6% used it more, as opposed to 52% who said they used it less. From the local merchant perspective, we hear a broad range of opinions about the effectiveness of yellow pages versus local newspaper versus internet advertising. In a recent survey* of our 375,000+ local merchant network, we asked merchants for their thoughts on the effectiveness of various customer-acquisition channels, marketing budget allocation and willingness to invest in advertising (in terms of both time and dollars). Survey Results and Analysis Effectiveness of Yellow Pages 24% of respondents rated yellow pages "not effective at all" or "mostly ineffective". When reached for comment, Dino Folino, owner of TDF Limousine Service in Oakmont, PA said:
"I, myself, don't use the Yellow Book. I go to the computer to search and that's why I stopped wasting my money on print advertising."
His comment was representative of several conversations we've had with merchants. Interesting to note that in this case, the merchant's experience as a consumer drove his decision to quit spending on print advertising. If, in fact, merchant behavior as a consumer does influence advertising decisions, a 52% drop in consumer yellow page usage over two years (see Nielsen/NetRatings survey results above) doesn't bode well for the industry.
42% of survey respondents rated yellow pages as "effective" or "very effective" and 19% rated yellow pages "neither effective nor ineffective" ( 14% had no opinion or no experience with yellow pages).
Budget Allocation
Those who rated yellow pages as "not effective at all" or "mostly ineffective" allocated only 9% of their budget to yellow pages and a whopping 45% of their budget to internet advertising. Not surprising considering that 75% of this group rated internet advertising "effective" or "very effective".
What was somewhat surprising was the response from 42% of merchants who believe YP is effective. Of those merchants, 75% rated internet advertising as "effective" or "very effective". They allocate an average of 37% of their marketing budget to yellow pages and 30% to internet advertising (the remaining budget goes to newspapers, radio, TV and "other").
Figure 1: Budget Allocation
So even the most satisfied Yellow Pages customers allocate 30% of their budget to online. What happens if YP usage continues to decline? As online opportunities become more efficient and accessible, how will yellow pages salespeople convince merchants to spend more on print? Should the YP salesperson even lead their pitch with print? Since both YP advocates and naysayers believe internet advertising is effective, it may be time "flip the script" and begin their sales pitch with online (would you like a yellow page ad with that?).
Willingness to Invest
Here we observed consistency among respondents. While, in general, survey respondents under-report their willingness to spend dollars, the local businesses we interviewed didn't foresee spending big bucks on internet advertising even if it was guaranteed to work! Here's what we learned:
* Of merchants who rated the yellow pages effective, 73% would not spend more than $100/month on internet advertising
* Of merchants who rated YP ineffective, 60% would not spend more than $100/month on internet advertising
If the vast majority of local businesses are unwilling to spend more than $100 per month on internet advertising, is it ever profitable to insert a salesperson into the mix? Can we expect broad-scale adoption of internet advertising when price points for many solutions begin at $250 per month? Many traditional business models (and some current players in the local online space) have such a high cost structure that they can't offer products in the "sweet spot" our merchants desire.
In terms of time merchants were willing to spend, we again see consistency between the "YP effectives" and the "YP ineffectives":
Even if it was guaranteed to work, 43% of merchants were willing to spend only between 0-3 hours per week marketing their business online. 40% said they would be willing to spend between 3-10 hours and 16% would spend more than 10 hours per week.
Figure 2: Time Willing to Invest if Internet Marketing Guaranteed to Work
Running online marketing campaigns requires ramp up time that many of our merchants just can't spare. If a local merchant spends 10+ hours per day running their business, is it really reasonable to expect them to become proficient at SEM, blogging or email marketing? While a subset of local business owners is interested in getting educated about online, the feedback I'm hearing indicates that a turnkey approach is more appropriate.
Rumors of YP's Demise Have Been Greatly Exaggerated...for Now
While print directories face difficult financial times and reduced usage, a large percentage of our user base still believes yellow pages effectively drive customers to their business. And while consumer usage is on the decline, YPs still have the opportunity to leverage the relationships they've built with merchants to sell new, more effective solutions.
With their best customers adopting internet advertising as an important part of their marketing mix, the time is now...but what to sell and how? If our merchants had their way they would ask for:
* Internet marketing solutions with the option of print ads as an add-on
* Services that are cheap (sub-$100 per month) and effective
* Services that are simple to use, requiring fewer than three hours per week to manage
Over the next 6 months, we here at MerchantCircle are interested to see how the traditional print industry reacts to changes in the local space, especially now that those changes are severely impacting shareholder value.
Darren Waddell Sr. Director of Marketing, MerchantCircle
* Notes: As context, our target demographic represents the "long-tail" of online advertisers: typically merchants outside of major metros in categories other than arts, entertainment and dining (these categories represent around 10% of our network members). While we surveyed our entire base (more on them in a future blog), the results presented below come from 864 of our most highly-engaged merchants - those who regularly log into their accounts regularly to write blogs, upload photos, send newsletters and create coupons.
Labels: Idearc, John Mueller, Kathy Harless, Merchant Circle, Merchant Insights, MerchantCircle, Perry Evans, RH Donnelly, TDF Limousine Service, Yell, Yellow Page Decline, Yellow Pages
posted by
MerchantCircle Staff
at
2/21/2008 05:09:00 PM
,
9 Comments:
Although this may be true for some type of businesses, put yourself in these shoes. It is 3:00 in the morning, you wake to the sound of flowing water. To your surprise you have a flooded basement. Are you going to stop and take the time to turn on your computer, wait for it to load, wait for the internet connection to actually work with you, connect and then search? No most people are going to pick up their Verizon Yellow pages flip to the type of business they need and call. That is what it is all about. Finding what or who you need to buy a product or service at the time when you want and need to purchase something. Most of us go to the internet to get information on something. Most of the internet is like a library. It is the information highway. Now, if a consumer does have the luxury of time to search a business and find out what they do, who they service, when they can provide that service, then the internet is the place to go, but you must go to a site that can help you locally. Superpages.com.
If you want a full rounded and productive way to advertise your business, you need a multi media company to provide everything that you need to do this. Idearc Media isn't just Yellow pages anymore, it is a multi media company providing advertisers with options from Billboards to Direct Mail. So, current advertisers and new advertisers, don't just think print, think outside the box, ask your sales rep "what else do you have for me to grow my revenue?"..I'm sure they will lead you in the right direction.
So let me guess…”Anonymous” is a Verizon Super Pages sales rep who relies heavily on anecdotes to close deals. Here’s my anecdote: when I talked to 10 people in my office, 8 of them can’t even remember where they keep their print yellow pages (hopefully not in the basement!).
Kidding aside, if you read the post closely, I did not say that print yellow pages have no value. In fact, 42% of our merchants find print YP effective. I concede that IdeaArc is more than just print and I’d really like to think that sales reps are all motivated to lead their client “in the right direction”.
However, from our survey results, we found that online was viewed as the most effective advertising channel by the vast majority of respondents. Period. And, given the sub-$100 price point most of our merchants desire (keeping in mind our customer demographic) I doubt costly billboard ads or direct mail drops are of much value.
-DW
Interesting....I know one thing for sure. If my power went out and I needed an electrician, the internet sure wouldn't work! I think the yellow pages gets a bad rap. As a business owner in NYC, I think the yellow pages is the fastest place to find a phone number that's not already stored on my cellphone or rolodex. Other than that I don't use the yellow pages at all. Interesting article, though.
Couldn't resist not commenting:
"If my power went out and I needed an electrician, the internet sure wouldn't work!"
Yes, and if the water got contaminated, your tap water surely wouldn't work. Or if the pipe broke, again the tap doesn't work. So as a backup, do you keep gallons of water around?
I don't want to wade into the muck that is YP: relevant vs irrelevant, but the argument of not having electricity and thus needing the print YP is rather weak. The last time I remember not having electricity in the house was when the entire East Coast Grid went out some 5 years ago. There are always extreme scenarios - basing needing the YP because of one is not a good argument.
if the power goes out, there is always your iPhone web interface, the GPS business locator in your car (or on your phone) or GOOG411 directory services. Quite a few options ;-)
I can’t bash the “print phone book” (Yellow Pages, Yellow book, Yellow…ect, Verizon, Windstream)… well I can really… for the point that was just listed above, and I probably forgot some. To be effective in these books you have to be listed in all of them for your area! As a marketing manager, I hated it when the “print phone book” salesman came to the door. If I didn’t list in the book I didn’t exist. If I didn’t spend more than the other guy I didn’t get a good placement. If I didn’t buy an ad I couldn’t get on the internet listing!!! Come on!
I respect the print business for what it is, and I hate to beat down anyone or business, but we are all making a movement to information sharing in a major way these days. Free mostly, because the information we list for free with companies like MerchantCircle here. Our information has value. Online print books too, but they trick you into thinking you have to pay to give them your valuable information.
Exposure is great… and in marketing they say that there are two types of people out there: those that know about you, and those that don’t know about you. (then it gets more complicated as the flow chart expands) So what would be more effective exposure? A book that is distributed to 10,000 possible observers (for a small town) or an online presence that is virtually limitless?
If I am in a situation where I don’t have the internet, I use my cell phone and call 411. I know that a “print phone book” has paid advertisers in it… and just because someone does not pay for advertising it does not mean they do not exist! It might just mean they didn’t give in to the guy dressed in a suit made of motel drapes peddling an ancient form of paid advertising.
To all business owners and media consultants, Here is the bottom line..technology is here and will be here to stay, however just because it is here and it is the new sexy way to find businesses it is not the only way. The only way you are going to know if something works you need to track your calls,email and any other form that PRODUCES SALES OR RESULTS for that company.If the results are there then it works regardless of whether is high tech or an old medium.....
Here's a curve ball some people do not have a phone book or yellow pages - raising hand.
When I lived in Canada I would most certainly reach for the yellow pages (kept beside the phone in the living room) on occasion to look stuff up but we had a land line and life was different.
Now that I live in Belize and have no land line and no phone book so primarily I go online to get my information. (there are phone books here - we have been living here 3.5 years and never once had one delivered to our doorstep lol)
I am no advertising professional and neither do I work for a printed directory. I repair computers and I actually find it more convenient to use the directory for advertising because when the computer breaks, you can't get into it to find a technician. In that case you have to rely on printed media or word of mouth. Some malware won't let you get online or search for a solution. But that is just in my case, others differ.
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