Prescription for the Yellow Pages – #DMS09

Charles Laughlin and Neal Polachek of BIA Kelsey talking about their survey of Yellow Pages CEOs:

Some quotes from CEOs on where we are today:

• “Conserving cash has replaced growth.  Advertisers have reduced spending at a rate we’ve never seen before”
• “Print usage has dropped significantly.  Nobody talked about usage in the past because sales were based on inclusion v. ROI”
• “There is an oversupply of classified ad options – too many books”

Kelsey is forecasting that the industry is $30B with 10% coming from digital.  Digital will continue to grow it’s share

Advertiser volume has decreased from 3.7MM in 2006 to 3.4MM in 2008 while average account value has increased from $2,701 to $3,250 in the same time period.

EBITDA margins have droped from 45% in 2004 to 43.5% in 2008.

Europe has the largest share of revenue from online with 25% in 2008.  North America is at 10.4%.  15% avg global share from online.

Where we’re headed:

• We will grow our share by “reaggregating the consumer”
• We will sell leads rather than products
• Price per call is a leading model going forward
• The cost structure is fixed with declining revenue – how do we change this?

What to look for?

• “Out” Models:
  – Revenue by product channel
  – References as a usage measure
• “In” Models:
  – Subscription v. Performance
  – Leads & conversions
  – Profit per advertiser
  – Customer satisfaction

What to Look for:

• Performance & Fee based blended ads
• Transactional services
• Big shift in recruiting and training sales reps
• Increase in specialists on sales teams
• May reps will struggle with the transition
• Channels get smaller
• Technology supplements core channel
• Outsourcing will increase

Neal steps up to the plate with a wee bit of local wisdom:

The 3 P’s of selling marketing services to SMBs:

Presence – Can the SMB be found?

Performance – Can you deliver leads?

Permanence – Can you retain and maintain the account?

Not sure I heard any prescriptions here but this was a good tee-up for what’s going on in the industry.