Say GoodBye to the Yellow Pages
The headline of this report is not so much a prediction of sudden demise as it is a play o" a
1998 report by Forrester Research, "Say Goodbye to Classi!eds." When that report was
published decade ago, the newspaper industry sco"ed as its print classi!eds continued to
overshadow upstart Internet sites. Yet the bottom has fallen out of newspaper classi!eds,
and in generally the same timeframe that we are predicting for print yellow page directories.
Since 2001, half of the annual print classi!ed spending by car dealers and job recruiters - billions
of dollars in annual sales - has dried up. Last year the newspaper industry saw its steepestever
decline in print classi!eds, driven largely by a 23 percent fallo" in real estate classi!eds.
The conditions for yellow pages publishers are eerily similar. Print directory revenues have
shown stability throughout most of this decade despite the rise of the search engines - the
same pre-condition that newspapers saw in the late 1990s with the rise of online classi!ed
verticals. The economic trigger - a recession - is now forcing small-business advertisers to be
more careful with their ad budgets. Over the next !ve years, we are predicting that 39 percent
of the ad spending on print yellow pages revenues will vanish as small businesses shift
marketing budgets online. After 12 years as an advertising medium, the Internet has finally
reached small-business owners with viable marketing opportunities in the form of keyword
advertising, interactive directories and low-priced online video commercials.
Until now, the key bene!ciaries of this shift have been the search engines. But legacy media
companies - yellow pages publishers included - have unleashed a newly trained army of
local sales people to hunt down this migrating money. Directory publishers have crosstrained
nearly all their print reps to sell interactive media, while newspaper publishers have
launched their own interactive directories and have deployed cross-trained sales troops to
sell them. All told, online products are being peddled by 34,100 trained local sales reps -
more sales people than any other local medium. With all those reps hawking banners, paid
search, interactive directory listings and online video, it is no wonder that local online
advertising is increasing at a rate of 61 percent this year, to $14.1 billion.
Yellow pages publishers have spent the past three years transforming their massive onthe-
ground sales forces into marketing consultants who can meet their customers' demands
both in print and online. Their combined print/online packages are simple, low-priced,
one-stop solutions to small-business advertising needs. The proof of the industry's rapid
transformation is in the numbers: Of all local media companies, yellow pages publishers have
been the most successful in moving toward digital sales, averaging about 14 percent of their
gross revenues from online sales this year. By contrast, the online contribution for most local
newspaper, radio, cable and TV competitors is less than 5 percent of gross revenues.
The main battle for the small business ad spending is between the pure-plays, on the
one hand, and the two groups with the largest local sales forces: newspapers and directory
publishers. Both have feverishly cross-trained their sales forces in the past three years and
added "online only" reps to pursue the hottest-selling advertising product in local markets:
interactive advertising, including the fastest-growing format of all, online video commercials.
From
www.borrellassociates.com
