What’s up with Yellow Pages?
All around the world yellow pages have been tanking for the last 9 months, hitting fresh new lows every other day. Once the darlings of PE firm for leveraged buy-outs, now seems that nobody wants the any more, and prefer dumping them at every occasion.
A couple of examples here in EU will picture the dramatic situation:
- Yell Group, UK, down 75% YoY
- Seat Pagine Gialle, IT, down 77% YoY
Now what’s the main reason behind this and is it going to change any time soon?
For the latter question, I believe, unfortunately for the PE firms, it is not going to change any time soon, or possibly ever.
Investors are scared that online advertising is eating into YP advertiser base and that YPs are not fast enough at adapting their business model. Blame Google, Yahoo and MSN. I think investors are right, for now. YPs have decreasing revenues on the paper side, not surprisingly, but growing revenues on the online side. But, the online side isn’t big enough to guarantee a meaningful growth to the top line (yet). Throw in the big debts they have, the tough competitors in the online space, and you get the picture.
Investors are therefore discounting what appears to be a dying business, without giving much credit to YPs ability to grow their online business fast enough to outpace the decrease in paper. Not surprising.
Yet YPs have two amazing assets:
- their broad customer base made of brick and mortar and SMEs
- their thousands of feet on the streets
In one word: “Demand”.
Technology and understanding of the online business and value proposition is their challenge. YPs have to move away from a culture of “inclusion business” to embrace a culture of value generation, measurability and distribution/syndication.
Their weak side in the online arena is traffic (”Supply”). They rule the world with print, but unfortunately engagement is shifting toward online, where their position is extremely weak. Search traffic is concentrated in a couple of destinations: Google first, Yahoo next. No chance to change this, and no point in trying to attract users to their websites. There are others better at doing this, and they are not going away any time soon. Also, their content and service proposition is pretty restricted and limited when compared to the competition.
I am convinced their only chance of success is linked to their ability to bring their customers where users engage (and not users to their customers) through distribution/syndication and smarter products, and to be quick in establishing a strong presence in the mobile space.
I will get back on this in the future, but in the meantime it would be great to hear your comments and views.
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