Simba information, led by Senior Analyst David Goddard, has just completed this year’s version of their annual Industry Forecast. The study provides an in-depth, detailed view of the current state of the industry, a summary of the key findings, and projections on where the industry is headed in the new future.
When we talked with Goddard about the forecast, he noted some of the key findings:
Overall U.S. yellow pages revenue declined 11.8% in 2010. The industry’s revenue slide continued in 2010 as a recessionary economy endured and the transition from print to digital products continued. This marks another year of continuous; multiyear double digit loses in revenue from the major publishers. The industry growth rate has been declining steadily since 2004 and finished 2010 at $13.57 billion, or an 11.8% decline over that period. The outlook for 2011 is similarly negative, but at a slower rate.
Environmental Ticking Time Bomb Goes Off. Simba believes that the current environmental challenges are a “ticking time bomb” threatening the industry with increased government-imposed controls and “do not deliver” lists scattered around the 50 states. While Simba notes that the associations are hard at work addressing and even partially defused efforts over the last year, by late 2010/early 2011 the industry faced major legislation challenges in two large metro communities—San Francisco and Seattle, and has not won recent efforts to blunt the trend.
National yellow page advertising is in a sharp decline. Spending in the yellow pages national channel took a sharp decline of 16.2% in 2010, its third consecutive decline in double digits. National yellow pages spending is projected to decline an additional 12% to $1.47 billion in 2011. Contrast that with the overall yellow pages industry projected decline of 5.5% to $12.82 billion in 2011.
RBOC publishers are the major drag on total industry results. Aggregate yellow pages revenue for the regional Bell related companies declined 18.2% to $7.72 billion in 2010. Meanwhile, revenue at six leading non-telco independent publishers—Yellowbook, LocalEdge (formerly White Directory Publishers), Valley Yellow Pages, Ziplocal (formerly PDC and Your Community PhoneBook), User-Friendly Media and Names & Numbers—declined only 4.6% to $2.38 billion.
Online Now Accounts for a 17.2% Share of Total Revenue in 2010. Yellow pages publishers have been aggressively trying to position themselves as the source for advice and support of new digital media products. As a result they have seen online revenue continue a double digit increase to reach $2.33 billion in 2010, while the print revenue declined to $11.24 billion, all in the face of a tough economy and an ever-strengthening search engine world led by Google. In the study, Simba will tell you how they project online will continue its double-digit growth rate through 2013 when it will top $4.24 billion, or 33.4% of total revenue of $12.71 billion.
The study also provides much more detailed analysis in these and other areas. For example, Goddard commented that in analyzing publisher results, he estimates the RBOCs are discounting prices approximately 20% which would result in actual revenue from the over 50,000 circulation books of $7.3 billion. Billings for RBOC publishers declined 13.8% to an estimated $9.1 billion in 2010 in books with more than 50,000 circulation. Volume was down 17.3% to 518,085 yellow pages. The estimated $9.1 billion in 2010 billings is based upon full DHC pricing.
The outlook for 2011? Goddard believes that it doesn’t look as if 2011 is going to be much better for the industry. He is projecting a 5.5% decline to $12.82 billion. Going forward the rate of decline is expected to slow and by 2013 he expects we will see a slight increase of 2.5%. Major metro markets are the largest source of local advertising drops. Yellow pages revenue in the top 20 metro markets declined to $1.65 billion in 2010, a 12.2% share of total industry revenues of $13.57 billion, according to Simba estimates. Revenue for the top 20 markets was $1.86 billion in 2009, a 12.1% share of total yellow pages revenue of $15.38 billion.