Tag Archives: Ken Clark

YP Talk — 2012 in review

Happy New Year everyone!!!! 

The WordPress.com stats helpers have been kind of enough to prepare a 2012 annual report for this site.   One of the most interesting stats for this site that we are very proud of — readers in 2012 came from 149 different countries which has to make YP Talk one of the most widely read sources for the Yellow Page industry, worldwide….

Here’s an excerpt from the annual report:

4,329 films were submitted to the 2012 Cannes Film Festival. This blog had over 35,000 unique views in 2012. If each view were a film, this blog would power 8 Film Festivals

Click here to see the complete report.

Thank you to all of you for reading and commenting on the articles we have posted over the past year.  We look forward to keeping you informed in 2013.

Keeping the news in perspective…

I’m back from a week’s vacation and have a collection of news tidbits accrued during my travels that further highlight why this industry needs to take a step back and sort through all the recent noise about how Yellow Pages is really being viewed by consumers and small business owners.

The first data point actually has nothing to do directly with the Yellow Page industry, but in another way, does.  This comes from Hollywood — reports indicate that ticket sales at North American cinemas declined an estimated 3%, to $4.28 billion, for the period from the first full weekend in May to Labor Day, compared with the period a year earlier (source).  The culprit – it is the economy, stupid.  This recession/depression/high unemployment (or whatever you want to call it) economy continues to just drift along like a boat without a rudder or engine.  So while a lot of “experts” are pronouncing the end of the Yellow Page industry due to declining revenues, in reality many small business owners are still suffering and fighting through lower sales from prior years.  In the case of consumers, when incomes are down and unemployment is up, things like spending on going to the movies are one of the first casualties.  Yet I don’t see “experts” viewing that as a sign of the imminent collapse of the movie theatre business.  But somehow slow Yellow Page advertising sales in this down economy are consider the start of a death knee.  Really?

Data point two is a similar economy indicator and industry comparison point.  FedEx has just issued a profit warning due to weak global economy (source).  The company slashed its FQ1 EPS forecast to $1.37-$1.43 from an earlier estimate of $1.45-$1.60 and the current period could represent FedEx’s first quarterly decline since 2009.  In its comments, the company indicated that “…weakness in the global economy constrained revenue growth at FedEx Express more than expected in earlier guidance.” Once again, I don’t think any “expert” is viewing this dip in earnings as a signal of the demise of express mail services due to what FedEx said.  Simply put, the economy just plain sucks right now.  There are some bright spots out there, but overall the economic funk continues.

Data point three has two parts – the first is the realization that the value of Facebook has now dropped some $40 BILLION since its IPO.  Let’s combine that with the news that more bad news from digital “experts” darling Groupon where several of the  co-founders of CityDeal, the Samwer-backed European clone that was acquired by Groupon in 2010, have decided to depart the company.  These aren’t the first defections of senior management from the company.    The key question for this data point — if all of these new digital advertising media are such great deals for SMB’s, shouldn’t these flagship digital providers be raking in the cash, and not be looking like sinking ships listing badly to port?

Which brings me to the next data point – the continuance of bogus Yellow Pages billing.  Rarely does a week go by that I do not see at least one warning about bogus Yellow Page billings being sent to small business owners.  For example, here is one in San Francisco, and another in Amarillo just this past week.  What I find interesting about these schemes is that if SMB’s are so disenchanted with Yellow Pages advertising results, how could they be so naïve to then pay an incoming bill, just because it has a Yellow Pages logo of some type on it?  Despite what online and social media “experts” say, could it be that those old fashion print Yellow Pages still bring leads/business to their doors?

The answer to the last question is still a resounding “YES”.  Here is another recent study initiated by Haines Publishing, which found that 80% of residents in Ross and Pickaway Counties, Ohio use the print yellow pages first when looking for local business information (source).

When you add all of this up, it indicates that right now, this crappy economy is affecting all advertising.  And it also indicates that SMB’s should not give up their print Yellow Pages positions just for a less expensive (sometimes), sexier (perception vs. reality), new digital platform, especially without verifying that the new digital advertising effort is going to yield the same quality leads that print still generate.  Perhaps the solution lies not in a print OR digital discussion.  Instead, it should be a print AND digital solution for SMB’s.  Sure, get a nice website up, play with Twitter, Facebook, Groupon, or whatever.  However, don’t give up your core position in print Yellow Pages, not when we are seeing call tracking results up over 15% YOY.  Why would any SMB want to take the risk of losing any business in this current economic climate?

 

Why Facebook Will Kill The Yellow Pages

Actually, those of you that know me, have probably already figured out that this is a leading, bogus title.  Even if this is the latest, hottest, newest, most exciting thing from Wall Street, I seriously don’t think Facebook is going to make a dent in the local advertising.  Why?   Because there are already some serious clouds forming in its over-hyped empire.

Now don’t get me wrong – I enjoy some of the info sharing with widely dispersed friends and family that Facebook can bring.  I just don’t see this as the local advertising nirvana that it is being made out to be by some.

By the time you are reading this, Facebook will have completed its initial IPO stock offering, and with a final price at $38 a share, it should raise about $18.4 zilllion (ok, billion), becoming the second-largest U.S. IPO ever.  That’s a lot of cash no matter what you think of their business model.

Facebook is also one of the few profitable Internet companies to go public recently — it had net income of $205 million in the first three months of 2012, on revenue of $1.06 billion. In all of 2011, it earned $1 billion, up from $606 million a year earlier. That’s a far cry from 2007, when it posted a net loss of $138 million and revenue of just $153 million.

But at these kinds of valuation levels, the expectations will be huge.  And as we know in the Yellow Page industry, everyone will be gunning to take a piece of their pie.  Therein lies the rub.  So let’s look at the cracks already appearing in their armor.

Problem, #1 – Expectations require results, big results

To meet these over inflated expectations, Facebook will need to cook up new streams of revenue that indicate a future beyond its current revenue model of just advertising. Last year, advertising represented 85% of Facebook’s revenue of $3.7 billion. At its IPO, Facebook will likely be valued at about 100 times its current profit, meaning it must fuel growth by somehow figuring out how to squeeze a lot more value out of its 900 million users.

For example, their latest revenue test came a week or so ago when the company began charging users in New Zealand as much as two New Zealand dollars ($1.53) a post to ensure that their own friends see what they write. The service, dubbed “Highlight”, seems contradictory to Facebook’s long-standing pledge, emblazoned on its home page, that the site is “free and always will be.” The service is similar to one for marketers, called “Reach Generator”, which Facebook introduced in February, for brands to pay per “fan” to reach those users 75% of the time with marketing messages.  Naturally, some users have been puzzled by Facebook’s fee to make posts show up more often. Maybe they just need to add an asterisk to that free pledge.

A Facebook spokesman was quoted as saying that the company constantly tries new features. “This particular test is simply to gauge people’s interest in this method of sharing with their friends,” but declined to say how the experiment was going.

The problem is that Facebook already has a reputation of fast and furious product introductions that don’t always stick. For example, it abandoned a major 2007 initiative called “Beacon” that sent data from external websites to Facebook, and a 2011 effort at selling daily deals, similar to what Groupon offers.

Problem # 2 – The return on their advertising sucks

As I’m sure you heard, General Motors has announced it is withdrawing its advertising on Facebook because it just wasn’t seeing the results they expected. GM currently spends about $40M on its Facebook presence, with about $10M of that for advertising. But GM isn’t the only company to see weak results for its Facebook ads: Wordstream estimated that Facebook ads have an average click-through rate of just 0.051%. That’s barely half the 0.1% rate typically seen for Internet ads, and a small fraction of what Google has (0.4%). Moreover, analyst noted that Facebook’s 6.5% Q/Q revenue decline in seasonally weak Q1 compares unfavorably with the 1% increase posted by Google’s display ads for the same period, and that from a much larger base.

Problem #3 – Most advertisers have no idea how to use Facebook to their advantage

If you do a quick Google search you will see a whole rash of stories on this.  Given the experience the Yellow Page industry has with SMB’s, where those marketing a range of products often see sales calls now running 2 to 3 hours, why would we think that these same SMBs would understand Facebook seamlessly?  And the bigger question is that if they struggle with this newest, hottest of internet sites, what does that say about the future of social network advertising?

Problem #4 – Users don’t trust the site

One benefit of print Yellow Pages has always been its huge trust factor amongst consumers.  For Facebook, a recent global survey by the digital marketing agency, Greenlight, revealed that a full 30% of people ‘strongly distrust’ Facebook with their personal data.  Additionally 44% confirm they would ‘never’ click on Facebook sponsored ads, and 31% indicated they rarely click on them.  That kind of distrust and lack of interest in Facebook as an advertising vehicle does not bode well for Facebook’s advertising programs.

 

We’ll have to see what the future holds but the early signals aren’t showing me any indication that Facebook is a platform to connect buyers and sellers.  To communicate and share with others, yes.  But to find local products and services?  Not yet.  Not even close.