Tag Archives: Simba Information

Editors Corner — Yellow Page Industry Strategic Predictions for 2012

New Year’s is always a traditional time to sit back and reflect on what was and what will be.  It’s also the time of year where pundits feel compelled to offer their predictions for the coming year.  I’ve always thought this process to be a bit silly as they have no real impact on actual business strategies, and usually are just meant for a couple of minutes of shock value. 

So let’s tweak the process a little to offer some more strategic predictions on several key macro areas that I think should be the focus for successful companies in 2012 in the Yellow Page industry – suppliers, publishers, and CMRs alike.  I believe it comes down to these five basic things.

1.  Be sure to know where you are starting from

To know where you are going, you need to start with exactly where are we.  Looking back, it seemed to me that 2011 was both one of the most difficult and most rewarding years I’ve witnessed for this industry in some time.  Why so difficult?   Businesses of all sizes spent 2012 hunkered down, frustrated and skeptical about where the economy was going.  If something had to be cut, rightfully or wrongly, it was usually the advertising budget.  At the other end of the spectrum, consumers watched every penny to stay afloat, so by definition, they were doing less shopping and being more deliberate, doing more detailed research when they are ready to buy. 

Why so rewarding?  Because I also think some reality finally set in.  Online and mobile technology has wonderful potential for the future.  But it doesn’t come to life without comprehensive, accurate, and timely local data.  Who has the most complete set of that data now?  Not Google.  It’s the publishers.  And with each sales call, they can build a more and more detailed database.  As publishers rediscover that they have a database of incredible, unique core data, many of them will begin to address how they can leverage those assets, independent of getting too hung up on platform. 

A “Yellow Pages” can be in a book format, something running on your mobile phone, or searched online.  But at its most basic element, it’s all about the data, not the delivery mechanism.  I believe that is the starting point that the industry seems to have lost in its pursuit of new revenue streams.  No one, no other media industry, has a source like this.

2.  People – who’s rowing the boat?

Over the holidays I got to visit Asia and made a little detour to visit a major publisher there.  Their number one business issue?  Not the migration from print to digital products.  People.  Finding people who can sell in a solution provider mode, not just take orders.  That sentiment has been echoed across the globe with every company I’ve talked to.  Merge that with a very unhappy workplace where different HR experts have indicated that upwards of 40+% of your team is ready to bolt immediately should the job market improve, and you have the makings of a huge mess.

Right now, there isn’t a lot of positive energy in many companies in this industry.  Case in point is a major publishers like Dex One talking about changing out up to two-thirds of their entire team. To be successful, all companies in the industry, especially publishers, will need to find a way to identify, recruit, and compensate their people, especially their sales teams, in 2012.  It will be an uphill battle.

We’ll have a lot more on this in a coming article.

 

3.   Products – and your strategy is??

One easy prediction to make is that this year the economy will be better than the last few.  All kinds of opportunities are out there. But for which products?? 

Some macro level info to start from:  experts believe that weighed down by flat incomes and slow job creation; there is little chance that U.S. consumers will increase spending significantly this year.  One recent projection was a forecast for 2% growth in consumer spending in the first half of the year, compared with the estimated 3.6% increase in the fourth quarter of 2011.  But when those consumers are ready to spend, they will need that high quality local business information that only this industry can provide.

You’ve all heard that everything digital will be the rage again next year.  Digital advertising will make up more than 20% of all ad spending in 2012 and will account for half of all growth, predicts ZenithOptimedia.  In the Yellow Pages world, the BIA/Kelsey and Simba groups are both suggesting that 2011 will see a slower decrease in print revenues and a faster increase in digital revenues, but with print still being the predominant revenue generator at this point.

What keeps print going??  Things like natural disasters help.  And disasters will again occur in 2012.  For example, this past October, when an unseasonal snowstorm hit the Northeast from New Jersey to Maine, call tracking supplier Telmetrics found that local consumers flocked to their phone books to find a wide variety of important business services.  Call volumes shot up more than 18% across the region as a result of the storm, with Connecticut seeing a nearly 47% increase.  

This is another theme we will cover in future articles.  Yes, you need to be in digital, but it’s not time to give up on print yet.  Remember, it’s just another delivery mechanism.

 

4.  “Show me the money value…” – Value and service as the new differentiator

During my holiday travels I had the occasion to experience both US and international airlines.  It wasn’t even a fair comparison.  On the international flights, the carrier did a lot of little things to impress me and express how much they wanted my future business:  things like provided eyeshades, ear plugs, even a spare toothbrush, while managing to keep my wine glass full the entire time.  Domestically, it was get your rear end in the seat, here’s a bag of peanuts, and give me your wallet so we can gouge you for each piece of luggage checked.  When I have the need to fly next, which type of airline do you think I will use?  And given it was their peak season, why wouldn’t they hand out free cookies or something just to pretend they are happy tp have your business, that they want the whole experience with them to be pleasurable, and to have you back again soon?  Nope.  They didn’t even try.

Given that all advertising expenditures will be tight this year, and that publishers will be providing a wide smorgasbord of products, what will differentiate them from the 30 other guys walking in the door trying to get that small business to spend their advertising money?  Simply said it will be the one that can demonstrate the true value of their product, value seen from the eyes of the recipient not the provider, and then execute on what they promise.  You have to be able to justify why that business should be spending money with your company.  You need to find something they aren’t doing in their current ad program that will help generate more business contacts for them.

Keep in mind that our customers now have a choice.  They can remain our happy and loyal customers, because we’ve exceeded their expectations.  Or they can become our competitors’ customers because our competitors have exceeded expectations — while we haven’t.

 

5.  Planning is nice, but you need to execute your strategy.

Strategy and planning are important, very important.  A totally necessary component for success.  But strategy without execution is useless if nothing ever happens.  Execute!

If you are managing a team, you need to get your troops engaged in the plan.  Engaged people are not interested in leaving.  And they also aren’t afraid of tomorrow — they’re not afraid of change.  Engaged people try harder, do more.  They’re anxious to move, to succeed.  Their energy is infectious.  They’re the positive face of your brand and your company.  They’re your company’s most valuable ambassadors.  They’re the secret weapon for success as they execute your strategy.  Are you doing everything you can to get them engaged?

Also, let’s get personalWhat’s with you next year? How will you be better as a person and at what you do for a living? What will make you better?  Where is your focus? This is another area we will be writing on in 2012.

 

Welcome to 2012.  Put on your seat belts and get ready for a wild ride…

 

Simba Information Industry Forecast – 2011

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.

View From The Corner Office: An interview with Dave Goddard, Simba Information

Perhaps no one issue is more relevant, current, or strategically important for the Yellow Pages industry right now than  some of the recent environmental challenges it has faced.  Up until recently the industry had managed to fight back most efforts. But a new ordinance passed by the Seattle City Council which would levee new registration fees for publishers, require mandatory opt-out compliance, and impose significant new waster recovery fees per book distributed has now brought the issue to the fore front.

Simba Information, led by Senior Analyst of the Yellow Pages Group, David Goddard, has released a comprehensive new report covering the full spectrum of the topic entitled Going Green:  Environmental Challenges in the Yellow Pages industry 2010. Goddard is a recognized authority on the industry having covered it since 1997.  He oversees the content gathering and presentation of Simba’s Yellow Pages & Directory Report and numerous related research reports. This work is an exceptional piece covering not only the general industry issues, but also provides readers with more detailed views inside most of the major publisher efforts.

We recently sat down with Goddard to further discuss his views on this hot topic. Enjoy.

YPT: How was this study assembled??

GODDARD:   Generally, Simba gathers the information for a report for about a year, which gives some solid trend lines. We then analyze the information and publish it. We have tracked the environmental impact on the industry for the past few years but this year Seattle brought the impact on the industry right to the forefront. While we discovered the industry has become more green over the past few years—primarily since the beginning of the PSI hearings in 2007 — it may be too little and too late. A number of states  and municipalities are already looking closely at the cost of yellow pages recycling just as Seattle did and may decide to recoup the money.   Seattle is going to charge the publishers as much as $600,000 at year to do business in their community. That will probably look very inviting to legislators.

YPT:  Is your overall sense that the industry understands how serious an issue this really is?

GODDARD:   Absolutely, I remember the first few environmental meetings that came up in 2007 & 2008. The publishers were surprised by the environmental issue as it pertained to their industry.  But, now they have educated themselves and a great deal of the credit goes to the YPA and ADP associations.  The publishers now work hard to making recycling of yellow pages directories more convenient and have gotten behind the green movement. However, the challenge is quite large because publishers are dealing with individual states and municipalities.

YPT:  In YP Talk articles we recently suggested that this lawsuit may not be a totally bad thing for this industry.  It could almost be viewed as an inexpensive public relations effort from the industry.  Do you agree??

GODDARD:   It is likely there will be a more united industry. Seattle is already proving itself to be a good example: two of the RBOCs and the YPA have filed the suit against the city ordinance and Yellowbook, which also distributed in the city, has thrown support behind them.   The money that will be owed to Seattle if this ordinance is upheld is really going to pinch. And, it won’t take long for environmental groups in cities like Chicago, which are already in contact with Seattle, to look to do the same.   Publishers may well have to pay to distribute in some of the cities and communities. Hopefully, both sides in Seattle will come up with a compromise that will work for publishers and the city. What that compromise would be, I’m not sure but I suspect they will be looking for one.

YPT:  Publishers have suggested that opt-out rates are only about 1% of the total delivery , and that it is a small fragment doing all the complaining/blogging about the issue while rest of the community isn’t really engaged in the discussion.

GODDARD:   Those statistics sound about right from what I’m hearing but the issue has now moved into the political arena.  If the Seattle model expands, communities across the U.S. are going to ask taxpayers if they want to continue to pay for recycling phone books or send a bill to yellow pages publishers.  I think the taxpayers’ answer is pretty obvious. Communities are going to go for the money. So, even if it’s only 1% of the households that don’t want the book delivered, the political arena is likely to give communities the legal right to send Joe Walsh a bill.  The publishers have to pay the bill, go to court in an attempt to have the ordinance overturned or come up with a compromise.

YPT:  Wouldn’t the process agreed to in the Minneapolis/St. Paul area be the better route for all parties (agreement to set up a single source opt-out program with fees involved.   So, I think me the issues is that if there were no fees involved then say you have to offer the opt-out I don’t think that would bother anyone.

GODDARD:  Minneapolis/St. Paul was a good compromise but communities are always looking for additional revenue.  While cooperation with business is a goal, the Seattle model is an opportunity to offset some expenses. It would be nice for the industry if the Seattle model doesn’t spread but it’s pretty likely that it will.

YPT:  Specific to the Seattle ordinance, it seems that the ordinance champion, Councilman O’Brien, really has his eyes on a bigger loft (State House).

GODDARD:  Yes, you’re right.  Who’s going to be against cleaning up a community?  O’Brien told Simba in a recent interview: “If you produce it, you should pay to get rid of it.”  And, who can successfully argue with that?

YPT:  In which key areas do you think we’re going to similar legislation come up with next?

GODDARD: My understanding is that environmental groups in Chicago are looking to Seattle but don’t want the legal bill, so they are waiting to see what happens.  How long will a court case like this last – 18 months to 3 years?  It’s certainly going to take a while, so I expect we’ll see a lot of communities watching and waiting. If the Seattle ordinance is upheld, communities are likely to follow the model. Two RBOCs and the YPA, which represents a major portion of the business, have recognized the danger of a strong fee-based environmental model and drawn the line in Seattle.

YPT:  But if they lose?

GODDARD:  Those flood gates are going to open if they lose.  It will be costly to the publishers in Seattle and most likely will become expensive in other communities as well. Since the stakes are so large, a settlement really seems likely.

YPT:  You indicated that one of the things that surprised you in your work on this publication was how green the publishers have become.  Tell us more about that.

GODDARD:   Basically, unlike previous years, we’re seeing a lot of progress. In past years we would search the publishers’ web sites and find that opt-out was available but the procedure was difficult. A person who wanted to opt out often had to hunt through the site, follow many steps and sometimes end up placing a phone call to the publisher rather than an online procedure.   But this year it has gotten pretty easy.  And, the YPA and the ADP, which has their own opt-out site, are about to take it national.  So the industry really is going ‘green’ and working toward recycling—that is the big difference from past years.  Back in 2006 before the PSI (Product Stewardship Institute, an environmental advocacy group) meetings, you often couldn’t find yellow pages recycling information anywhere on a publisher’s site. By 2010 a resident can opt out of a book or find the closest recycling center without much difficulty all across the country.

YPT:  Publishers have indicated that the actual opt-out rates are running under 1%, and have slowed to a trickle.  How do you view this result??

GODDARD:   What opt-out does is create a choice and Seattle is a good example because three of the largest yellow pages publishers—Dex, Super Media and Yellow Book—distribute directories in the market. What is likely to happen is two of those publishers will be “opted-out” and a household will receive one book. Environmentalist groups seem to really get fired up when multiple publishers deliver multiple books multiple times a year. Many, many books then arrive at the landfill or recycling center, which is a great photo opportunity. That’s what draws attention and that’s where they see unnecessary costs to the taxpayer.  An average yellow pages user may not even recognize the differences between books delivered to their home, never mind the difference between incumbent and independent.   Given an opt-out choice, I doubt there will be many residents that love the yellow pages so much that they want to receive all three. I just don’t see that happening and with a door-to-door campaign like the one planned by Seattle environmentalists, the opt-out option will definitely come to the surface.

YPT:  If you were leading a print Yellow Pages publishing operation, what steps would you be taking now?

GODDARD:   Basically they have to get into Seattle and file a suit that points out the defects in the ordinance, including the question of why yellow pages publishers need a permit to operate in the city but newspaper publishers don’t.  There are a number of questions raised by the Seattle ordinance that appear to fly in the face of the First Amendment.  While the publishers have to make an expensive stand in Seattle, it can also be an opportunity.  It may well be in the best interest of the industry to find a compromise that becomes a model across the country rather than kill the Seattle ordinance in court and face continuous battles in other communities.

The yellow industry is going greener while the environmental groups are getting stronger, more united and savvy with working with politicians. This entire issue really came to the forefront on the East Coast when Verizon Information Services [now SuperMedia] split its big book in Boston into three regional editions. The issue has now spread across the country to the West Coast and the environmentalists and publishers are in this together. As Sieg Fischer, president of Valley Yellow Pages, said at the PSI dialogue at the Seattle EPA office a couple of years ago, “We all live on this planet; maybe we can work this out together.”  The Seattle ordinance and lawsuit could supply that cooperation.

And lastly, the PSI group has some real credibility and they have influence all over the country.  The institute, which has been involved with multiple industries ranging from batteries to pesticides, seems to know how to work with environmentalists and businesses.  The wisest course of action may be to work more closely with PSI to find a compromise. They may wear green shoes, but the truth of the matter is that they are pretty savvy.

YPT:  How much is the report and how can someone order a copy?

GODDARD:   The report costs $2,995 for an online download and this is the link: http://www.simbainformation.com/pub/2648050.html