Newsletter Archive - Special Edition
Summary of YPA - Yellow Pages Association Conference
05/11/2006 - The following is a summary of the key events from the recent YPA Convention which took place in Orlando, FL, April 23-25.
Our Major Take Aways
The biggest discussion in sessions and the hallways was focused in several areas.
Internet & Print Can Co-Exist: Compared to recent years you could detect a change from "who will win the turf war over serving local advertisers" to "what partnerships publishers need to co-market print and Internet products." For those of you still overly concerned that Google is going to take over the Yellow Pages business and go direct to local advertisers, the Google representative on the Local Search Panel noted that Google views its local search offering as an "extension of its core mission. We don't have a 'go it alone' strategy; partnering with others in the industry is a critical component to our strategy."
Biggest Buzz Factor Goes to: The highest buzz factor at the conference revolved around Yellowpages.com and specifically when (not if) RHD would buy into Yellowpages.com (currently 100% owned by AT&T assuming the BellSouth merger closes). This move would certain solve many of RHD's online strategy concerns voiced at a recent industry analysis event. They currently have multiple brand URL's to deal with such as Dexonline.com and bestredyp.com.
It's All About Sales. Yellow Pages Group CEO Mark Tellier's presentation provided some solid evidence that YPG's focus on premise sales and sales productivity has helped jump YPG's organic revenue growth rate to 7.1% in 4Q05, its best growth in several years. Other publishers in attendance were taking plenty of notes during Tellier's presentation especially when he noted that YPG has increased the percentage of premise sales to over 80% of the sales force from 60% level the company had been at. He also reiterated that YPG has not seen any impact on print usage from online growth.
Syndicated research. Opinions are all over the place on this hot industry topic. CMRs are now under pressure to consider any directory that has at least 20%+ usage. Independent directories are rooting for more syndicated research as they have nothing to lose from the research results and have more share than perhaps first thought in many markets. The publishing of these results are now starting to draw more attention from the financial/Wall Street types. And no solution has been forthcoming for a wider distribution of the results beyond the paying CMRs and publishers.
We have broken up our summaries of the conference events into two major groups - Industry related speakers & events, and Non-industry speakers:
Non-Industry speakers:
Whenever you bring in speakers external to the industry, you always run the risk that the speaker feels overly compelled to do sometime witty and unusual to capture the audience's attention. Bob Garfield, editor at large for Advertising Age, didn't disappoint the crowd. In a presentation that often sounded more like a R-rated George Carlin Vegas act, Bob used a cute PowerPoint slide show smothered in audio, video, and irrelevant political humor to try to get his key points home. They were:
- Today's media, especially TV, is in a very chaotic state when it comes to advertising.
- This chaos is primarily from the low barriers of entry into the Internet for anyone that has enough technical know-how to combine entertainment and information in a presentation that also provides low cost advertising opportunities.
- He scolded Yellow Pages publishers for being unprepared and slow in reacting to the Internet.
- While we are in his view an "old media", the "good news" is that the industry has time because "no other industry has the ability to steal your customers."
John Battelle, Chair/Publisher - Federated Media and author of, "The Search: How Google and its Rivals Rewrote the Rules of Business and Transformed our Culture" provided a more traditional presentation where he emphasized these key points about the Web based on his experiences and industry observations:
- The Web is a platform - and search rules.
- The Web is an architecture of participation with more and more user generated contact.
- Successful Internet companies have a "lightweight business model". For example, Craigslist is run by 17 people.
- Search has the lowest customer acquisition/leads cost -- $8.50 vs. print Yellow Pages - $20, Online - $55, eMail - $66, and direct marketing - $70
- The Web 2.0 is here.
Unleashing The Magic of Local Search" Panel - Dana Todd, moderator
This was an interesting panel, moderated by Dana Todd, president of the Search Engine Marketing Professional Organization (SEMPO), and consisted of Paul Levine, general manager of Yahoo! Local; Shailesh Rao, director - local search/3rd party partnerships for Google; Robyn Rose, VP Internet marketing - Verizon SuperPages.com and Charles Stubbs, President/CEO - YELLOWPAGES.COM.
Among the highlights:
- Stubbs stated during a panel discussion that an Internet publisher would need over 8,000 local salespeople to have a true nation wide footprint. The new AT&T currently has 4,200+. Interesting point is that if RHD buys into YellowPages.com, RHD would bring some additional 6,000 local sales reps into play.
- Todd announced that a recent SEMPO survey demonstrated that over half of SEM agencies and advertisers tried locally targeted ads and were pleased with the results, but there were a large number of unrepresented small business advertisers who haven't explored the medium.
Industry Speakers:
Board & YPA Staff
The conference was kicked off with the announcement that Kathy. Harless, president - Verizon Information Services, has been elected chairwoman of the 2006 board of directors. Harless has served as chairwoman in 2002 and succeeds outgoing chairman Dennis Payne, president/CEO - AT&T Yellow Pages.
In Harless's opening comments she noted that "the print and online Yellow Pages industry, with $26 billion in global revenue continues to be a major force in the advertising world. Our medium is universally recognized, widely used, extremely effective, easily measurable and, even given increasing competition and marketplace pressure, extremely profitable."
Neg Norton the President of YPA outlined the key industry initiatives for 2006 which we will cover separately in an upcoming YP Talk article.
Another key note speaker was Steven T. Smith Vice President of Marketing Communication, Enterprise Rent-A-Car who provided the "National Advertiser Viewpoint". Of note in Smith's presentation were comments such as these:
- He strongly supports the new syndicated research efforts. He challenged the industry to work with Enterprise and other national advertisers to provide more and better evidence of the performance of print Yellow Pages.
- The level of their Yellow Pages advertising is pegged to a percentage of the revenue (5% for all media buys) is generates.
- In 2005 Enterprise has begun to lower its print Yellow Pages ad spending due to the lower usage level and higher prices (price-ups).
- He was particularly emphatic that the value of print Yellow Pages advertising was diminishing, but that IYP/local search wasn't total capturing the loss.
In the breakout sessions, David Goddard, an industry researcher from Simba Information, provided an overview of the industry noting that:
- 2005 overall industry growth was 3.1% and Simba expects it to be 3.3% in 2006.
- Telco-affiliated publishers declined by 0.4% in 2005 while independents grew 14.9%.
- The top 4 US publishers (AT&T, Verizon, RHD, and Yellow Book) control 86% of the YP industry.
- Rate increases in 2006 are lower than historically levels.
Paul Ginnochio of Deutsche Bank provided a very good industry analysis at the International reception. He strongly believes that Yellow Page publisher stocks remain undervalued given their high margins (48%),
strong customer relationships, and the relatively slow decline of references (overall references have declined just 3.3% since 1999).
For more information, contact Paul at (212) 250-8463 or paul.ginocchio@db.com.
All For One, And One For All?
And finally to recap some of more significant hallway chatter, it's been no big secret that discussions are underway between The Yellow Pages Association, the Association of Directory Publishers (ADP), and the Association of Directory Marketers (ADM) about merging these multiple industry associations into one. It was confirmed in hallway discussions and publicly mentioned by YPA Board Members Kathy Harless of Verizon and Kathy Hipple of Ambassador Pages.
Word is that each of the three associations has named representatives to see if such an arrangement can be worked out probably with the help of some kind of mediator. The main issue seems to be how voting will be weighted. Small publishers and CMRs are unlikely to support something in which the few largest publishers in the industry have a controlling number of votes.
See our interview with Neg Norton this week for information (click here). This will be a tricky merger. Stay tuned.