Newsletter Archive - Corner Office
A discussion with Peter Broadbent, CEO, Wahlstrom Group
07/05/2004 - The Wahlstrom Group was founded in 1954 by Frederick Wahlstrom. His concept of the closed national Trademark plan for independent dealers and agents led to his founding of Wahlstrom & Company which soon became the first agency to be recognized as a specialist Yellow Pages agency by telephone Companies. Among the earliest clients of the agency was Aetna, which has maintained a continuous relationship with Wahlstrom for over 40 years.
Wahlstrom has been a consistent pioneer within the Yellow Pages industry. They were, for example, the first agency to apply computer technology to the administration of national Yellow Pages programs. In 1979, Wahlstrom became the first agency affiliated with the American Association of Advertising Agencies (A.A.A.A.) to be recognized as an Authorized Selling Representative (ASR), which are now known as Certified Marketing Representatives (CMR).
In the marketing arena, Wahlstrom is the only four-time winner of the Creative Media Award for Yellow Pages planning, presented by Adweek and Marketing & Media. The company has also received numerous Yellow Pages Integrated Marketing Association (YPIMA) awards for Yellow Pages planning innovation, ad design, and public service.
Peter Broadbent was named CEO of Wahlstrom Group in December 2002 (if you're not familiar with the Wahlstrom Group, it is currently the second largest CMR in the industry with client billings totaling about $175 millions). Peter joined Wahlstrom at the agency's headquarters office in Stamford, CT, in 1983. The following year, he was assigned the position of manager of sales and marketing at the agency's California office, Wahlstrom/West, where his responsibilities included marketing management of the office's major client programs.
In 1988, Peter returned to the agency's headquarters staff in Stamford to assume senior account management responsibilities. He was named president of Wahlstrom in 1998. In 2001, Bozell Yellow Pages and Initiative Media Directory Marketing were merged with Wahlstrom to form the Wahlstrom Group, and Peter was named Chief Operating Officer.
Peter serves on the Yellow Pages I.M.A.® board of directors. He also serves on the Board of Association of Directory Marketing (ADM) and has served on the board of directors of the Insurance Marketing Communications Association (IMCA) and the National Yellow Pages Agency Association (NYPAA), a predecessor organization of ADM.
Since becoming CEO, Peter has built an operation that is continually acknowledged by publishers as one of the most progressive CMRs; a CMR that is not happy with just maintaining its client base, but one that actively pursues new business opportunities and tests new concepts.
We talked with Peter about his career, the direction of Wahlstrom, and the state of the industry in general.
YPT: How did you get started in the Yellow Pages business?
I actually grew up on the industry buying guide side of the business. I started with Thomas Register. But in the early 1980's the state of Connecticut and the whole country was going through some really tough times in the manufacturing industries. Computer controlled manufacturing had been introduced into the industry and it required substantial capital commitments. My former boss at Thomas Register, Phil Robinson, was good friends with some of the senior management of the ad agencies in the area. Given the direction that the industrial guide business was going in, he suggested I take a look at these yellow page agencies. I worked for a time at O'Halloran and then had an interview with Frank Barton (then President and CEO). Frank likes to tell the story about how he was expecting to conduct a normal interview but I immediately began interviewing him about the future of this business. He actually had to sell me on the long term viability of it at first. Ironically, the answers he used to sell me on the business are pretty much the same ones I would use today if questioned by a new job candidate. While there are many people who would question the future of the printed product in an increasing digital world, I still think the printed product has a long life ahead.
YPT: Who was your biggest mentor/supporter in your career??
My biggest mentor was definitely Frank Barton. But I've also learned a lot from clients like Rich Costello at GE, from the various publisher Presidents, from the many veterans in this industry, and other CMRs It's such a unique industry that you have the opportunity to pick-up so many things from all parts of the industry. The whole industry is really one big mentor.
Perfect meal? A good piece of swordfish or a steak, green beans almandine, goat cheese salad, good glass of red wine, and most importantly good company.
Favorite movie? Probably a good-old spaghetti Western like "The Good, The Bad, and The Ugly", or Shrek. I liked the first Shrek better than the newest one.
Best way to spend a day off?? A day on the golf course with my wife and two kids.
Golf Handicap??: Up to a 10. The fairways seem to be getting narrower and the holes longer than they use to be!!
Born? New Haven, CT, home of Yale University
College: Attended the University of Connecticut
YPT: Is there such a thing as a career path in Yellow Pages, if so, what does it look like??
That's a good question. I think that if you view YP as one vehicle of directional advertising, just one component that directional databases will be delivered on, absolutely there is a future. But it will require a good understanding of the foundation of the business. The hard part in answering that question is in being specific about what the business will look like in ten years. But clearly the core fundamentals of the business, the understanding and knowledge base, are still required and remains available for people to learn. The print directories aren't going away anytime soon. If you look at the SRI usage numbers, usage has leveled off. Those categories that show increasing usage provide good opportunities for advertisers. The core book itself is still producing great ROI returns for the larger advertisers. So in the short term the business is very stable. Longer term, you have to believe that a blend of print and electronic will evolve and that people who understand the core business and are smart about it can do well and definitely have a career.
YPT: In a handful of words, describe Peter Broadbent??
Client centric. A strategic thinker. Someone who tries to understand all the angles to be opportunistic. Impatient for success.
YPT: Has your definition of success changed over the years??
No. It's still about uncovering and creating value for your customers and clients. Very simply the returns and success you can generate for your customers will lead to similar returns and success in your own career.
YPT: What does a typical week look like for you??
Monday morning always starts with a management team meeting first thing to look at progress and where we are with our clients. After that most of my week is involved in client meetings and communications, internal meetings, making new contacts --- a lot of networking. I try to spend at least 50% of my time with clients.
YPT: How would you describe the Peter Broadbent management style??
I would say that I don't try to micromanage people. I prefer to provide broad guide lines and then give them the space to do their work and create opportunities. I do want them to be very client focused - follow-up quickly, respond to their needs. Client service is very important at Wahlstrom.
YPT: As a CEO, do you have a boss and what are their expectations??
Scott Harding who is the CEO of NSA (Newspaper Services of America, a unit of Initiative Media) is my boss. When you run a business the expectations are that you deliver the numbers (results), plain and simple.
YPT: What are the demographics of your employees, years with company, level of experience??
The average tenure of our staff is about seven plus years in the business. Senior management is more like fourteen plus years. Broadly speaking the staff is a college educated group with some advertising agency or client experience. We prefer Yellow Pages experience in the account rep positions, but actually have a mix of experienced people and people who are new to the business. We're very selective in who we hire on the account side. They have to be able to demonstrate customer centric thinking. Experienced industry people have to demonstrate that they are innovative people, and don't just follow the norms. If they don't have the experience, we can train them in selling and servicing in the Wahlstrom way. We are always looking.
It's a tough job to hire into because about 90% of the work that the client hires us for is more behind the scenes operational type work involved in just getting the orders into the books. It's an interesting right brain left brain exercise where we need strategic thinking on the front end with the client, and then the operational skills on the transactional back end.
YPT: What have been your organization's major achievements over the past year??
Some of our client specific research to prove out the value of our strategies, strategies in areas such as the use of color, space position, IYP - search market strategy, and multi-cultural programs has been very successful and allowed us to explore more opportunities
YPT: On the flip side, what have been your organization's biggest disappointments over the past year??
The economy in general and its impact on our clients continues to be a big disappointment. For example one client post 9/11 had a significant advertising cut especially in its YP spending. Even though we proved the value in the YP advertising program, and at a time when advertising expenditures in general are improving, this client remains in a cost reduction mode. It's frustrating that we can prove the value of the media but can't bring the advertising back up to a level that gives them the maximum benefit. Instead they remain in more of a focus on cost cutting savings than in investing to grow their business.
YPT: A number of publishers are trying variable pricing strategies. What is your view on that??
It's long overdue. But it needs to be a balancing act between legitimate programs vs. just ripping up the rate cards. That approach really hurt the magazine publishers several years ago. Most importantly you want to be sure to set the price based on the value it brings. If the pricing is by units, or categories, or a heading, that's great, as long it creates greater value then we should charge more for it. In the end you want to have advertisements that are fairly priced that provide value to both the publisher and the advertiser. More heading specific pricing makes sense to me and we already have a model in the pay for position strategies now being used on the Internet. Operationally though, its does add further complexity to the placing of orders, which is where the critical role of CMR comes in.
YPT: Many CMRs have noted that the commissions that publishers are paying to CMRs continues to shrink. Where is that trend heading??
All CMRs have been caught in the middle of pricing pressures from both sides, with publishers reducing commissions and client procurement. It's hard to say whether the trend of shrinking commissions will continue but I believe that the publisher commission strategies are an indication of whether their business is in a harvest or growth mode. Most publishers want to understand the CMR business/financial model more specifically because there is clearly a discrepancy between what their perception is of our results vs. the actual reality. But I also believe there is a general understanding that there has to be a floor or we can't properly service the advertising clients and grow the business. There has to be a fueling of the channel to help pursue new-new clients and uncover ways to demonstrate value to the existing clients. Variable commissions using the prior year's results as the basis for this year's rates doesn't provide consistent fuel, nor does it take into affect the many nuances and factors influencing advertiser spending. It doesn't take into account situations where the advertiser chose to cut all advertising expenditures, not just YP. Those types of circumstances have to be taken into account when considering investments in new opportunities.
YPT: Independent publishers have been fighting harder to draw the same level of National ad dollars that the bigger publishers attract. What has been Wahlstrom's position on independent books??
Independents have created a major slice of usage that warrants consideration. Certainly their pricing provides a more favorable ROI for our clients in that usage segment they have created. If they can continue to improve the content of their books and drive usage, I think you will see more National advertising dollars being spent in these independent books. The amount we are putting into independent books has definitely increased. While some of these independents are still frustrated that the percentage share of National advertisers still lags the bigger publisher books, we continue to encourage them to prove out their value. It all comes back to ROI and creating value for our advertising clients.
YPT: What do you see as the future of the National channel?? How will it evolve??
Years ago I would have been more aggressive in my comments, but things don't tend to move that fast. I would expect that the effect of ServiceMaster placing orders directly without a CMR (Editor: see June YP Talk and interview with Roy Beatty of ServiceMaster) will probably result in others considering that model. But I don't see any drastic change in the CMR model since it is one that has worked for a long period of time and continues to work because it is a service with some very smart people providing very effective and efficient value that is needed by those National advertisers on a daily basis. The value is still there and I just don't see that changing drastically. You would expect to see more attempts at a range of relationships and services, but the fundamental core services that CMRs provide are still important to most National advertisers, and should only be expected to continue to improve and be even more effective.
YPT: There is a lot of discussion about the impact of "paid search" and "paid local search". How do you see it affecting Wahlstrom's advertising recommendations??
We have certainly increased our activity in this new media so we can serve the cross platform needs of our clients - print or digital. We are much more engaged in the digital side helping our clients to navigate these new waters.
As a product, I think it's just a matter of fulfilling the full spectrum of digital advertising. You can simplify it as a new product area. But our approach to consumer behaviors isn't necessarily changing. Search is another way of connecting Buyers to Brands. Today, we are much more digitally oriented in our communications for and with the client franchise, which I think is a positive thing.
While we see great promise of future opportunity, we think that local search content is still a little bit thin at this point. You don't seem to have a local advertiser base yet that wants to spend the time to manage it. For National advertisers, they can afford it but haven't exactly figured out how to best use it. So there is a definite disconnect between those who want to buy it and those that can afford it.
YPT: Is Yellow Pages really an advertising medium? Should the industry want to have it perceived as one??
We view it as a "push - pull" model. You have media such as TV and radio that try to engage the consumer's interest in their products and their brands. Then there is the other side where directional advertising is needed when they are ready to buy. That is where Yellow Pages provide the best value. YP is a complementary medium not a competitive medium. The growth of advertising on the Internet has helped that discussion a little as people have seen the morphing from banners (push) to search (pull) as the primary advertising mechanism. That analogy is very helpful to the positioning of Yellow Pages. The associations should position Yellow Pages as a more complementary medium instead of combative with the other media. That position is more tenable with the advertisers. Yellow Pages is advertising, it's just on the directional side of the equation.
I believe there is also a general lack of understanding of the value of directional media within both agencies and some National advertisers. In agencies, you have the dichotomy relative to where advertising is positioned in the agency environment where you have "the agency" for TV, radio, etc., and then there are the "below the line" units which are sometimes even called "non-advertising" units, for specialized work such as public relations, direct mail, Yellow Pages and search. I think that is changing, but a lot of the old mindset is still there. I've noticed that many of the advertising business schools have recognized the need to do a better job of educating their students on all the touch points that advertising provides including directional marketing. All media need to be synergistic in their approach to provide the highest value. It's not all just about TV anymore.
YPT: What success have you had within your own holding company getting the awareness of Yellow Pages raised??
The most successful strategy has been when we implement a "walking the halls" approach to the other parts of our IPG parent company. You have to be available and out front within these other client service units to remind them of the importance of directional advertising as part of their overall advertising programs. As a result, we should be ready shortly to announce the addition of three new, non-traditional advertisers as a result of collaboration with these other agency units. We've been successful but it is very time consuming and requires an investment. I must add that our culture here within IPG from the top down is focused on delivering media neutral strategies for clients. That bodes well for our business.