Newsletter Archive - Local Search & IYP
What Is the Real Story with Online Advertising and IYP?
12/10/2009 - A range of data points on the status of online advertising and specifically IYP have appeared within the past couple of weeks to update what is happening in the online advertising world, and specifically IYP.
First, according to a projection from eMarketer, spending on online advertising is expected to come in at some $22.8 billion in 2009 in the U.S., down 2.9% from a year ago. The decline comes mostly from big drops in sponsorships, classifieds, and even e-mail advertising according to eMarketer. Banner ads were pretty much flat from 2008. Only search is growing at a measly 4% overall. Here are the raw total numbers:
Then just today, BIA/Kelsey President Neal Polachek and SVP Matt Booth kicked off their ILM:09 conference by presenting the BIA/Kelsey local revenue forecast and assessment of the state of interactive local media. Their projections are that local media will fall from $155.3 billion in 2008 to $144.4 billion in 2014, a CAGR of -1.4 percent.
The third data point and probably the most relevant to those in this industry, comes from Simba Information. They have reported that Internet Yellow Pages spending is projected to increase 17.4% to $1.83 billion in 2009, accounting for 11.1% of total yellow pages market revenue. The information is contained in their new Online Yellow Pages Market 2009-2010 new report released recently. The report examines this growing segment of the industry focusing on Internet yellow pages publishers, pure-play Internet yellow pages sites, and search engines, which have rolled out local search features on their own to compete with Internet Yellow Pages sites.
While the report projects online ad sales will continue to grow in double digits in 2010, it is some of the underlying dynamics which make the findings compelling. David Goddard, the lead author of the Simba study commented:
"The industry faced its darkest days in 2008 and much of 2009 with a collapsed U.S. economy that weakened small and medium sized businesses, two large RBOC publishers that declared bankruptcy and an environmental movement that drew national attention, putting the publishers on the defense. But it is not all bleak: there is a gradual recovery of a little more than 1% projected for 2010.
Fortunately for the yellow pages industry, publishers recognized the opportunity of Internet yellow pages a few years ago and invested in the online operations; it is now paying off, especially for AT&T Advertising Solutions, the largest RBOC, and Yellow Book, the largest independent."
In talking with Goddard further, he noted that the 11.1% IYP number may appear to be high based on most publishers comments that their results have been in the low single digit percentage range at best. Several factors should be remembered:
- The total of 11.1% is somewhat skewed because both AT&T and Yellow Book, two of the largest publishers in the industry with huge market shares are actually achieving results above the average level, which therefore raises the industry average. For example Simba projects that AT&T is at approximately $725 million in IYP revenues on a projected total revenue base of $5.5 billion (13.2% level).
- The bankruptcies/reorganizations of large publishers Idearc and RHD, combined with a number of book closings across the board for larger publishers in this economic and advertising downturned has resulted in print revenues coming down, further lowering the denominator in the calculation.
For more information about the Simba report, go to www.simbainformation.com.