Yellow Pages Look Past Print

by Mark Walsh, Jul 30, 2008, 7:30 AM

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Spending on print Yellow Pages will plunge by 39% in the next five years to $7.8 billion as small businesses increasingly shift marketing dollars online.

That's the grim prediction for print directories in "Say Goodbye To Yellow Pages," a new report by Borrell Associates that further projects that by 2010 most U.S. adults will not crack open a Yellow Pages book in any given month.

The gloomy forecast does not necessarily spell doom for directory publishers, however. To the contrary, the Borrell report says Yellow Pages publishers have been the most successful of all local media companies in transitioning to the Internet, with 14% of gross revenues coming from online sales this year.

Most other local outlets--including newspapers, radio, TV and cable-- are still getting less than 5% of revenues from the Web. But the directories' online units, such as Yellowpages.com and Superpages.com, will be locked in a three-way battle with pure-play online competitors such as Google and Yahoo as well as newspaper sites.

A key to the directory publishers' digital strategy lies with their re-trained sales forces, according to Borrell. "Yellow pages publishers have spent the past three years transforming their massive on-the-ground sales forces into marketing consultants who can meet their customers' demands both in print and online," according to the report.

The research firm estimates that 80% of the 14,600 print directory sales reps are actively selling online ads, compared to 35% of the 31,900-member newspaper sales force. On top of that, Borrell expects local media players to increase online-only reps by 55% this year.

Despite these gains, the research firm estimates that pure-play Internet companies dominate local online ad spending with 57.3% of the market, compared to 24.6% for newspapers and 7.8% for directories. Local Internet spending overall is expected to jump 50% this year to $13.1 billion this year.

The Internet-only players have surged ahead "because they spend all their time competing, rather than half their time protecting a legacy business line," Gordon Borrell told Online Media Daily.

Helping to fuel that growth is online video. As the fastest-growing local ad category, video is projected to triple this year to $1.4 billion and hit $7.6 billion by 2013. Eschewing costlier pre-roll spots, Yellow Pages advertisers online prefer on-demand infomercials that run from 90 seconds to 5 minutes.

Directory publishers such as R.H. Donnelly are selling full-motion video for less than $3,000 a year and Idearc for about $4,000, including production costs, according to the report. Online ad agencies such as SpotRunner, meanwhile, offer customized 30-second local commercials for $500 apiece.

While Borrell believes mobile holds promise for small businesses advertisers, the firm says the amounts being spent are so small that it can't yet offer estimates. "Our research indicates that while the mobile-device audience is large, the future of advertising on the tiny screen is certainly not here and now," according to the study.

To tout their cross-media offerings, directory publishers are also doing some advertising of their own. Yellowpages.com this month launched a billboard outdoor ad campaign in five target markets from Detroit to Sacramento, Calif.

The effort is part of the company's initiative to help local advertisers reach consumers across cell phones, the Internet and TV ads. Yellowpages.com offers mobile ads as part of its range of services, along with video business profiles.

Three of the top 10 directory categories--restaurants, doctors and auto dealers--are already spending more online than in print Yellow Pages books, according to Borrell.

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