• by Tameka Kee , January 11, 2008

This year will be pivotal for the global Yellow Pages industry, according to a new report by The Kelsey Group.

Much like newspapers, print Yellow Pages will continue to bleed dollars to their various digital counterparts, from Internet Yellow Pages (IYPs), to local search engines and combination search/listing services like ReachLocal and Yodle. Factors like an acceleration of the print "fade rate" and the looming recession will contribute to the onslaught.

The Princeton, NJ-based local advertising research firm predicts the falloff in usage of newspapers and print Yellow Pages could even reach 10% this year--much higher than the 2%-3% fade rate seen in past years.

According to Peter Krasilovsky, program director, Marketplaces at The Kelsey Group, the accelerated rate of attrition from '07 should be a wake-up call to Yellow Pages publishers. While industry-changing developments don't typically happen in such a short time frame, publishers will need to give up their "sense of complacency" to avoid being blindsided by the impact of their rapidly diminishing share of voice in '08.

And though Yellow Pages directories have fared well in recent economic downturns, publishers did not have to contend with the glut of flexible, quantifiable online inventory that they do now.

"In the past, small and medium-sized businesses have protected their print Yellow Pages investment at the expense of other media," said Charles Laughlin, managing editor, The Kelsey Group. "(But) given the structural changes in the local ad market, we believe the next downturn will favor media choices that are more flexible and provide a lower cost per lead than print directories, which would signal a profound shift."

Stuart McKelvey, CEO of TMP Directional Marketing, agrees. "Historically, Yellow Pages have been the one media that smaller advertisers want to keep because they know how it works," McKelvey said. "But the last recession was almost ten years ago, and the local search solutions were not as mature or developed then."

McKelvey added that the flexibility of online options was especially appealing. "In times of uncertainty, smaller businesses will be looking for more flexible contract terms," he said. "They don't want to be locked into paying for a Yellow Pages ad for a year--they want to be able to run campaigns on AdWords as needed."