Is Yellow Pages in Terminal Decline?

 

IS YELLOW PAGES IN AUSTRALIA IN TERMINAL DECLINE?

In days gone by, the Yellow Pages in Australia was the only horse in town when it came to directory advertising. As a virtual monopoly player, Yellow Pages Australia was able to charge pretty much what they wanted for placement in the printed directories that could be found in almost very household and business. And business was willing to pay handsomely for a presence in the directory that was practically a sure thing to deliver a steady stream of new customers and a healthy ROI on the listing investment.

Then along came the Internet. Not the initially over-hyped version mind you, but the latest incarnation now being called Web 2.0. When dial up access was the only means for most Australians to access the Internet, the use of online business/phone directories and search engines was naturally limited. The time required to connect and then load the required pages was greater than the time it took to open the printed directory and find the required information, so people used the book. Now that most Australians have access to the Internet using some form of high speed broadband, the reverse has occurred - it is now at least as fast and convenient, probably faster and more convenient, to search for business information using the Internet. So people now use the Internet much more for directory based lookups.

Whilst all this was happening, Google emerged as the heavy hitter in search engines. More and more people began to use Google as their main source of finding the information they required in their day to day lives, including the sourcing of services and products in their local areas. As the volume of locality focussed searches for products and services increased (ie "beauty salons in Chatswood"), Google and other major search engines responded by adding local search functionality such as Google Local (now Google Maps). Quite suddenly, some competition began to emerge in the Australian directory advertising market.


The impact of this new competition and user behaviour on Yellow Pages Australia has been quite dramatic if site trafffic details compiled by Alexa** are anything to go by (see chart above). Since peaking somewhere in the first quarter of 2006, the Alexa measured "reach" of yellowpages.com.au has fallen by something like 75%. Reach here is defined as the percentage of all global Internet users measured by Alexa that visit yellowpages.com.au. For any business, this is a crushing statistic, especially when more and more of your users are apparently abandoning printed directories in favour of Internet based directories and search engines. Interestingly, the most recent traffic data published by Yellow Pages Australia that I could find on yellowpages.com.au quoted "yellow.com.au averaging 2.5 million visitors each month" - with a source: Roy Morgan Single Source Australia, October 2005 � September 2006. Interestingly, this information kind of dates around the time that the Alexa reach figures for yellowpages.com.au began to decline. Surely some more recent data is available - especially as the site seems to have been recently updated.

What really got me thinking about what was going on at Yellow Pages Australia, were a number of comments made at a very recent "Search Engine School" seminar held in Sydney. Yellow Pages Australia took a heavy pasting in uncomplimentary comments from a number of speakers in relation to the price and performance of Yellow Pages Australia, in particular yellowpages.com.au. A slide in one particular presentation showed a significant decline in site visits in the 12 months to August 2007. I decided to look into this a little further.

After the seminar, I actually rang Yellow Pages Australia to inquire as to whether traffic to yellowpages.com.au had declined from the numbers shown in the latest statistics published on their site - the 2005/2006 numbers referred to above. After being unsuccessfully cycled around various telemarketing circuits for ten minutes or so, I finally got to speak to a warm body. Everything went smoothly as I enquired about pricing and package options in a somewat revealing discussion (more about this in a subsequent article) that lasted a good ten or fifteen minutes. When I asked for the latest traffic details though, things suddenly changed and I was told I would need to speak to a sales representative qualified to answer such a question. Quite surprised that I wasn't already speaking with one, I asked to be transferred to the right person. I was told that this wasn't possible and that I would need to arrange for someone to call me back. I said I was available for a call back right away, but was told that such a call back  was not possible for at least 48 hours. Despite scheduling a call for a specified time 36 hours in advance, no call ever came.

It would seem on the surface that Yellow Pages Australia is not a brand that has translated well into the online world, a key factor no doubt behind the recent, much more funky, "Yellow" re-branding campaign. Irrespective of this, Yellow Pages Australia is certainly far from being spent as a major force in local directory advertising in Australia. Based on it's previous virtual monopoly position, the profit margin of the business is still healthy although much greater than most businesses could ever hope to sustain in a competitive environment, it has a large field force of sales representatives that is probably key to selling Internet advertising solutions to smaller businesses, strong brand awareness and recognition, and importantly, probably still has the best (read most current, comprehensive and reliable) business database available in Australia. And crucially, there is still time before generational change in Australian business ownership fully kicks in.

Perhaps one of the biggest negative facing Yellow Pages Australia is that their listings don't seem to appear at all in relevant Google local search results where one would expect to find them. This is a problem when 80% of Australian Internet search queries are made on Google and an increasing number users have Google search tools imbedded directly in their browsers. The recent Yellow Pages Australia partnership with NineMSN no doubt attempts to address this issue but  truly, not being found in Google search results these days can't be good for any business.

The word in the street, at least from people that I speak with, seems to suggest however that Yellow Pages Australia remain just a bit arrogant in their dealings and that their pricing certainly hasn't got a any cheaper relative to performance implied by the Alexa "reach" statistics. When long standing customers start giving up their quarter page ads in the Sydney Yellow Pages as the annual price approaches $AU 20,000 for some "headings", and then use the "saving" to fund alternative forms of advertising, especially online, there may be bigger problems down the track.

Not the least of the problems Yellow Pages Australia must be grappling with is volume of saleable inventory - in the good old days, they just needed to print more pages to create more inventory, raise the price, and then try and sell bigger ads so that customers could still get noticed enough. These days, when more and more businesses are increasingly focussed on an online directory presence, premium online directory inventory is heavily restricted to the first, and maybe in some cases the second, page of search results. Even on the first page, differentiation from competitors is extremely difficult and listing number ten or twenty can often look exactly the same as the first listing (although arguably being towards the top of the page may be better than being positioned lower in the page). At the same time, emerging keen competition now caps the kind of prices that businesses are prepared to pay for listings - a potentially nasty business environment for Yellow Pages Australia management to deal with. Is Yellow Pages in Australian in terminal decline? It is probably way to early to tell, but the early signs may just be starting to be written on the wall.

I will return to some of these issues and problems referred to above in later articles. 

(**For information about Alexa visit:http://www.alexa.com/data/details/traffic_details/yellowpages.com.au)