Every day, I constantly hear my clients tell me that they are cutting back on their yellow pages advertising because ‘no one uses the yellow pages anymore’. I’m sure you’ve heard it too – many people claim the only thing that the yellow page books are good for is firewood. Although this is clearly not entirely true, it’s good to know about the current situation facing the yellow page companies.
What are they losing?
A report called “Say Goodbye to Yellow Pages” was done in July 2008 by Borrell Associates. This report estimated that the Yellow Pages industry will lose 38.9% of its revenue over the next five years because smaller businesses are focusing more on online advertising. It was expected that in 2008, the print annual revenue was $12.7 billion. This is forecasted to decrease to $7.8 billion in 2013.
The Yellow Pages website doesn’t seem to indicate what their current standing is. Here it says that they are “on target to generate 1.8 billion searches by the end of 2007″. Since this information is clearly VERY outdated, it makes me wonder if the reason why they haven’t updated this is because the current number is lower.
But what about online yellow pages?
Although the amount of advertising done on online yellow pages sites is increasing, the industry is still losing revenue because the yellow page internet ads are only a third of the price of a print ad. Half of the reason why they’re cheaper is because online advertising on yellow page websites are performance-driven and therefore the businesses only have to pay based on the activity of their ad (clicks and impressions). For a lot of business owners, the question of whether they should migrate online or not has a simple answer – yes, because it’s cheaper and easier to track!
So should I stop advertising in yellow pages altogether?
I would say no. 60% of small businesses still advertise in the printed yellow pages, and some of them rely on this as their main source of leads. Just because the usage of yellow pages has dropped a small % doesn’t mean advertising there is useless!
TMP Directional Marketing, an online advertising company, made a lot of great points in a paper that they published called Say Goodbye to Yellow Pages? Or Maybe Not.
1. These days you need to advertise in more media sources. I agree with TMPDM when they stated that “The reach once enjoyed by advertisers can no longer be achieved through a few select media sources”. Small businesses today need to really take advice from advertising professionals and “think outside the box”. In order to stay ahead of your competition and not lose out on business, you can’t put “all your eggs in one basket” anymore. Gone are the days where you can pay one company and all of a sudden reach 60% of your target audience in one shot.
2. How companies should advertise should be different based on the industry. TMPDM also pointed out that in the travel industry, there has been a steady decline in Yellow Pages advertising since 2003. National revenue for this category have dropped an average of 7% annually over the same period of time. Online, there has been a 48% average annual increase in travel agencies references since 2005. This indicates that many companies in this industry are moving online. TMPDM says that this isn’t the case in other industries, such as the tire dealers.
Advice for the yellow pages companies:
Chris Smith from Search Engine Land makes some great points in his article What Could Save the Yellow Pages? 10 Ideas.
1. Stop denying the trends – He points out that one of the biggest mistakes of the yellow pages companies is that they are not dealing with this loss very well. For the most part, they are refusing to admit they have a drop in usage and this “refusal to acknowledge the bad news has resulted in distrust from advertisers, so small businesses are skeptical and are not listening to their premise sales reps as easily any more”.
2. Lower the costs for print yellow pages – He says that the yellow pages companies should lower their costs in order to meet with advertisers’ expectations. He says “You’re going to have to drop the costs some in order to align with advertisers’ value perceptions – if usage is dropping […] then the value of advertising is dropping as well”.
3. Merge with your competitors – He suggests that some of the yellow page companies should join together so that they can be a stronger force. He says, “If the market forces are doing what I’m thinking they are, companies will either need to merge, or else the weaker ones will just die off while the strongest organisms survive. Sure there’s major expenses with planning a merger and bringing it to fruition, but your alternative might be to die off completely”. This kind of goes a long with the idea that MSN had when they tried incessantly to buy Yahoo.
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