Will Print YP Suffer in Recessionary ’08?

The Kelsey Group has always been a staunch defender of the print yellow pages industry, its efficacy as an ad medium and its outlook. But, interestingly, the firm is now saying (via MediaPost) that the trend toward online will accelerate – at the expense of print. What’s interesting is not that Kelsey is saying online advertising adoption trends will accelerate (that’s clear from a plethora of evidence) but that the firm itself is saying so publicly that print is likely to suffer in ’08, both in terms of usage and potentially advertising.

According to MediaPost:

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

“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.”

If Kelsey is saying that print will suffer, then you know they’re seeing very strong evidence of that.

People keep asking about the mythical “tipping point” for local. It has already come on the consumer side. The Internet (which includes IYP) has become the highest penetration medium for consumers seeking local business information with print yellow pages second (per 2007 research from TMP Directional Marketing and, separately, WebVisible). However, SMB advertisers lag consumers, just as national advertisers do.

As the MediaPost article goes on to point out and suggest, a recession this year (we’re probably in one now) may further accelerate a trend away from print YP. This is a mirror of the national market, which will likely see traditional media suffer as some of those dollars shift to online. Newspapers will likely see this most acutely.

The thing that may help “insulate” print yellow pages revenues to some degree is the “agency” role that most publishers have cultivated vis-à-vis their SMBs. As print publishers become the gateway to online marketing for many SMBs, print advertising is a part of the overall package being sold. (It’s also the case that print still performs.)

However, we’ll have to see how bad the economy gets and whether, as Kelsey’s Charles Laughlin suggests in the quote above, more SMBs abandon print in favor of online, as a more flexible alternative.

Another potential issue for print YP is growing advertiser sophistication. Firms such as ReachLocal, Yodle, Weblistic, Web.com, Orange Soda, Innuity and many others are competing for the YP advertiser base. If the YP publishers “initiate” SMBs into online marketing can they retain them as all these firms come after them? In other words, YP may be privileged when it comes to the online marketing neophytes but once they understand the landscape will competing firms be able to steal some of these SMB advertisers away?

Video and mobile may turn out to be key strategic offerings that (together with print) help differentiate the YP publishers from their rivals.

What do you think?

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Update: Here’s Kelsey Group CEO Neal Polachek’s clarification on these numbers (prompted no doubt by some unhappy phone calls received by the firm.)