Glib Traders ‘Dis’ Print YP

CNBCI was sent this clip from CNBC of some Wall Street-types critically discussing the print yellow pages industry. While they factually report the decline of the stock price of a couple YP publishers, the thing that’s interesting and somewhat shocking is the superficiality of their understanding and analysis of the larger market dynamics. (It’s a TV segment but you get the sense that there’s not much more behind what they’re saying; it plays like ESPN Sports Center.)

Their dubious message is these stocks are down as confirmation of the idea that nobody’s using print anymore. One thing the segment makes abundantly clear is that the print YP industry and the YPA needs to get way more aggressive with PR if it’s going to fend off the perception at the heart of this report that print is “technologically obsolete” and on the way out.

19 Responses to “Glib Traders ‘Dis’ Print YP”

  1. troy Says:

    You hit the nail on the head that the whole yellowpages industry has done a terrible job on PR and worst letting others define and label the industry. Of course, there are many to blame:

    The individual yellowpages companies are all to busy fighting each other and not realizing who the real enermies are. More importantly, most of the leadership of these companies are people that are stuck in their Print culture and have very little thought leadership to compete in the Web. 2.0 world.

    The so called industry trade group YPA is totally useless and don’t know how to spell PR.

    The solution is for all the YP companies to get together and put aside their egos and develop a compelling and aggressive industry message by somebody who is not wearing a suit. Replace the leadership at YPA with people that can engage the popular press, analysts, and new media in order to not let others define the industry.

  2. Scott Says:

    The interesting thing is the yp companies’ equity values (i.e. stock) is only a small portion of the total value of the businesses. They have crushing debt loads and the fact that the cash flow is not growing throws a big wrench into the LBO model that levered these businesses up in the first place. The declining stock prices is thus a sign that investors are worried that these companies will not be able to pay off their debt and, if this occurs, the equity becomes essentially worthless as the companies go belly up and become owned by the bond holders. The real problem with these stocks is private equity investors throught the YP biz would grow at a slow and steady rate forever and now that it is clear this is unlikley to be the case, the financial structures that were created for these companies are breaking.

  3. Greg Sterling Says:

    There’s some mix of bad economy and loss of advertisers due to competition from other sources. It will take a recovery to see whether this is a long term structural change or a function of weakness in the broader economy.

  4. troy Says:

    Scott, you make a great point. If this is the case, looks like and Yellowbook are in much better shape to survive. This will be good for the industry as most people are tired of having 2 or 3 books tossed on their front door through out the year that they view as wasteful.

  5. Scott Says:

    I don’t think RHD and IAR go out of business, however, they will need to realign their capital structures given they were simply just too highly levered by the PE shops and not set up to weather even a 1-2% y/y growth scenario. As such, their equity is essentially worthless and that is why these stocks are trading down. That said, their equity was only 10-20% of these companies total valuations so too much emphasis is being placed on their declining stock prices in my opinion. I do agree with you troy in that at&t/ is much better positioned — especially when it comes to making acquisitions, which will be necessary for all these companies to survive in the long run.

  6. Greg Sterling Says:

    It’s not clear to me that understands that it needs to expand and “diversify” in my opinion beyond its current product for the long term. They made a pretty good acquisition in Ingenio, but that was for core business uses.

    It would be pretty interesting if they were to buy a site, for example, like Yelp or verticals in high value categories.

  7. troy Says:

    The nature of Print yellowpages has an build in conflict because from an user’s point of view, they don’t want to see 3 books of virtually duplicate content thrown at them and fueling the arguement that the industry is killing trees for no good reasons. From the advertiser’s point of view, if there were only one yellowpages provider, the price will be like any monopoly. I think the race to who will survive will be based on who has the leanest cost structure to begin with because prices will be dropping. will have their sugardaddy AT&T hence they could still be fat, dumb, and happy for a while. Idearc and RHD with their high debts and prices will have to downsize. Yellowbook on the other hand has always been organized with low price and cost in mind since day one.

  8. Time, tide and the print YP « Think Locally Says:

    […] the world of local experts,  all of whom I respect, no one takes the extreme view: See Greg Sterling, John Kelsey, Perry Evans.  The consensus is that we’re looking at a slow decline — while […]

  9. Stephanie Hobbs Says:

    Fascinating comments all and some very good points, but FYI, the YPA has been fighting a trench war for months on media coverage of usage, value and environmental issues. And we need everyone’s help on this one. Our recent release on the stabilization of print usage and growth of online usage was ignored by much of the media and disputed by some bloggers. Even after numerous calls to outlets that covered us in the past, we’ve seen very little pick-up. We’ve been working with CNBC all day and believe they will be interviewing one of our members next week. No excuses, but as a Ken Clark put it so well a few weeks ago, everyone making a living from Yellow Pages needs to join the battle. Everyone. So let’s stop pointing fingers and get to work fighting the mis-information in the media. We have ROI, “ready-to-buy” customers and a strong story. Need help? Get in touch with the Yellow Pages Association and we’ll gladly supply the numbers.

  10. troy Says:

    Stephanie, why do you think the media ignored your PR on usage? Doesn’t that in itself tell you something about your PR. Notice you are using the same old arguments that was coined years ago on the value of yellowpages like; ROI, ready to buy, connecting sellers and buyers, etc..The public perception is not yellowpages but the “yellowingpages” which is reinforced by the same old messages. You know the old saying about stupidilty; doing the same thing over and over again and hoping for a different result. For example, the term “local search”. By right, that should have been associated with the yellowpages industry given it’s history but others highjack it. You are right about not pointing fingers but there needs to be thought leadership by this industry and the YPA should be the logcial place to start. The media and press wants to hear and report on big ideas and fresh perspectives and not something that just keeps repeating itself. Take a chance, say something that nobody expects you to say. Maybe then the media will listen.

  11. Ken Clark Says:

    Very disappointing comments from you. Stephannie’s been in the PR business for over 25 years and your background is??? so I’m not sure you are the best one to critique her approach and her commentary will also be constrained by the membership she must represent.

    The fact is the YPA announcement was ignored because the typical 25-30 year old analyst in NYC has no clue how print YP is used in the real world. Print is not dead — there are over 7500+ directories currently published, the printing presses are still running at capacity and these publishers are still making globs of money. It’s just that most of these Wall Street types have no clue what goes on in the real world. When YP industry has a bad year it goes flat to -2%. when otheer media – magazines, newspapers, TV go soft, it’s more like -10 to 25.

    Discussions just this week with several publishers verified:
    1) print is still being heavily used in the real world and will continue to be as the demographics don’t support some mass exodus to online. I’d challenge you to find something quicker online than thru the book — the book will win every time on speed and also provide an initial indication on the viability of the business — local search gives you??? a bunch of web sites you have rummage through
    2) advertisers at the local level are curious but not flocking to Internet, which is fine, publishers can offer them these products when they are ready. How else is all of that stuff going to make it to the Nirvana that local search os perceived to be?
    3) the advertisers are the ones using the terms “ROI” and connecting to buyers, it wasn’t invented by some marketing person. Try actually talking to some small business owners and you might be surprised.

    It is sad to say that YPA is fighting an uphill battle on thought leadership since their own membership is all over the map on what needs to be done. If you don’t market your products, explain capabilities, and highlight advantages, how can anyone expect that free book that shows up at your door can have much value….

    Maybe now with the stock price drops we can get some people to start a dialog, but a real one this time….

  12. Greg Sterling Says:

    The “yellow pages is dying” narrative is hard to overcome because many bloggers don’t use print themselves. They extrapolate to the larger population as a whole. I would suggest video interviews with consumers in various markets and businesses as one additional form of PR to show that there are real people and businesses out there getting value from the product. Just a spontaneous suggestion.

    I would also create some regular PR vehicle probably around IYP and consumer behavior that goes out monthly or quarterly that the press can seize upon (something like a “local search index”)

  13. troy Says:

    Ken, you are preaching to the choir with your points. I’m not trying to be critical of Stephannie and the YPA but the facts speak for themselves. As for my background, I’m in the industry and tired of the attacks but more tired of the failure of imagination by our “leaders”. No doubt YPA is fighting an uphill battles with difficult members but here is a chance for YPA to truely step up and earn their keeps when they are really needed instead of holding conferences to pat each other on the back. I’m just saying what needs to be said and shake up the old status quo or we are all going down like the stock prices of late. Greg is thinking right with some innovative approach but we need more of that kind of thinking and doing. We have a choice of continuing with a bunker mentality or totally reinventing the industry which starts with a critcal look in the mirror.

  14. The latest print YP argument (is a doozy) - Tech Soapbox Says:

    […] I tend to shy away from the “Are the Yellow Pages Relevant / Irrelevant?” Greg’s latest post on the topic brought out some heat in the […]

  15. Wayne Says:

    I am not in YP industry but will start my company about online yellowpages. You guys might think I am crazy but I believe there’s a chance because I see no one is doing what I am going to do.

    1. 3G technolog for telecom is coming this year and it will just get more popular years to years. People able to connect to the Internet w/h high speed connection and that means they can do a search online more easily.
    What do you guys think? will people still need a heavy YP? plus ppl always don’t know where’s YP at home or office and they will just ask around for it then eventually they will use the Internet to find what they need if it takes more time to just find a YP.

    2. Have you noticed that who’s using YP the most? from my personal experience, I will only pick up YP when on a trip to a new city… so I think biz travelers use it a lot?
    by the way, if not in urgent, I will never pick up YP in the hotel because all the dusts sitting on book plus hotel also put yp in low level makes it getting more dirts

    3. IAR, RHD,, Marchex, Yellowpages, Yellowbook, Yelp … those companies are all in some way relates to local business but I just don’t see the difference from those website from YP’s customers point of view(those who pay for the ad)? one is more accurate, userful than another one for consumers?

    just my 2 cents here!

  16. MikeM Says:

    I don’t know whether to believe the YP print industry figures or not. I do know that very few people I come in contact with actually consult the print yellow pages anymore.
    Not a singe person I know under 30 picks one up.

    My impression is they are being propped up by the YP sales forces that is bundling the old model with online.
    Since the small business customer base is still for the most part ignorant of their online options they are an easy mark for the slick caller from the YP’s.

    I know this as I have been a target of aggressive YP sales people.

    I talk to small businesses all the time and the online option is a tough sell. For decades they have been presented with the big book as the one true way of reaching the customer.

    My sense is the YP print people will continue to feed from the trough as long as the average small business remains blind to what the online world offers.

  17. Jeff Tadie Says:

    I’d suggest the most important tactic that has preserved some of the high-use and high-rev categories (auto aftermarket, medical specialties) of print yp is “Seniority”…essentially, if you pause or decrease your print ads for an issue, you are shoved back in line and lose some degree of prominance, even if you later choose to buy up again.

    Varies by publisher…but seniority creates a barrier to exit (and incentive to keep spending, even as the merchant becomes less committed) that merchants have to consider very carefully.

    Thus, there may even be a lagging effect…where higher $ merch are on the fence, and the tipping point is closer than it used to be

    Last point is, as the tonnage of the alternative sales forces and merchant facing models accumulates…(such as my teams at Cornerstone and Your Marketing Corner, and teams at ReachLocal, Weblistic/SpotR, etc.)…the traditional yp print buyer is going to be approached in-person by seasoned ad execs bringing real data points, real ROI and real alternatives to print yp. That tipping point will be realized faster than ever before.

  18. troy Says:

    MikeM. “not a single person I know under 30 picks one up” is the most often heard line as to why the yellowpages industry will go away. Think about why that is so. Could it be that most people under 30 are either living in an apartment or in their parent’s basement and if the toilet goes bad, they either call their super or Dad. Do you really think small businesses are “blind” to the online world? They choose yellowpages to advertise in because it works for them. The online world with all the suppposely ROI and measurement does not translate to revenue for most small businesses. That is why they do very little online advertising. Bottom line is that the yellowpages industery is not growing that’s for sure but it is not going away either because there are no clear and compelling alternatives to totally replace it in the foreseeable future. It is not like what DVD did to VHS. According to Global Insight, yellowpages growth was flat between 2006 and 2007 while broadcast TV, Radio and Newspapers declined by 1.5%, 2.4% and 6.3% respectively but the combined revenue of the 4 medium is still over $123B. No doubt Google and others would like a piece of it but they will not be able to take it all either.

  19. Greg Sterling Says:

    Google needs YP publishers (and others) as sales channels. On the consumer side it competes with them. But it definitely welcomes their partnership on the sales side.

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