Internet Yellow Pages might change hands and move to Local Media players
This post will try to forecast the direction of the future Internet Yellow Pages players (IYP). In the last 30 years we had been used to the fact that YP is in fact a monopoly. i.e. gaining market share requires spending significant amount of capital (printing, book distributions …..) that it made no sense to go into battle with the major YP player. Evident by this dynamic, in most markets the big players held more then 90% of the market.
In the 1990s; with the evolvement of the web, it seems as if some of the main hurdles for competitors have been removed (limited need for printing and distribution) and tha competition will intensify. In parallel consumers came to understand that YP is not the only alternative to find local merchants.
Some of the YP competitors opened vertical indexes (wedding, restaurants….) and were more successful; some tried to confront head to head with the big directories and in most cases fails. Although operational costs were reduced dramatically, those operations who decided to compete head to head with the leading YP players could not survive. The main reason was sales effort. At that time is was very painful to convince a SMB’s to become a web advertiser. And only YP sales force were capable of going through the long sales cycle due to the fact that they could easily bundle it with the printed sale cycle.
In 2004 the situation changed. SMB’s became aware of the web potential and importance and understood that they need to be there. The only problem was in which media. In many countries it is not a clear case that IYP is the best choice, as Google and other vertical portals suddenly open new fruitful alternatives.
In 2006 the communities entered and reshuffle the cards again. Suddenly consumers are not only open for new alternatives and seek the one that suits them the best, but they are also willing to participate in a joint effort to improve the quality of the YP listings by sharing their experiences. Research says that in the ages of 12-17 more then 50% of the kids are open to share their thoughts, so think of the impact of this dynamic in 10-15 years when they will be 30-35 years old.
This is something that creates significant challenges for traditional IYP. Now the market is not only more open for competitors, but also competitors are challenging their core business model. The market is aiming to change their business model. No more burden on the consumers shoulders--i.e. no more bad businesses which invests a lot of money in the media and gain advantage over the good businesses with maybe slightly less capital.
What do YP players do?
At this point we see the YP players holding their traditional position. They are doing all the necessary (but minimal) things to hold their competitors from entering in. In markets where communities enter they allow people to post reviews, where in other markets they remain in the old IYP concept.
But in this game (i.e. community based YP) not only that they have no advantage they actually have a few big disadvantages:
- For years they have been recognized by the users as a closed monopoly . In term of community, being closed and not transparent is a deal killer.
- Yellow Pages brand is old with limited appeal among the young web users, thus will have hard time attracting them to join a community that by its nature requires intimate relationship.
- Yelow Pages has conflict of interest because the community based YP can cannibalize the current model (i.e. it requires to allow people to post bad comments on big advertisers)
- Yellow Pages is obliged to its legacy, and is less ready for changes For example, YO committed to advertise all businesses, but consumers want to have only the good ones in the community.
- Above all I’m personally not sure it will be easy to extend the YP brand to community. Its like trying to extend Toyotabrand to luxury motors
Thus we believe YP will have hard time to manage this shift effectively.
The players that are perfectly suited for this era are the local media companies (TV, radio, newspaper, etc.). The reasons are:
- They have intimate relationships with the opinion leaders, which can be a magnet for other community members to join
- They reach consumers on a daily basis, (i.e. their media is complementary to the community, and is good for leveraging the vibes created in the community). This means that they can combine publishing their media with the community, which will significantly increase the power of the local community.
- They know how to handle users' content , and how to make it easy for readers.
- They can leverage their own content to generate awareness for these services and they have seasons with low demand for spots.
- The currently manage small Yellow Pages in their medias (specially the printed Local news papers)
- And they have no constrains.
We see a lot of Local Media operators entering the community playground. The question is whether they will have the vision to see the YP opportunity and gain their footprint in this amazing market?
I believe that they will and if they won’t people like me will help them understand this potential J
