The recent battle between Burger King and its franchisees on the reallocation of local media dollars to its national brand advertising indicates a wider battle between franchisees and their corporate owners.

MediaPost writer Dave Morgan points out:

“We’re in a severe recession. Everyone is being asked to do more with less, and it’s natural to expect business partners to fight for control over scarce resources. National brands want to grab industry market share and see their ads on national television. Local store owners want foot traffic, sales and their ads on local radio and in local newspapers. Unfortunately, there’s not enough money to do both at the moment.”

With local media markets already bracing for a smaller auto dealer network, the shift of local franchisee spending to national brand advertising could pull another significant block of ad spending from the likes of directories, newspapers and local TV and cable stations. With many local media outlets struggling to make revenue goals, the loss of franchisee spending couldn’t come at a worse time.

Right or wrong, many more national brands want more accountability, and to them consolidation of media spend control gives them more accountability. Morgan goes on to say, “Whether or not local control over media and promotion produces the best results is ultimately less important to many companies today than the ability to actually measure those results. In these times, CFOs are exercising more control, and that means more centralization.”

What this means to local media is that they need to focus more on measurability, value and ultimately ROI to be able to show the increased value of what they deliver on a local basis. In the directory space, national advertiser services must be enhanced to capture the shift from local to national so they do not lose this spending. The relationship between Yellow Pages publishers and their CMRs (certified marketing representatives) in the U.S. is critical in order to manage the local to national shift with their franchisee base.

While the local to national shift has been occurring over the past several years, local media need to be proactive about how to manage or market to national brands to show how they can best maximize spending.

As the Kelsey Group has been studying the sales approach in the local media space, what has struck me is the lack of innovation on the part of the Yellow Pages. In the past, the Yellow Pages sales force has been viewed as a competitive advantage because of its size and depth of existing clients. What we’ve observed of late are a few chinks in this armor, not only in the U.S., but overseas as well. 

One of the key drivers of weakness has been the shorter contract periods of online products. Many SEM products are working off a 90-day contract, while others require additional support and attention because of seasonality or various promotions throughout the year. As more online products are added, small businesses are moving away from 12-month contracts requiring more contact with the salesperson. This level of constant contact has not been part of the Yellow Pages sales strategy or skill set. 

We have also observed local media making a slow change over from transactional selling to a more solution-focused consultative approach. The years of new product development and online feature and benefit training have led to a sales force ill equipped to answer the fundamental question of small businesses: “How does all of this fit together to help my business?”

In our survey of the sales channel, 48 percent of small businesses see this as the true value of working with a salesperson. Local business are asking salespeople to be platform neutral and show them how to put together a media approach that maximizes their budget and provides the number of leads they need to stay in business and be competitive. With the variability of the compensation between print and online products, platform neutrality gets in the way of where salespeople are making money, further complicating the current situation. 

The directory segment still has the advantage of size and customer depth, but the 2009 sales results definitely highlight the need for a sales approach revolution. We can always blame the economy, but if we take the time to listen to the needs of the small business, I think a different story of why directories are losing revenues might emerge. How are directory companies addressing this issue and how are salespeople themselves working to better meet the needs of their advertisers? We’d like to hear from you.    

Oodle CEO Craig Donato led off day three of Marketplaces 2009 describing how classified advertising has gone through an evolution over the past five years, progressing from simply importing them online, to making them searchable and finally today integrating classifieds with social media/user-generated content (UGC). Donato pointed out that while newspapers led the way in taking classifieds online, they have done poor job of adapting to the changing online needs to maintain a leadership role. Because of the ongoing change, new opportunities emerged for eBay and Craigslist, both of which clearly understood what both buyers and sellers wanted.

The current phase of classified is the merging of social tools and more transparency with listings revealing information like why an item is being put up for sale or why a particular home is a great family home and what visitors have liked best about the property. According to Donato, “Local advertisers need to get involved in the conversation because conversation builds credibility.”

What Oodle has tried to do is encourage local advertisers to create profiles on Facebook and MySpace so they can build their networks and get involved in supplying good information about their products, being open to answer questions, and to feed the latest specials or newest homes for sale as examples.

For local sites, Donato suggests that “it is less about how to work with Facebook and MySpace, but rather how the usefulness of their tools can be integrated into your sites.” The more local advertisers can get their customers and prospects engaged in conversations about their listings, the more valuable the listing and sites become. Social classifieds are yet another example of the required transparency consumers are seeking about both new and used classifieds on the Web, and it is now in the hands of sites like Oodle to provide the tools and education to help get people talking.

The phone is quickly advancing as a means of pushing out ad-sponsored content that mimics some of the popular mobile advertising features.

Greg Webster of VoodooVox, at ILM:08, debuted some of the new features of the company’s In-Call Media group, demonstrating additional marketing opportunities via on-hold messages, “pre-call” messages when using calling cards, and distribution over a network of telephone audio outlets such as 1-800-FREE-411, radio stations and major call centers. Many of the major functions include sending information to your mobile phone and being able to push a button to get extended information beyond a typical :09 message now utilized on the network. The ICM interface allows advertisers to set up their own campaign, direct it to specific states and even defined DMAs.

Two case studies clearly showed the power of this emerging media. One study involved the promotion of an event aimed at Hispanics by Food4Less, which utilized “pre-call” messages on calling cards used in identified Hispanic communities. The net result of this campaign was a 40 percent increase in awareness, a 15 percent increase in attendance and a 35 percent increase in new customers. Another approach used by Buena Vista International targeted radio station on-hold messages to promote a limited release movie aimed at teen girls.  The real aim of this new media approach is to take advantage of lost sales opportunities while customers are on hold with messages that are more relevant and appealing rather than simply playing “Muskrat Love” or “your call is important to us.” Much like mobile phone advertising, in-call media aims to provide a more intimate connection with customers to drive specific actions or to raise awareness. 

IAC Vice President Kara Nortman, speaking at Interactive Local Media 2008, provided both a dose of reality and a glimmer of hope about where media companies in the local marketplace are headed. Nortman’s view of what is working well included sites that are building great organic traffic rather than relying on paid traffic, offering a unique distribution strategy at a cost-efficient price point and providing some level of a self-serve model to attract customers who cannot be affordably reached on the local level.

When talking about how best to attract and win local merchants, Nortman pointed out: “While a local field sales force is a significant advantage, it is only an advantage if there is enough of a merchant/advertiser base. So many smaller online companies are pushing for or building a large field sales force, which will likely hinder their growth and ability to break even.”

From a business model standpoint, Nortman views the local media landscape morphing into companies that bring together brands that build great content, own a robust distribution network, and can gain access to and retain local merchants. “These new media organizations may very well bring together several recognized local brands to become effective.”

Citysearch is a good model of this new local media company, offering an appealing advertising platform and bringing together merchants and content development to build sustainable consumer traffic, which helps local merchants to be successful.  

AT&T Advertising Solutions has announced a partnership with Hispanic publisher Seccion Amarilla to sell Hispanic advertising into select Seccion Amarilla directories.

“AT&T is always focused on enhancing our directories to best serve our business and residential customers in the diverse communities we serve,” Carlos Salinas, executive director of strategy and business development at AT&T Advertising Solutions, said in the release. “This is one more way AT&T strives to connect people everywhere they live and work and do it better than anyone else.”

The agreement allows Seccion Amarilla to carry the AT&T logo on the directory covers in recognition of the partnership.

Earlier this month, The Kelsey Group release an Advisory (“Hispanic Directories a Small but Mighty Growth Segment for Print”) on the growth of the Hispanic directory segment, demonstrating the opportunities within the market. While many local media segments have suffered from decline, the Hispanic segment continues to show strong growth. TKG projects the Hispanic segment will grow at a compound annual growth rate of 5.9 percent to US$218.4 million in 2012 from US$163.7 million in 2007.

The move by AT&T combines two strong brands within the Hispanic community and allows more focused Hispanic revenue development for both parties. The combined effort by AT&T and Seccion Amarilla will continue the trend of more focused sales and strategic efforts in the Hispanic market and may spur additional segment growth.

Jim Hail, president and chief operating officer of Hagadone Directories and chairman of the Association of Directory Publishers, outlined what he believes has been a systematic decline in the brand value of the Yellow Pages at this year’s ADP Mid-Year Convention in San Antonio.

Prior to the break-up of AT&T there was strong support for promoting the Yellow Pages category via the industry’s “Let Your Fingers Do The Walking” campaign. “After the break-up, the incumbents and the Yellow Pages Association stopped promoting the category in favor of the incumbent publishers promoting their own brands,” said Hail. The reason given for walking away from an industry campaign has often been attributed to the incumbents, which said doing so would essentially be funding and helping the other publishers.

Not pulling any punches, Hail said, “The industry, mainly the incumbents, have let the brand become tarnished with little effort to help build back the industry, and this has put everyone in the Yellow Pages at risk. We will continue to work with and push YPA and the incumbent publishers to reconsider this position.” 

While independent publishers’ revenue share and usage share have continued to increase, their ability to affect the industry as a whole has been hindered since they are often overshadowed by the financial challenges of the incumbent publishers, which are more globally recognized and often control the perception of the industry.

The reality is that both ADP and the Yellow Pages Association need to work together to find common solutions to revitalize the brand and deal with the bad PR. Given the current challenges a coordinated effort would seem to have a stronger impact.

Hail concluded by saying, “No matter if you are a large incumbent publisher or an independent publisher, we need to have a common voice to help level the playing field in the local media space.”

In an opening session of the Association of Directory Publishers‘ 2008 Mid-Year Convention in San Antonio, YP Talk Publisher Ken Clark gave a close-up view of how negative PR in print and online is eroding the perception of the Yellow Pages industry. Describing these sites as “slowly chewing away the credibility of the industry,” Clark described them as “paper termites who are slowly eating away at the industry’s credibility with murky research, hearsay and the replication of misinformation.”

Over the past 12 months, the level of bad press has far outweighed the good press on what Yellow Pages companies have done. Recent coverage on TheDeets.com and Tracy Coenen’s “Top 25 Things Disappearing from America” are just a few highlights of the impact bloggers can have on the reputation of the industry when they place themselves in the role of majority thinkers on U.S. print Yellow Pages.

According to Clark, this altered perception of the industry is creating a credit crunch in the financial market and the misconception that the product is rubbish, a danger to the environment, a yellow supporter or a smart green consumer. The question is, what if anything is the industry doing to correct this or take the lead in how it is being perceived? Clark set out a challenge for the ADP attendees to:

One of the things that dawned on me after listening to the many speakers at our recent DMS ’08 conference in Atlanta was that a fundamental aspect of the Yellow Pages business has been lost — exclusivity. During the days before the Internet and the massive sharing of data with Google, Yahoo and others, the content and data of the Yellow Pages were exclusive to the print directories or their online counterparts.

While U.S. publisher Internet Yellow Pages sites bemoan the fact that they do not enjoy healthy traffic levels, when we look to the new breed of local search players like Yellowbot, Yelp and Brownbook and listen to search platform developers like Exalead, they clearly understand the value of exclusivity. The online world, and certainly local media in general, is driven by information and particularly uniquely aggregated information. The power local search sites hold is in the amount of aggregated data they have either uniquely developed or have aggregated into a convenient package for site visitors. IYPs remain in a position to become the end all and be all of aggregated local business and service information, but the window of opportunity is quickly closing due to the efforts of Google, Yahoo and a variety of aggressive local search sites.

With the vast amount of local company data that is continuously updated and enhanced each year, directory companies own a gold mine of local information that companies like Google, Yahoo and local search sites covet — which is why they continue to strike deals to gain access to this information. Collecting and updating local business and service data is an expense that search engines and local search players are not willing to pay. Pick any vertical and you can bet that in most cases the Yellow Pages database has more business listings and content than any other source. 

European players have understood this advantage and have shared far less with the search engines and vertical sites. They have enjoyed more organic traffic levels because of their cautious nature, desire to keep the deepest local content exclusively within their IYP sites and willingness to promote their brands. While some of their advantage lies in Europe’s more closed information sharing practices, publishers in Europe have made a decision to share less with search engines than their U.S. counterparts in order to build their brand.

The print Yellow Pages product has definitely lost its relevance worldwide to a large segment of its once loyal users. If the print book could again become a source of vital local information that was exclusive to its bound pages alone (not even to its IYP site), that would certainly build relevancy and a desire to use the product. The industry needs to get busy with the task of figuring out what demographic groups it wants to own, figuring out what content and user features those customers want in both print and online, and then implementing and heavily promoting those exclusive features and user benefits. These are the steps critical to winning new print and IYP users, enhancing the relevancy of the product line and increasing the ROI for advertisers.

Hispanic Yellow Pages of America has ceased operations, according to a notice distributed on Monday via ELINC, a Yellow Pages Association’s electronic newsletter providing updates on the directory industry to the CMR community. 

Chicago-based  HYPA had grown primarily through acquisitions since its inception in 2004. According to The Kelsey Group’s Global Yellow Pages 2007 report, HYPA had 22 directory titles in Arizona, Colorado, Idaho, Illinois, Nevada, Oregon, Utah, Washington and Wisconsin with estimated revenues of US$2.7 million, and until recently it employed 100 people. HYPA had aspirations of growing a national network of Hispanic directories with plans to expand the operations into California and Texas. 

According to a spokesman from High Ridge Partners, the Chicago investment firm that is now managing HYPA operations, the assets of the organization are to be liquidated and sold to settle the company’s debt. It is not clear if the current directories sold but not published will be produced and distributed. The company’s Web sites have also been taken down and are no longer accessible.  What we do not yet know is why HYPA has apparently failed. TKG believes the Hispanic Yellow Pages market is more vulnerable to weak economic conditions, when SMBs make tough decisions on where to invest their advertising dollar. We will follow up on this development in greater detailing in an upcoming Advisory from The Kelsey Report.