Yesterday, I spent about three hours with Idearc Media CEO Scott Klein, who shared the vision he and his management team have for the company. Some of that vision is encapsulated in the rollout of SuperGuarantee, a major new initiative. Other clues are found in several enhancements to the core Superpages site. My biggest take-away: Klein’s overarching mission to reestablish the notion of trust inside and outside the Idearc organization.

Since taking the helm of Idearc in June 2008, Klein has promoted more than 100  managers. While he did bring in a couple of key managers from the outside, he found a wealth of creative and energetic talent right inside the Idearc organization.

Amen to that. There’s nothing like upward movement within a large company to instill a sense of hope in an organization many would have considered leaving for dead a few months earlier. In our view, Klein’s attention to the company’s mental health should go a long way in reestablishing trust among the “rank and file” — in this case, the sales reps and managers who are out there day in and day out meeting with the millions of small businesses that are worried and concerned about the economy.

To those outside Idearc — its consumers and advertising clients — Klein has rightly focused on rebuilding trust. For users of Idearc’s various information brands — the book, online or mobile — the launch of SuperGuarantee is an important step in the right direction. It offers users an avenue for resolving situations where a service provider fell short of the consumer’s expectations. While this is bound to strike a chord with consumers, the ultimate test will be if usage — offline and online — grows.

Having been part of the ValueStar team in the mid-1990s in Northern California and watching closely various other attempts to offer a “good housekeeping” seal, I believe  Klein and team are on the right path. But it may well prove to be a path that has more ruts and potholes than a large organization like Idearc can patch quickly. It is a bold move toward rebuilding trust for the Superpages brand among consumers and has the potential to differentiate the brand in the faces of numerous competitors.

Let’s assume Klein and team ultimately succeed in working their “trust me” magic on employees and consumers. Their greatest challenge will be to build a level of trust between the company’s thousands of sales representatives and nearly 1 million small-business advertising clients.

Yellow Pages companies — large and small, incumbent and independent — have spent nearly two decades burning goodwill and trust among their advertisers. Whether they were raising rates in the face of clear usage and/or distribution declines, or simply not being transparent and objective in planning a print Yellow Pages campaign, advertisers — large and small — are reluctant to “trust” Yellow Pages publishers. It is ultimately this constituency that Klein and team — and Yellow Pages publishers in the U.S. and around the world — must address.

As the marketplace moves toward a multiproduct, multiplatform world, the Yellow Pages publishers are in the enviable position: They have a sales channel that is both deep and broad. No other local medium can make that claim. But that claim will ring hollow unless a new trust is established. Klein and team get it, and others do too. Now it’s time to execute.

Ran across this interesting piece via Topix that was produced by the local ABC7 affiliate here in the Bay Area. The story uncovers a nervousness among local SMBs that the Internet is increasingly having an impact on their business outlook.

I have watched this firsthand since I live in San Anselmo, and it is clear that business owners are skittish. One of the SMBs profiled in the piece offers high-end flowers and would seem to be more insulated from being disintermediated by Internet models – but its owners too are nervous. Years ago there was an expectation that Main Street USA was doomed by the onslaught of the big-box retailers.

Now it’s the Internet that is threatening to doom Main Street. SMBs will have to continue to figure out how they can offer products and services that combined are differentiated on the basis of service, features or price.

Dan Pulcrano closed out Day 2 of Drilling Down on Local ’08 with a presentation to expose attendees to the wild west of the geo-domain space. Pulcrano, owner of numerous city sites such as Seattle.com and SanJose.com, argued that the geo-domain sites are poised to become a much more powerful factor in the local search ecosystem. City sites are the beneficiaries of considerable direct domain traffic and have usually worked with travel partners such as Expedia or Orbitz or Hotels.com to monetize their audience. Increasingly the geo-domain players will move into other relevant areas such as entertainment and nightlife to increase their monetization opportunities.

During yesterday’s afternoon session focused on Auto at Drilling Down on Local ’08, the panelists nearly universally said U.S. automaker giant General Motors was the furthest along in figuring out how to leverage the Web.

Mitch Golub, president of Cars.com, said that has not always been the case — Toyota used to be the leader OEM but has since ceded that post to GM. GM’s leadership on the Web did not do much for driving car sales, as Ward’s Automotive reported that Q1 sales were down more than 16 percent. Ward’s Cliff Banks predicted that there’d be perhaps 1,000 or 1,500 fewer rooftops (auto dealerships) by 2010 as undercapitalized dealers find the economic downturn too difficult to navigate.

As the economy slows, dealerships and OEMs will push even harder to ascertain the true ROI of their media mix, which should ultimately benefit the online sector.

Since our founding, The Kelsey Group has been committed to delivering our unvarnished view of the dynamics of the ever changing and evolving local advertising market. We have been criticized by some in traditional media who suggested we have overstated the rise of the Internet. And we’ve taken shots from those pushing new media suggesting we are too sympathetic to traditional media. Being at the center of this rapidly changing interactive local media space is exhilarating and at times terrifying.

We remain committed to providing a forum through this blog for a spirited debate and exchange of ideas on local media. What we will not do, however, is offer a forum for personal attacks. Therefore, we made a decision this morning to remove our blog post from yesterday that pointed to a CNBC segment about the Yellow Pages. Please keep commenting on what you read here, and by all means be candid, contrary and controversial. If you wish to make a personal attack, however, find a different forum.

The recent hubbub over our “prediction” regarding print media usage — see my earlier blog — has created an exaggerated picture of the perils facing print Yellow Pages. While it is true print YP has some serious challenges, we often forget how well it still works for so many local businesses. Three recent personal experiences drove this point home to me.

1. On Christmas night, as I was sipping eggnog, someone backed into my car. The following day I picked up the phone book, called one auto repair shop in San Rafael, CA, and two days later the shop had authorization for a $2,500 repair. I am pretty certain that my single repair job paid for the entire month of print YP advertising for that auto shop.

2. My second lovely Christmas present was that a family of rats decided they liked our warm and cozy house. Time to pick up the print Yellow Pages once again. Out came the pest control technician to help us manage our new house guests. I asked the owner today how his Yellow Pages ad was working. His first comment was “not very well … you can’t believe how expensive it is.” So I asked him if he tracks his calls and of course the answer was nope, but he did know that most of his calls came from his Yellow Pages ad. Maybe it will take a couple of other houses on my block to pay for the month’s $2,000 Yellow Pages ad, but they now have me on the hook for $150 a month service. I’d say he’s not likely to downsize his ad anytime soon.

3. Finally, our third charming present this Christmas season was a stopped-up toilet. I know the model here. The guys come out and they don’t leave until they’ve lifted $500 for me for two hours of sewer cleaning. If they fill three two-hour slots per day, from the Yellow Pages ad, they’re breakeven by the first Tuesday morning of every month.

So, is print Yellow Pages usage declining? We have consistently said it is in decline and we will continue to collect data to inform our view. Is declining print Yellow Pages usage a problem for the print Yellow Pages industry? You bet it is. They know it and are adjusting their models and approaches every day to manage through a difficult transition period. Are advertisers going to desert the book en masse? Only if they’re looking to sabotage their own business. Look at all the Christmas presents I shared this holiday.

American Public Media’s Marketplace ran an interesting piece yesterday about the launch of NBC Everywhere, NBC’s foray into the expansive and growing out-of-home media market.

According to the piece, there are some 500,000 out-of-home display monitors delivering content and advertising into the aisles of large retailers, the seats of movie theaters and the gas pumps at gas stations. The piece points out that this out-of-home market might reach $2.5B by 2010. The New York Times also covered the story here.

So does this matter to local? These emerging networks are IP based and as a consequence can push highly relevant content and ad messages to the targeted audience. The piece is certainly worth a listen and offers those in “local” yet another platform to consider. Besides, back in November, NBC changed the name of its affiliate network to NBC Local Media – hint, hint.

NBC is not the only network to play in this expanding space. Last year CBS bought Sign Story Digital Media and quickly renamed it CBS Outernet. This week CBS signed a partnership arrangement with RippleTV. In the press release, they talk about how “this agreement represents a powerful marriage between CBS’ national reach and Ripple’s ability to target consumers at the community level.”

We expect even more activity in this space in 2008 as these networks demonstrate their ability to reach the ever-elusive American consumer.

The Kelsey Group has generated considerable attention (and some confusion) in the media and on the blogosphere from a statement that appeared in an Advisory issued by our Marketplaces program on Jan. 4 offering picks and predictions for 2008 (each TKG research practice issued a similar document).

The statement in question reads as follows (referring to newspapers and Yellow Pages):

“In 2008 we think there will be a dramatic falloff in print usage due to two factors: Online has gotten ‘good enough,’ and users have grown fluent with online search. The falloff in 2008 could even reach 10 percent, compared with the 2 percent to 3 percent we’ve seen in years past.”

Several points are needed to put this statement in perspective.

This and all the predictions issued in January by The Kelsey Group’s analysts were meant to be directional in nature. In hindsight, we should have anticipated that using specific numbers to illustrate a conceptual view could be misconstrued as a firm projection.

In truth, the numbers included in the predictions Advisory were meant only to illustrate our sense of things and should not be interpreted as a Kelsey Group forecast. In addition, the figures cited relate to Yellow Pages and newspapers combined, rather than to each individually, which has further clouded the waters.

The Kelsey Group is in the process of updating its annual revenue and usage forecast for global Yellow Pages and local search, which will project out five years. This document will be released to TKG clients in mid-first quarter, at which time our forecast figures will be subject to debate and scrutiny.

Witnessing the rain that has drenched the Bay Area over the past couple of weeks begs the rhetorical question — what could be more local than weather? Now with reports surfacing that weather.com is up for sale, one wonders if any of the major Yellow Pages publishers have their eyes on what is no doubt an intriguing property.

With a price tag of $5b (for the parent company, The Weather Channel) this is not a cheap asset, but to date, weather.com has been unable to build a local advertising business. Imagine a Yellow Pages representative offering local plumbers and roofers and tree trimmers inventory right alongside the latest weather report. For Yellow Pages publishers to garner the requisite volume of unique visitors and build repeat traffic, they’ll have to offer users a reason to be on their site all the time. Weather is something, like traffic, that resonates at the local level.

Someone is going to buy weather.com, but only a few players can ever realize the potential of the local advertising market the way a Yellow Pages publisher can. Now, where’s that raincoat so I can go grab my morning paper?

Earlier this month the Kelsey program directors — Charles Laughlin, Matt Booth and Peter Krasilovsky — offered up their predictions for 2008. These predictions present Kelsey clients a partial road map for navigating what could be a stressful and challenging 2008. Most economists are now debating only the depth of a U.S.-led recession rather than the possibility of a recession. A couple of our analysts’ predictions are highlighted below.

The Kelsey Report’s Laughlin points out that the global print Yellow Pages market may experience more volatility than in previous slow growth periods. As advertisers seek to rationalize their advertising spending, they may well find many more flexible advertising solutions — read online advertising — available to them during this tightening market than in past cycles. Well-positioned online players should see an uptick in orders and demand for flexible advertising solutions that can be turned on and off quickly as dictated by the ebb and flow of the economy. Niche or specialized directory publishers could also see increased demand as advertisers seek to target their messages to more qualified audiences.

Booth, who leads our Interactive Local Media program, suggests that the terrestrial radio industry will go through a period of considerable adjustment as advertisers learn more about the “true” nature of their audiences. Radio’s newly tweaked and more improved (from a transparency point of view) listener tracking system by Arbitron will force advertisers and radio stations to rethink the ad buys. We’ve already seen a shifting of the radio landscape, as Peter Krasilovsky pointed out in this blog just a few days ago. This shift will play into the hands of cross-platform media companies that can offer advertisers a comprehensive media buy — think Google, Microsoft, eBay.

Krasilovsky, who runs Marketplaces, our newest advisory services focused on verticals and classifieds, predicts that in 2008 even more attention will be focused on key vertical categories. The Kelsey Group expects to launch a series of proprietary research initiatives to drill down into the shifting advertising budgets of key players within specific vertical markets. As consumers seek out better and better information, in many cases only tightly defined vertical sites will be able to offer the depth of buying information, which will transition an increasingly nervous shopper into a bona fide buyer.