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.

I’m here in Athens this week at the European Association of Directory Publishers’ annual congress. Nice line-up of speakers thus far, many of whom are echoing the themes that we heard emerge at The Kelsey Group’s DMS ’08 conference last week in Atlanta.

European Directories CEO Cornel Riklin was one of the keynote speakers to open the event today. Among his key messages to the group of mostly European directory publishers and vendors was not to look at their businesses as just print or online, but instead to view them as focused on generating leads for their advertisers.

Riklin used a variety of statistics from his company’s operations in eight countries to make the case for his overall key messages, which included the following:

• “Our business is lead generation.”
• Strategy and execution: Good execution can grow print usage/stabilize print growth, and aggressive strategic direction can grow online.
• Directory publishers can compete effectively: Strength and differentiators are the sales force and multimedia product offerings.
• Consolidation will strengthen the industry.

Riklin followed speakers that included David Smith, economics editor for The Sunday Times, and ABN AMRO’s Julian Moore, who painted a less than positive view of the global economy and media industries. Riklin, however, shed some light on how his sales force of 2,500 and total employees of 5,000 are executing on his key messages in eight diverse countries (and Gibraltar) that achieve revenues approaching 800 million euros and EBITDA of about 300 million euros.

Riklin allows print operations to be run locally while online is run from the center or corporate side of things. He sees daily how competition is increasing in key markets such as the Netherlands and acknowledges that “the industry is under siege.” He remains incredibly upbeat about the industry’s prospects even in an environment that he believes has experienced a polarization of share price performance and overall financial performance of directory publishers around the world. Riklin concludes: “It’s all about execution.”

The CEO’s vision includes a 50-50 distribution of revenues by 2011 between print and online and overall revenue growth. In an effort to achieve such growth he has rolled out a more specialized sales force that offers more packages or bundles and does so aggressively. He echoes sentiments we heard at last week’s DMS ’08 conference that get to the heart of a consultative or one-stop-shop multi-product sales approach. Consolidation, too, is part and parcel of his plans, although there were no hints of the publisher’s next target. European Directories, of course, has its hands full as it integrates its most recent acquisitons — Ditel in Poland and Gouden Gids in the Netherlands.

Riklin’s presentation was followed by U.S.-based Local Insight Media CEO Scott Pomeroy, who provided a similar message about his company’s “relentless focus on execution.” As the company’s chairwoman, Marilyn Neal, noted during her presentation at DMS ’08 last week, Local Insight Media is one of the few major publishers in the world experiencing print revenue growth. Pomeroy, too, cited economic forces, but noted key differentiators for his company such as its investment in and management of its sales force. Local Insight Media is trialing new ways of doing business, such as pay for performance, and working with new digital platforms that help set it apart.  

DMS ’08 concluded with a “big thinker” panel and a format that batted around questions in the form of “in five years … ”

Panelists:

Geoff Avard, GM, Strategy, Sensis

Perry Evans, President, CEO, Local Matters

Sebastien Provencher, Cofounder, VP Product Management, Praized Media

Ken Ray, VP and CMO, AT&T Publishing & Advertising

The panel was more forthright than usual for a composition of public companies (half the panel). It was a reality check on real issues that will face local search and Yellow Pages in the foreseeable future. The list of questions and predictions was designed to be provocative and controversial to really flesh out the issues and get the panel and the audience talking. Here are a few:

In five years … SEM bid pressure will rise to the point that advertisers will see more value in print advertising.

Ken Ray: “Online is like Los Angeles. Everyone found out it was a great place to live and everyone moved there and now it’s too crowded; 16-lane highways isn’t my idea of the best place to live. The same is happening with search advertising. The next few years will see a confluence of three things that the Yellow Pages needs to do to be a relevant source of leads. The pricing models have to change and involve hybrid pay-for-performance pricing. Second, retain the usefulness of content by integrating URLs, e-mail, texting and other calls to action. There are a whole set of things we’re already seeing in Europe and Japan in terms of using the cellphone as a transactional device. Lastly, we need to work on distribution and get the book out there better. It’s still easy to use and it’s a darn good way to make a purchase.”

In five years … small businesses will use self-service online advertising like AdWords to a much greater degree.

Ken Ray: “That’s wildly unrealistic. What business owners tell you they will do and what they actually do is rarely the same. They will tell you that they track calls, too. And they make service calls on weekends. Self service works for some things but not others. Can you self provision a bold ad? Yes. Can you reliably self provision a more involved campaign, no. We need to step in to provide a consultative role and be the trusted marketing advisor.

Perry Evans: “If self provisioning takes over, the [Yellow Pages] industry will have failed itself. Many SMBs don’t want to self service and if they do, it’s because they aren’t being served. A lot of technology will come into play in online ad placements, but it shouldn’t be in picking the ad, but rather in tracking and reporting.”

In five years … like many of the rumors that continue to circulate, Google will have bought a Yellow Pages publisher to gain a direct local sales channel.

Sebastien Provencher: “It won’t happen. It’s too much of a cultural clash. Microsoft may be more plausible. They’ve been investing in local search assets over the past 12 months.

Ken Ray:  “The question comes down to how Google wants to distribute its sales organization: to buy, build or partner. They’re already partnering today. Buying would be a huge cultural clash. If I were Google, I might build it myself.”

Geoff Avard: “It’s not entirely out of the question. Google doesn’t want to be one channel and they’re moving into lots of other media like radio. The more [Yellow Pages] become multi-channel, the more attractive we’ll be to Google.

In five years … no one under 30 will be using the Yellow Pages.

Perry Evans: “I hope it doesn’t matter. It’s not a print issue but more about the industry adapting to be a source of local content. It’s not just a question of users looking at yellow paper.”

In five years … more listings will be accessed by mobile than on the PC.

Ken Ray: “Location awareness will be important and we’ll have more and more listings on mobile search applications. It took [our mobile search product] five months to get 1 million visitors. It took us five years to do that online. The iPhone will be important. Data use on the iPhone is 60 times what it is on other mobile devices.

Sebastien Provencher: “It’s not really the iPhone itself that will change everything but what iPhone has done to open up the market. There will be many other devices that replicate what the iPhone is doing. The jack is out of the box and there is no going back. In five years, everyone is going to be using more advanced mobile products.”

In five years … what will follow the iPhone as the next big thing?

Perry Evans: “A device that provides a GPS stream that is always on to record the ‘polygon’ of your life. This could have the ability to say where you’ve been and where you’re likely to go and what you’re likely to do when you get there. The ability to leverage that data to deliver targeted content could be huge.”

In five years … where will you be?

Sebastien Provencher: “I will still be working in local search. It’s still growing and it will continue to be the most exciting space.”

We’re back from Atlanta after a successful DMS conference. A roundup of internal coverage is in the works. In the meantime, here are a few links to others’ coverage.

Praized

LocalSEOGuide

LocalBizBits

Small Business Commando

ReelSEO

AT&T Advertising & Publishing CMO Ken Ray, speaking on a panel at Kelsey’s DMS ’08 event this week in Atlanta, said print books have plenty of life in them but that publishers have got to work to make them relevant with “URLs, e-mail, texting … using cellphones as a transactional device … a whole set of things we are already seeing in Europe and Japan.”

On a more basic level, the books just need better distribution. “Using the books is still pretty darn easy,” he said. “But no one is satisfied with the way we get books into the home.”

As for ad sales, Ray is among those who think the Yellow Pages business will remain dependent on live sales reps, rather than self provisioning, which “is wildly unrealistic,” he said.

“They will tell you that they track calls, too. And they make service calls on weekends.” But he thinks the bottom line is: whether we want people to self provision higher-value ads. “I don’t think so,” said Ray. “Are they really going to upsell themselves? We want to be service consultants.”

The biggest part of being a “service consultant” is to bring leads to advertisers, added Ray. “I’d like to say ‘a lead is a lead,’ ” he said. “’Here is what it is worth’. I don’t want to get into different components.”

Local voice search advertising is already getting promising results, with widespread reach, and high clickthrough rates, according to V-Enable CMO Craig Hagopian, who was speaking at DMS ’08. V-Enable is a San Diego-based mobile voice search company with 65 employees. It partners with Superpages.com, Yellowbook, and AT&T’s Ingenio and Yellowpages.com.

Hagopian said the company is averaging six searches per month from a typical user. Featured ads posted at the top of searches are clicked on 10 percent to 15 percent of the time, and half of those clicks results in a call to a business. The ads typically go for $1.20 to $1.40 per action.

The implications may be important. Looking forward, the wallet and key are likely to go away as everything gets digitized. “But the phone stays with you,” he said.

Search activity on the phone is also worth noting. Top features, in order, include Yellow Pages, Directory Assistance, Navigate/Mapping and Internet/Directory Assistance. “All come together with mobile. The mobile phone can do all these things,” said Hagopian.

The “Deconstructing Internet Yellow Pages” panel at DMS ’08 revealed a number of areas in which IYPs need to evolve. Based on Kelsey’s IYP research, conference chair and TKG Program Director Charles Laughlin said, “IYPs appear too conservative and unwilling to do what it takes to win in the local search space.”

One of the key areas consumers value in IYPs remains accuracy of data, but items like look and feel and the ability to add and share information have risen to the top. Two of the “new breed” IYP sites, Brownbook.net and YellowBot, are certainly listening to consumers and responding with uniquely positioned sites. 

While major IYPs have advanced, they appear more oriented to supporting advertisers than the consumer. According to David Ingram, CEO of Brownbook.net: “There seems to be a mismatch between what consumers want and what the directory industry sees as important. Consumers want ease of use and accuracy versus publishers, who seem to focus more on advertiser-driven needs.” 

The need to structure data to make searching for and finding relevant information easier was viewed by most of the panelists to be vital in providing a satisfying experience on their sites. The challenge is structuring the content you control amid the vast amount of information on the Web, such as user reviews, consumer-generated content and other disparate data.  According to Morgan Zimmerman, VP business development for Exalead, “Consumers are looking for more localized information and demanding it from the sites they use and prefer — in an easy to digest manner.”

Taking a counterpoint was Erron Silverstein, cofounder and CEO of YellowBot, who felt consumers alter the way they search too frequently to adequately structure local search. “Tagging listing information shows you how to classify the information and how people are searching and offers suggestions to the advertiser base on how to connect. You need to let the consumer direct the structure.” 

The conclusion of the panel is that the current view of an IYP site needs to evolve with a more consumer-focused approach, which in turn will drive more traffic and ultimately better quality leads for advertisers. James Ashford, president of Yellow Assistance, summed it up when he said: “The user experience is key, and how they want to use your site will dictate how best to design and set up your functionality. Ultimately the users will supply the appropriate content and how they want it served up; this will drive the traffic your advertisers need.”   

Former Citysearch President Briggs Ferguson, who took the helm at Idearc Internet and its Superpages.com flagship about five months ago, said there is tremendous potential for the Yellow Pages industry. Speaking at DMS ’08 in Atlanta, he opined that “it should be much bigger than it is today. At the very least, we get past it as an $8 billion industry. We should see $10 billion online alone. [The whole industry should pull in] the $20 [billion to] $25 billion range.”

Ferguson cautioned that the industry has some major challenges to reach such lofty levels. Among them: how to make sure that YP advertisers get a high volume of leads, lead quality and standardization. “As an industry, we have to get into a genuine lead mind-set.” Regarding standardization: The Yellow Pages industry is suffering through the same issues as the United States did during the industrial revolution, he said.

The gap between online and print monetization also looms large. “Print YP monetizes at $1 a lead. The local search side monetizes at 20 cents,” he estimated. “We need information and data that can move from one box to another box in such a way that can happen very quickly. Without it, it creates an enormous drag on the entire system.”

Online features also need to be intelligently applied. He noted that maps are often inappropriately applied and aren’t always necessary. Moreover, the meta data that comes with listings is very inconsistent. While the incorporation of ratings has been an overall plus for online Yellow Pages, “they haven’t had the impact on the industry that you’d expect.”

Yellow Pages Group of Canada, which is widely considered as one of the best positioned Yellow Pages companies in the world, will continue to focus on manning its sales channel, resisting efforts to rely too heavily on self-serve solutions, according to President and CEO Marc Tellier.

“Search engine companies will privately admit self service isn’t working,” Tellier said during his keynote at DMS ’08. “That’s the position were in. It is too easy to go to the lowest cost channel.”

Tellier noted that roughly 75 percent of his sales force is now face to face, up from 50 percent when he arrived seven years ago. The rest is largely phone-based. “We’re investing in the sales organization to provide that valuable advice” to small businesses.

One of the keys to the future success of the company is to make the sales channel more efficient, Tellier added. “We are transitioning from a product-driven to a service-driven approach,” he said. Along those lines, all YPG reps have tablet PCs and wireless connectivity. The tablets enable reps to consummate 87 percent of sales directly, without any administrative intervention.

My brother recently had a “vertical experience” in the Disneyland “Twilight Zone Tower of Terror.” A 150-foot drop in a rickety old elevator. Three times, in fact.

But Disney’s vertical engineering legerdemain is less ambitious than that of the diverse “vertical” providers who spoke at the “Building Online Vertical Experiences” panel this afternoon at Directional Media Strategies 2008. Wrangled by Peter Krasilovsky, the panel included Tom Bates, VP and GM of Cox’s Kudzu; John Busby, director of product management of Marchex; and Joel Toledano, CEO of Krillion.

Started in Atlanta in 2005, Kudzu has since expanded to San Diego, Phoenix and Las Vegas. It will soon be expanding to other markets (although it’s not yet clear if it’s growing like the eponymous weed). Kudzu’s goal is to provide an online substitute for “word of mouth,” focusing on home-related and other services.

As Bates acknowledged, “It’s good to be Google” (brings to mind Mel Brooks’ musical soliloquy “It’s good to be king” in “The History of the World”). But more importantly, Bates proffered that it’s also good to be one click away from Google – and that a viable business can be built in that position. Meaning: Kudzu can build a business as a recipient of Google’s search traffic related to home and other services.

Krillion’s Toledano pointed out that seven of the top 20 search terms are for big-box retailers. Seems that these big-box retailers have a knack for selling large quantities of products consumers crave. Krillion maintains a ginormous database with more than 1 billion SKUs, and accurate information on which items are in which big-box stores. Act II for Krillion will be to upload data from the legions of smaller merchants — a work in progress. Krillion is also now powering local inventory search for mass market product companies (such as Panasonic), and will soon be powering similar information on behalf of a major consumer review site.

Toledano opined that a key to building scale in the online world is to use “other people’s traffic” (perhaps the online counterpart to “other people’s money” in the world of finance).

Marchex, by contrast, has assembled a network of some 150,000 locally focused Web sites (yes, that is one hundred and fifty thousand). You might say this is the very long tail of Web properties – in fact, Busby did say it. He said that “consumers engage the long tail” – and backed this up with data. That is, consumers like sites that have a narrow focus on specific activities, topics or places. This specificity is precisely what fuels consumer interest.