At Princeton’s Fourth of July fireworks last night, I got into a discussion with a friend who is concerned about his son who works as a journalist for a small NJ newspaper. I referred him to a “tell it like it is” story in Search Engine Watch by Kevin Heisler under the foreboding headline “Newspapers Bleed Red Ink: Death by Internet.” I particularly liked this article because he quotes experts in the Internet/media business, Google’s CEO Eric Schmidt, the NY Times, News Corp CEO Rupert Murdoch and Microsoft CEO Steve Ballmer.

Heisler’s recommendation: “If you’re a journalist, consider quitting and becoming a SEO specialist. The search industry is filled with former journalists who’ve seen the light. The alternative is death by Internet.” He makes a convincing case quoting industry problems as well as the big shots mentioned above. The problem is that it’s just not that easy. People don’t easily up and quit their jobs anymore than they will move from one part of the country to another in order to find work. Nevertheless, there are a lot more educational institutions teaching journalism than search engine optimization, and most of us hope there is some miraculous change that will occur that will make our career decisions look smart. The reality is that many of us live by inertia, unable to make a change until we are forced to.

Earlier this week, I heard a CNBC interview with the real estate magnate and now media mogul, Sam Zell, who owns Tribune Co. He said that focus groups that the Tribune ran eight years ago told our executives what people wanted in newspapers and online services and “we ignored them. Now our goal is simply producing a newspaper that people will pay for.” As a result, jobs will be eliminated throughout every Tribune property. Those unfortunates will be scrambling to find new positions, and few of them will end up in traditional journalism.

“If I can just put on my sneakers,” Jessica Bookstaff, chairman of Associated Cities, told me last week then I can get my exercise. But it all starts with the sneakers. Associated Cities is hosting next week’s GeoDomain Expo, which starts Thursday, July 10, in Chicago. We were talking about what it takes to get some exercise, but it applies equally to a career. The Kelsey Group is working in association with Associated Cities to produce this event and I will be speaking on Friday. It will be a valuable event, and I would recommend you consider attending.

Idearc Media has made the decision to discontinue 28 competitive directory titles in Florida, Tennessee and Texas, and has eliminated 200 positions as a result. The company will also close nine sales offices, each associated with the independent directory titles being discontinued.

The company remains in the business of publishing independent directory titles and continues to publish them in 34 markets around the country. Idearc reports that in 2007 it published 1,200 distinct directory titles, including more than 1,100 in incumbent markets and more than 150 titles in markets where its former parent company, Verizon, is not the incumbent.

“We are very aggressive in our sales efforts, and these markets did not meet our expectations. Smart companies stay nimble and aggressively respond to market conditions, and that is what we are doing,” said Idearc spokesperson Mary De La Garza.

Total distribution for the titles that were discontinued is 7,607,729, according to Idearc. This is a fraction of the company’s 134 million total distribution. The sales offices closed are in Austin and San Antonio, Texas; Nashville and Knoxville, Tennessee; and Jacksonville, Hollywood, Homestead, Orlando and West Palm Beach, Florida. The company says it will continue to offer online products in non-franchise markets through adjacent incumbent directory sales offices.

The independent line of business accounted for about 3 percent of Idearc’s print revenues. In 2007, Idearc reported print directory revenues of US$2.9 billion, which placed the independent line of business in total at US$87 million. Therefore, the financial impact of this decision is relatively minor.

From a perception standpoint, the decision may have a somewhat bigger impact.

First, it suggests Idearc is taking action to eliminate underperforming assets and reduce its costs, which is widely seen as necessary given the company’s difficult financial position. However, De La Garza pointed out that the decision to discontinue these titles was in the works well before current CEO Scott Klein took over June 2.

The closing of the 28 titles also may reflect what will be a wider shakeout of independent directory titles throughout the industry. This may be particularly acute in regions like Florida, California and Texas, where there is a lot of competition and economic conditions are poor due to the foreclosure crisis. This will be a painful process, but it may ultimately benefit the industry, including Idearc.

The incredible rise in the number of competitive directory over the past decade has always seemed unsustainable, particularly given that competition doesn’t really grow the number of small-business leads generated in a market. Too much competition risked diluting the ROI any one publisher could offer its advertisers. This is doubtless more of a concern as economic conditions deteriorate. Less competition in a market will be the equivalent of opening a valve and releasing pressure. Those that remain in the competition will benefit, even if the discontinued revenues go to search engine marketing or to cover the small-business person’s rising cost of gas rather than to the publishers themselves.

Some details have been released about Praized Media’s Local Conversations Organizer. Praized is a Canadian start-up launched by YPG vets Harry Wakefield and Sebastien Provencher, and Sylvain Carle, a longtime industry vet. Its tagline is “Trust Your Tribes.”

In a teaser announcement released today, Praized said its platform will be used by Yellow Pages Group in Canada and Yellowbook in the U.S. It will be powered by YPG data in Canada and Localeze data in the states. The announcement said Praized will integrate with all types of editorial content and social tools. One idea from the company has been “Web 2.0 places” with recommendations.

There has not been all that much fresh coverage of the rumor, reported earlier this week, that Microsoft may acquire Yell Group, the U.K.-based international publisher with operations in the United Kingdom, the United States, Spain and Latin America. We have not been able to pick up much to support the rumor, though circumstances might suggest that Yell is poised to make some kind of significant move to generate cash without further driving down its share price. The company took a hit after it announced its earnings last week (along with a dividend cut), and gained a little back on the Microsoft rumor. At this writing, the stock is trading down by about 2 percent.

Here is a bit more discussion on ClickZ regarding the rumor that Microsoft may acquire Yell. The focus here is on Yellowbook.com, which has been a second tier player in the U.S. IYP space, but has recently revamped and is growing usage rapidly, albeit from a small base. One key difference is the veteran leadership of Pat Marshall, who helped found Superpages.com back in the IYP pioneer days, and joined Yell last year to lead efforts to make Yellowbook.com a more competitive digital platform.

This article reports on a recent BNP Paribas report that suggests Yell might sell off its U.S. and Latin American operations (with Carlos Slim’s Telmex being the likely buyer of the latter) to avoid violating debt covenants. No mention is made of the prospects of a Microsoft acquisition.

This article reveals, ironically enough, that Yell and Microsoft were both voted into the top 10 U.K. companies to work for.

Reuters is reporting a rumor that Microsoft CEO Steve Balmer has set his sights on Yell Group as his next acquisition target, which has led to a bump in Yell’s share price.

We don’t know if this is true. It is, after all, being reported as a “rumor.” However, this isn’t the most implausible rumor we’ve heard. Balmer may well be itching to do a deal in the wake of Microsoft’s failure to buy Yahoo!. Plus there has always been at least a superficial logic to a tech company acquiring a directory company, namely to acquire its sizable local sales channel. Yell is the largest publisher in the U.K. and through its Yellowbook unit, the No. 4 player in the United States, with a sales force of more than 5,000 reps, even after a recent sales channel downsizing.

It’s worth remembering that just a few years back, Google was widely said to be checking out Yell as a possible acquisition target. This was topic A for discussion at our Directory Driven Commerce event in 2005. Yellowbook CEO Joe Walsh was a keynoter at that event, and he endorsed the concept of a search engine buying a directory company without directly addressing the rumor. As Walsh put it, the assets directory publishers bring to the table would “complete” a search engine, in a Tom Cruise-Renee Zellweger kind of way. Still, the deal never materialized.

One big difference between then and now is the price tag on Yell. Back in late September 2005 when the Google-Yell rumor was floating around, Yell was trading at about 483 pence. Today, the stock was at 128.25.

Yellowbook has launched a new microsite to encourage consumers to download and share spots from its new ad campaign. The site also links to Yellowbook’s YouTube channel.

TKG recently posted on the new Yellowbook campaign and brand makeover. We see it as an upgrade of the previous David Carradine campaign, which the publisher contends was quite successful. Apparently, it wanted a new direction.

Yellowbook switched ad agencies for the new campaign, which of course is not an uncommon move. The result is a much more polished campaign, directed by Vadim Perelman (”House of Sand and Fog”) and featuring Blanca Soto (yes, the Blanca Soto). The objective is clearly to position Yellowbook as a multichannel, forward looking directory publisher.

On yesterday’s earnings call, Yell Group executives talked about the importance of investing in advertising and promotion, and cited data showing Yellowbook’s brand awareness was in many cases higher than that of its larger incumbent competitors. As noted in yesterday’s post, Yell plans to continue investing in its brands, despite the economic slowdown and pressure on costs.

At this writing, Idearc Media’s stock was trading higher (up about 28 percent at noon Eastern) after an earnings announcement that shows the company has managed its costs well enough to grow EBITDA, while its revenues continued to slide.

Here are a few highlights from today’s earnings call (we will have a more detailed write-up for clients of The Kelsey Report):

• Acting CEO Frank Gatto squarely blames the soft U.S. economy for continuing softness in ad sales. For the first quarter, “multi-product” ad sales were down 6.2 percent. On a reported basis, total revenues decreased 4.5 percent to US$770 million, with print declining 5.5 percent to US$696 million, and online up 7.4 percent to US$73 million.

• First-quarter EBITDA was up 1.4 percent on a reported basis, though it declined 3.2 percent on an adjusted pro forma basis. The adjusted EBITDA margin grew slightly to 47.7 percent. The company cited tight cost management and lower traffic acquisition costs (some of which were related to the end of its MSN relationship, which wrapped up in mid-December).

• The company blamed a shift from fixed fee to variably priced online advertising for the relatively anemic 7.4 percent first-quarter online growth rate. Idearc said it expects full-year online growth to be more in the 20 percent range. Idearc executives said demand is strong for performance-based advertising.

• The company is rolling out a new packaged search program called Search Marketing Local that will enhance the value proposition Idearc can offer local advertisers.

• Idearc executives adopted a friendlier tone toward the national sales channel on today’s call. Under former CEO Kathy Harless, the national channel was made something of a scapegoat for soft ad sales. Today, Idearc executives said national results had not improved from Q4 to Q1, but they added that the channel was working closely with Idearc and said they hoped to see results of this in the second half of the year.

• Idearc leaders acknowledged that stand-alone local online sales channels like ReachLocal are increasingly a factor, but they were confident they could compete because it offers a broader package that includes print, IYP, SEM and SEO.

Yellowbook has unveiled a new television ad campaign, replacing the kinda cheesy Kung Fu ads (sorry, David Carradine, you did what you could) with a much slicker campaign that focuses on promoting use of Yellowbook’s online directory (which is also sporting a new look and feel, modeled closely after its sister IYP Yell.com).

Yellowbook (a unit of the U.K. firm Yell Group) has also unveiled a more streamlined logo. It makes a lot of sense for the company to bring its overall design sensibilities up a notch if it hopes to remodel itself into a more platform-agnostic image. Its previous logo had seemed dated.

The new ads rely on the tried-and-true practice of setting up a somewhat amusing need for a business found under a common YP heading, then off to Yellowbook.com and the problem is solved, perhaps with a twist of irony. But this campaign marks a great leap forward in production quality from previous Yellowbook efforts. Here are two ads from the new campaign (the first doubles as a cautionary tale on lower back tattoos). Of course, Yellowbook isn’t delivering quite the Tom Cruise “Minority Report” experience that’s shown here. In fairness, the ads are supposed to be depicting the Yellow Pages of the future. 

The ads’ underlying theme of “finding what you are really looking for” is clever, since it underlines a key point of difference between IYP and search (at least for now), which is that Yellow Pages data are targeted and structured and designed to give consumers what they want with no extraneous material.  The ads were produced by Yellowbook’s new agency, Gotham Inc. (replacing Trahan Burden & Charles) and were shot by Vadim Perelman, director of the film “House of Sand and Fog.” I guess there is credibility, and then there is “I’ve directed Sir Ben Kingsley” credibility. 

In an executive interview today with the “Father of IYP,” Pat Marshall, Yellow Book’s chief new media officer talked about his re-entrance to the IYP space and what Yellow Book is looking for new business partners.

In all fairness, Marshall, who was previously head of Idearc’s (the former Verizon) Superpages.com, said he didn’t want to return to the IYP space, but rather wanted to get back into local search. Marshall characterized Yellowbook.com’s current position as more in the IYP business but said the trajectory is gradually moving toward local search.

Yellowbook.com is looking for partners right now primarily in three categories: infrastructure, traffic and inventory. Marshall gave some pretty specific direction on what Yellowbook.com will and will not consider in terms of potential partners and literally offered his e-mail address for the attendees looking to work with one of the fastest growing IYPs in the U.S. today.

More specifically, this is what he said:

1) Infrastructure - A potential partner must bring Yellowbook.com a business plan and provide a compelling argument as to how it can increase revenue, lower costs or provide a more competitive offering in the market.

2) Inventory - Marshall very directly said a potential partner must be willing to “put some skin in the game.” Why will the inventory be good for Yellowbook.com’s customers?

3) Traffic - A potential partner must bring a qualified audience to provide meaningful users to Yellow Book’s customers.

Marshall joined Yellow Book in July 2007 and while he can’t be given full credit for helping the Yellow Book Network grow its unique visitors (per comScore data) 137 percent from Q4 2006 to Q4 2007 and increase its share of IYP searches from 4 percent to 8.6 percent for the same period, he certainly can share in some of the credit. Going forward new advertising campaigns that will debut in the coming weeks will focus specifically on the various digital components of the Yellow Book business and future online growth will be credited to Marshall and his team.

The U.S. independent publisher White Directory has added two new members to its sales leadership team. Kevin Pavelski, vice president of digital expansion, and Pat Balles, vice president of global markets. From the press release:

“Pavelski comes to White Directory from Wisconsin, where he worked with AT&T for the past 13 years. He brings with him a wide array of Sales and Management experience, most recently serving as General Manager for AT&T. As VP of Digital Expansion, he will focus on the continued evolution and penetration of White Directory’s print and digital product lines.

“Balles is also from Wisconsin and spent the last five years with TMP Directional Marketing as Vice President and General Manager. Prior to that position, he worked for SBC/Ameritech for 14 years, holding various Sales and Management positions. In his new role as VP of Global Markets, Balles will focus on the development of new markets and sales channels, as well as market segmentation and new product integration.”