Leaders of the U.S. independent directory publishing industry were passionate in their defense of print media at this morning’s opening session of the Association of Directory Publishers meeting outside Houston, Texas. Jim Hail, the outgoing chair and head of Idaho-based Hagadone Directories, declared “Print is not dead!” He argued that the industry has become too apologetic about print and should take a much bolder posture in defending it in the media, where it continues to take a pretty vicious beating.

To bolster his point, Hail held up a recent Wall Street Journal article that details an effort by the magazine industry to embrace the “power of print.” Rather than accept its demise to digital, the magazine industry decided to run a campaign that basically says, at least where magazines are concerned, the print experience is superior. One tagline example, “The Internet is fleeting. Magazines are immersive.”

Hail was not impressed so much by the “esoteric” messaging but by the gumption the magazine industry has shown by saying, in effect, our old product is awesome, so deal with it. He wants the Yellow Pages industry to do the same thing.

“We need a consortium of publishers for an ad campaign … to tout the inherent strength of our medium,” Hail said.

Of course, Hail is aware that this call has been made many times before and never executed successfully. Joe Walsh, speaking after Hail, offered a somewhat different take. He said that while he has always favored a Yellow Pages version of the “Got Milk” campaign, he thinks it is “too late now” for any such effort to be effective.

He says the sense of print Yellow Pages as a passe medium has been fully baked into the public consciousness, “and we may not be able to reverse it.” Plus, he says there is no appetite among the major publishers to fund any such effort.

That said, Walsh sees some modest signs of improvement in the performance of Yellow Pages. He says his internal metrics show growing print usage, which he ascribes to an improving economy.

It’s nearing the end of earnings season for the global Yellow Pages industry, and my program, The Kelsey Report, will soon issue a detailed roundup of 2009 results across all the companies that report publicly.

In general, the news has been grim for print Yellow Pages, though some publishers have given faint glimmers of hope that print will stabilize this year, meaning a slowing rate of decline. Others are projecting an accelerating decline.

A recent (unscientific) Kelsey Report online survey of global YP industry insiders suggests that most in the industry see a strong secular component in recent revenue performance. Probably the most telling messages that has come out of some recent conversations I have had with leaders in the industry is that the continuing, if waning, effectiveness of print is an increasingly irrelevant point. The energy it takes to overcome objections to print can be more effectively directed to selling digital or a product bundle that emphasizes digital.

Ironically, I am hearing more and more that print may be necessary to making the bundle effective because it still drives leads, but it is poisonous to the messaging because no one believes it works. I am hearing more and more about strategies that essentially engineer a faster print-to-online shift because the investment story for a company focused on the local online opportunity is so much more compelling than a traditional media story.

So the big question is, does the industry have a viable plan to become a growing, profitable business in a post-print world? And how will organizations need to change to make economic sense in a world where the product mix is substantially different from what it is today?

These are some of the questions we’ll take a whack at in a workshop we’ll be conducting at the Yellow Pages Association’s conference next month in Las Vegas, and in much greater depth at BIA/Kelsey’s Directional Media Strategies conference in Dallas, Sept. 14-16. The workshop at the YPA event is titled, perhaps hopefully, “Built to Last: The new Yellow Pages Organization.”

My colleague Mike Boland will also have a prominent role at the YPA event, moderating a panel on “Monetizing Mobile Yellow Pages,” which is also the topic of an upcoming joint report from BIA/Kelsey’s Mobile Local Media and Kelsey Report advisory services. Mobile is increasingly seen as key to the future of the business, and arguably, because of its inherent emphasis on calls over clicks as the currency of leads, a place where directories have a more level playing field.

Next week I will be traveling to the Association of Directory Publishers meeting in Houston, where I’ll be very interested in talking to smaller market publishers about the environment they are experiencing. At the last ADP event I attended, it was clear the economy had taken a toll on many publishers, but there wasn’t much talk of a secular decline. I’ll be interested in hearing how the mood and message have changed since the last gathering.

Philadelphia-based 7Mainstreet cofounder Andy Leff got the idea for his company about four years ago while driving to the grocery store. “I was listening to something on the radio about the success MySpace was having with helping rock bands promote themselves, and I thought no company is doing anything like that for small businesses.”

Leff and his father, Ron, have since worked together to build 7Mainstreet into a platform for small businesses to establish a presence online that doesn’t just present listings content but enables them to sell inventory, interact with customers via social tools like blogs, post video, visual images and so on.

It’s kind of like the old storefront concept married with the modern Internet Yellow Pages. Rather than a business listing or info page, the standard offering for a small-business advertising is a commerce-enabled micro site. Andy Leff says one point to emphasize is that advertisers using a microsite can have total control over their environment, where on some sites, their presence can be cluttered by banner ads for competing or even conflicting messages.

The Leffs are currently trying to convince directory publishers, newspapers, catalogs and business-to-business publishers, among others, to white label their solution as a platform for selling online advertising and services to their small-business customers. In particular they’ve focused on the independent publisher space and to date have announced one client, Illinois-based Eagle Publications.

This is a crowded space, but the Leffs believe they have a key point of difference in their emphasis on enabling commerce, rather than just establishing presence.

We asked how 7Mainstreet drives traffic, which is the main challenge facing any independent publisher trying to build an online presence. The answer is a combination of things — all the sites are listed in a common database so all customers benefit from wider exposure than just the publishers that sold them the microsite. Plus 7Mainstreet is active in link building and other efforts to drive traffic.

Andy Leff also says it’s important to level with small businesses about the role they play in the performance of the site.

“You can buy a gym membership, but to get the muscles you need to show up and do bench presses,” Andy says. “If [SMBs] do not use [the microsites], they will not get full benefit. They need to put as much information in there as possible in order to improve their search ranking.”

The folks at Canpages have been very busy lately. In addition to producing competitive print and online directories throughout Canada (where they go head to head with the formidable Yellow Pages Group), the Canadian independent directory publisher operates Immersifind, an IYP/local search platform that is built off Canpages.ca, which in turn was based on the Yellow.ca site that Canpages acquired back in 2006.

Canpages is promoting Immersifind’s ability to get independent publishers up and running quickly on an advanced IYP platform that includes a sophisticated search tool,  Web 2.0 content features such as photos and online video, and communications features like text-messaging, e-mail forwarding and a Facebook widget that promote the sharing of search results.

Rather quietly, Immersifind has amassed an impressive list of customers, largely in the U.S. independent space, where competition among IYP/local search platform providers can be fierce. Companies on Immersifind’s client roster include Ambassador Media Group, Direct West (Canada), Gold Directories, Home Pages, Phone Directories Corp. and Pinnacle Publishing, and most recently Infopaginas, a private-equity-backed start-up directory publisher in Puerto Rico. The company has extended its reach as far as Australia (Oz Pages) and is reportedly in talks with other publishers outside North America.

The Canpages online directory brand was recently named the fastest-growing Web property in Canada by comScore Media. the report noted that Canpages.ca grew from 142,000 visitors in December 2007 to 2.4 million in December 2008.

The company also generated a lot of media attention up in Canada last month when it introduced a street-view product in Vancouver. The product also generates some backlash from privacy advocates, and Canpages beefed up its privacy policy in response. Street view would appear to be a net plus for Canpages despite the privacy complaints, given the attention the product has generated. Plus, it helps build an image as being at the leading edge of local search technology in Canada. Canpages has also launched a voice-enabled iPhone application.

On the print directories front, Canpages is expanding via acquisition, with the recent purchase of five EZ Finder directories from Direct West, which is the incumbent publisher in the province of Saskatchewan.

The independent Atlanta-based Yellow Pages publisher Metro Directories will go out of business this year, and its rival Yellowbook has agreed to honor the contracts of Metro advertisers for books yet to be published this year.

Here is a statement issued to TKG today by Yellowbook:

Yellowbook did not acquire Metro. Metro is still operating, as it winds down its business. Yellowbook and Metro recently signed an agreement to work together to serve the needs of Metro customers. Where we can, we’re honoring the agreements that were made for the Metro Directories by transitioning the programs that were scheduled to go into Metro books into our 2009 Yellowbook products. A number of Metro reps have joined Yellowbook and are working on this transition. We expect our arrangement with Metro to be of great benefit to advertisers and consumers in the greater Atlanta area. 

According to the Yellow Pages Association’s IRIS database, Metro was slated to publish nine directories this year. One, the Greater Atlanta directory, was scheduled to publish in March, and the remainder have publication dates throughout the balance of 2009. It is unclear why Metro is winding down its business, though it would seem some combination of a tough economy and a highly competitive Atlanta market, where Yellowbook and AT&T are also present, contributed.

Metro was known for its aggressive use of call tracking and guaranteed ad plans to differentiate itself with advertisers in Atlanta. The strategy worked for a long time, and Metro was influential beyond its size for its pricing approach.

Metro’s failure follows the shutdown of a number of players in the Hispanic Yellow Pages market over the past year, and we expect some other operators in large metros, markets in particular economic distress, and those that are third or fourth players in acutely competitive markets will fail this year as well. TKG believes most established, well-run independent publishers will continue to grow, though perhaps at more modest levels, given the economy.

       

Longtime U.S. independent publisher White Directory (owned by Hearst Corp.) has launched a complete rebranding, dropping the old “Talking Phone Book” in favor of “LocalEdge.” The company says it plans to phase in the new brand over the next 12 months.

In our view, the rebranding is way overdue. “Talking Phone Book” is a brand that harks back to the days when audiotex was a popular value added feature. Those days are long gone, so the brand was a bit old school to say the least.

Last week, Yell Group issued its nine-month earnings report (the company’s financial year ends March 31) and most of the news was sobering. Organic growth is expected to be in the negative double digits in its fourth quarter, and small-business advertisers are paralyzed by uncertainty over how long the downturn will last and how bad it will get. Still, company leaders say first-quarter canvasses so far suggest a leveling off in the rate of print declines.

Yell Group is one of the world’s largest directory publishers, with market leading positions in the U.K., Spain and Latin America, and a strong U.S. competitive platform with Yellowbook.

For the nine months ended Dec. 31, 2008, Yell Group generated revenues of GBP 1.65 billion, up 7 percent over the same period in 2007. However, the growth was all driven by exchange rates. At a constant exchange rate, revenues were down 2.4 percent, which reflects groupwide online growth (at a constant exchange rate) of 40 percent and an overall print decline of 7 percent. In the U.K., print revenues declined 9.4 percent. In the U.S., print was down 5 percent and in Spain, which is facing a particularly difficult economy, print was off by 13.4 percent.

The company expects things to get worse before they get better, and getting better in this environment simply means a slowing rate of decline.

Yell CFO John Davis said on last week’s earnings conference call that group organic results would be down 12 percent in the fourth quarter, which ends March 31. This means print results will be more dramatically negative, given the company currently generates 15 percent of group revenues from online, which continues to grow at a double-digit pace.

Yell Group CEO John Condron painted a bleak picture of the current mood of small businesses, noting that canvasses are increasingly “back-end loaded” as SMBs delay spending decisions until the last possible moment. However, he did offer a slightly brighter picture of the company’s first quarter. Both Condron and Davis went to lengths to avoid being misinterpreted as predicting recovery. They merely said there is evidence the rate of decline may be slowing a bit. That is what passes for good news in this media environment.

Condron also offered some revealing comments on the U.S. competitive environment. Yellowbook is generally the second player in a given metro market in terms of revenues, with competition up the ladder from incumbent publishers and down the ladder from smaller independent publishers.

For years, Yellowbook led the consolidation of the smaller independents but has all but ceased its acquisition program as market conditions have deteriorated.

“There is no surprise that we are getting more and more rescue calls [from independent publishers] begging use to save them from imminent collapse. The model doesn’t work when faced with an organization as well organized as ours and with an economy as tough as this,” Condron said. “And most are experiencing a double whammy because they do not have a credible Internet offering and they cannot make the investment for the future.” 

Granted, Condron’s characteristically direct comments reflect an interpretation of events that favors Yell’s interests. However, it does appear that the tide has shifted for many independents, which experienced years of strong growth and plentiful exit opportunities. Now, with an economy in tatters and spending patterns shifting to platforms that are more digital, flexible and explicitly performance-based, it stands to reason that many independents will struggle, particularly those with higher exposure to major metro markets.

TKG will write up Yell’s results in greater detail next week in a Client Inquiry Brief.     

We got news this week of two directory publishing operations shutting their doors, a reflection of the challenges of running a competitive directory publishing company in the face of a difficult economy and intense competition from incumbent publishers and the Internet.

HYP Network, a private-equity-backed company that built a substantial operation in Spanish-language directories through acquisition and start-up, has announced it will liquidate, citing the tough economy. Here is a comment from CEO Jerry Folckemer: “Due to the global economic downturn that has affected the entire country, the YP industry is one of the business areas that has been deeply impacted leaving us no choice but to close down with great regret with a wonderful pool of employees.”

HYP’s demise follows soon after the September 2008 liquidation of rival Hispanic Yellow Pages of America. The failure of these two companies leaves the U.S. Spanish-language publishing field largely to Seccion Amarilla USA, a division of the Mexican directory publisher, itself owned by Telmex, and the U.S. incumbent Yellow Pages publishers, all of which have Spanish-language products. Seccion Amarilla entered the U.S. market in 2006 by acquiring the independent publisher Enlace Spanish Yellow Pages.

Further north, media company Canwest has closed down its competitive directory publishing operation, which had entered the Canadian market with a pay-for-performance print directory model. The closing reflects both the performance of the unit and the overall condition of Canwest, which isn’t very good. The media company is scrambling to avoid violating its loan covenants, and it is closing non-performing units and looking to asset sales to improve its balance sheet.

While we think there will be more business failures in the directory space this year, we’d caution against reading these two developments as a sign of wider contraction in Yellow Pages, given the specific nature of each. The Spanish-language publishing niche has never established itself in the same way as general competitive publishers like Yellow Book and Valley Yellow Pages. So it doesn’t surprise us that Spanish-language publishers are early victims of the economic downturn. And the demise of Canwest’s directory unit was certainly precipitated by the condition of the parent. However, had that unit been a top performer, it probably would have been kept or sold, not shut down. In a healthier economy, perhaps it would have been given more time to succeed.

Here is a collection of newsworthy Yellow Pages and directional media items that I’ve noted over the past week or so.

Got this press release in my inbox from Yell Group this morning, showing some creativity in linking the print directory with the mobile Web:

INTERACTIVE SMART CODES TRIALLED ON YELLOW PAGES FRONT COVER

In a UK directory industry first, Yell is to trial innovative smart codes on the front covers of two editions of its Yellow Pages directories, enabling consumers to obtain the latest local cinema and weather information via the mobile internet.

The press release goes on to note that there are roughly 25 million handsets in the U.K. that are capable of accepting the i-nigma reader required to use the smart codes.

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A Texas-based hedge fund has upped its stake in R.H. Donnelley, making it the third-largest shareholder in the directory publisher. The fund, with the vaguely Jetsons-like name Amalgamated Gadgets (so far, no word if Spacely Sprockets has an interest in investing) now owns 5.34 million shares, or a 7.76 percent stake.

RHD shares closed at 0.37 on Nov. 26, about 99 percent off its high. Amalgamated gave no indication of the reason for investment, but has said it has no intention of “changing or influencing the control of the issuer of the securities.”

Both RHD and its peer Idearc have received notice from the NYSE that they face delisting due to noncompliance with requirements for listing on the exchange. Idearc has entered a quiet period in order to sort out its options for improving its financial position going forward.

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AT&T has made public its plans to change the name of AT&T Advertising & Publishing to AT&T Advertising Solutions, and reorganize into more distinct sales and product development silos. TKG broke this news here a while back.

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Cincinnati Bell has announced a new Smart Home Phone service, using technology from Casabi, that allows landline users to access features normally found on mobile phones, like get SMS messages (converting voicemails to text) and browsing online content, including Yellow Pages listings, news, weather and sports.

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The 4A’s has hired the agency Connect FKM to develop a print and online Yellow Pages program for 4A’s members. According to the press release, “The goal of the program is to create agency brand differentiation in the Yellow Pages for agencies wishing to distinguish themselves as 4A’s members. Member agencies will appear in a 4A’s trademark, a call-out box that will allow higher visibility and credibility within the print Yellow Pages.”

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Atlanta-based Metro Directories had signed on with Boomdash to sell a packaged SEM product to local businesses. Metro is widely known for its guaranteed ad program, but was relatively late to the online party, launching its IYP in 2007. Ann Arbor, Michigan-based Boomdash has been targeting independent publishers as resellers for its local search offering.

Sometimes even the most clever advertising for Yellow Pages has a “been there, done that” quality to it. Take a funny situation, add a clever conclusion involving a play on words related to a Yellow Pages heading and, bam, you’ve got a campaign. Some of these feel tired, and others not so much because of exceptional writing and execution. But the premise is always the same.

Yellowbook’s ongoing campaign has elements of this tried-and-true formula (read our earlier post on the campaign). What sets it apart is the way it uses an interface that doesn’t even exist (a kind of “Minority Report” virtual reality thing) to demonstrate the utility of Yellow Pages rather than emphasizing a specific medium, like print or IYP or mobile. I think it’s pretty smart, though some might argue this approach risks confusing consumers. Yellowbook has also engaged viewers by creating a cliffhanger of sorts, giving everyone a chance to vote on the outcome of the mini-drama established in its most recent “Breakup” spot.

In New Zealand, a very original multimedia campaign is under way, called “Yellow Treehouse.” A young woman named Tracey is charged with building a restaurant in a treehouse in a New Zealand rainforest (I totally want to have dinner there one day). As she works her way through the challenge of building the restaurant, she turns to Yellow to find what she needs to get the job done. The whole thing is being blogged and YouTubed and whatevered throughout the entire process.

These campaigns are good examples of using new media and more modern marketing conventions — the New Zealander’s tapping the reality TV vein with the Treehouse restaurant stunt, for example — to promote an age-old product.