Last week the Australian directory publisher Sensis released its half-year financial results, ended Dec. 31, 2009, which showed pretty strong resilience but nonetheless a meaningful decline in print revenues. For the half-year period, combined print and online Yellow Pages results were down 4.3 percent. Print Yellow Pages declined 8.7 percent. Including White Pages, the print drop was 7 percent. White Pages (print and online) declined 3 percent.

These are declines that would be the envy of most global incumbent publishers, and in fact they are far better than what other traditional media peers have experienced in Australia. Newspapers, for example, declined 18 percent in the same period. But over the past few years, Sensis has been an industry beacon for sustaining print growth while so many other companies were seeing declines ranging well into double digits. The latest results raise the obvious question of whether Sensis is facing the same fate as its peers, albeit delayed a year.

We spoke yesterday with Sensis CEO Bruce Akhurst, who doesn’t believe the declines reflect a sudden secular shift, and he expects to see “a more stable selling environment” in 2010 than in 2009. Akhurst offered several explanations for the 1H 2009-10 drop, and for why he is confident that print will rebound.

Akhurst noted that the first half of Sensis’ July-June financial year features all its largest markets (including Sydney and Melbourne), which as in other global markets have often substantially weaker print performances than small town and rural directories. Second, Akhurst pointed out that sales canvasses for these books took place in the early part of 2009, when worry over the global financial crisis was at its peak.

Akhurst also cited cause for hope. “Our customer base has remained intact,” he said, adding that most of the decline came from advertisers pulling back, or failing to expand into new books and categories as in the past. In general, customers did not abandon the category. Akhust says Sensis has 600,000 advertisers.

Also, Akhurst said that while the financial crisis created an overhang of fear, the actual economy has not suffered very much, with unemployment around 4 percent. He believes an improving economy plus loyal customers suggests a rebound in White and Yellow print.

“The next canvasses will be very important to us,” Akhurst says.

Still, the company is making changes. First it is moving significantly this year from a product based to a “network based” sales approach, meaning Sensis will focus its sales messaging around lead-generation and ROI metrics, across channels. The company will still sell on a pay for inclusion basis. Akhurst does not see pay for performance or performance guarantees anytime soon.

“It’s a continuation of a journey we’ve been on,” he said, noting for example the company’s dramatic increase in its commitment to call measurement a few years ago. The completion of the journey to the “network” approach depended on launching a new generation Amdocs publishing system, which went live in October.

Following a significant court decision, Yellow and White Pages content is not entitled to copyright protection in Australia. Assuming the case is upheld, any entity can legally copy the content from a Sensis directory, even to build a competitive local search or directory product, according to Australian press reports.

The decision is the outcome of a lawsuit filed by Sensis and its parent company, Telstra, against Local Directories, a small independent Australian publisher that used Sensis data in building its product.

The presiding judge argued, in essence, that the effort involved in building the databases didn’t rise to the level of intellectual property worthy of protection.

Sensis also released a statement following the ruling, which said, “This decision raises fundamental issues about the score of copyright law in relation to complex compilations, with far reaching impact beyond the facts of this particular case. Sensis is presently considering its position in relation to an appeal.”

We spoke also on Tuesday with Sensis CEO Bruce Akhurst, who downplayed the impact of the ruling. He pointed out that while the decision was not welcome, it really only clarifies the legality of an already common practice, copying Sensis’s listings data and classification system. He notes out that the content of the actual ads within the Sensis directories is and will continue to be protected under copyright.

On a recent visit to Stockholm, we sat down with Eniro President and CEO Jesper Karrbrink, who is managing Eniro through a strategic shift described in a presentation late last year as moving “from print dependence to online opportunity.” In a videotaped interview, Karrbrink insisted that Eniro’s product is its content. Print directories, the Internet, mobile phones and so on are merely “distribution formats” in his view. “This is a database company,” he said. Karrbrink compared directories to the music industry, which he said would be out of business had it determined its business was manufacturing records rather than distributing music.

The interview covered a wide range of issues, including:

• Eniro’s relationship with Google. He jokingly describes it as “love-hate.” He believes the key is for Eniro to provide search results on its eniro.se, .no, .dk, etc.,  platform that are more relevant to Nordic consumers than to compete in general search. “From an end user standpoint, they will always be competition. There is room for a couple of search engines out there.”
• Reselling competitors’ traffic. He didn’t rule out Eniro launching an SEM product but suggested it was not high on the company’s priority list. “We have discussed that, and we think we have a pretty good offering ourselves. And there is some risk to [selling others' traffic].”
• Sales channel strategies. He suggested that Eniro is reconsidering its current separate print and online sales approach. Going back to a single channel would be more cost efficient and more consistent with Karrbrink’s one product, multiple distribution channels philosophy. He says the company will do what makes the most sense. “This is not a religion.”

A more detailed write-up with more video excerpts will soon be delivered to clients of The Kelsey Report.

My colleague Neal Polachek and I just got off the phone with the leadership team at the Australian publisher Sensis, who walked us through its half-year results ended Dec. 31. We continue to marvel at how successful Sensis has been at growing revenue across all  its channels, while most publishers around the world struggle to maintain equilibrium as the print business suffers steep declines.

Here are the key figures:

• Total revenues up 8.5 percent, compared with 7.2 percent for the year-ago period. This includes results from the company’s fast growing Chinese operation (a story unto itself for another time).
• Total White Pages and Yellow Pages print and online growth of 5.9 percent.
• White Pages print growth of 11.6 percent.
• White Pages online growth of 87.5 percent.
• Total Yellow Pages (print and online) growth of 3 percent.
• Online Yellow Pages and search growth of 21 percent.
• Print Yellow Pages growth of 0.4 percent.

The weak link here of course is print Yellow Pages, but Sensis points out that the first half of its financial year is weighted to big markets while the second half is weighted to regional markets. Without giving any specific guidance, this seems to suggest a better second half and full year for print YP in Australia.

It’s hard to argue with these results, particularly in light of the bloodletting we are seeing in print in most regions. Sensis has been working for about two years on raising the level of execution across all aspects of the business — sales, marketing, production, customer support, distribution and so on. They have not left a stone unturned and they continue to invest in an effort to sustain these results. For example, the company increased its print distribution by 5 percent during the first half.

We’ve written extensively about the Sensis story in the past. What is clear is that so far at least, the company’s success is not a fluke.

If we see a potential weakness, it might be in the explosive growth of White Pages, which may not be sustainable over the long haul. Sensis has devoted a lot of attention to marketing White Pages, and to articulating its unique value proposition. it is also significant that White Pages is sold through a dedicated sales channel.

You have to tip your hat to Sensis. Time will tell how sustainable it all is, but for now at least, Sensis is the beacon of the global Yellow Pages industry.

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.     

Yelp announced today that it will launch Yelp U.K.

From the release:

Now people in the UK can use Yelp to read and write reviews about great businesses in their neighborhood. Locals are able to share their opinions on everything from curry houses to spas to mechanics. Additionally, small business owners can set up a free business owner’s account to attract new customers and communicate with current ones.

Apparently more than 100,000 people from the United Kingdom visited Yelp.com over the past month to research U.S. travel destinations, and Londoners have been asking for this for three years. The site will compete with Hamburg-based Qype, among a few others. Qype has gained lots of traction over the past year and has come to be known — fairly or unfairly — by many U.S. industry watchers as the “Yelp of Europe.”

I’ll be in London next month for SES and will be able to give Yelp U.K. a test drive. I’ll be sure to take pictures of “People Love us on Yelp” stickers in restaurant windows all over London. I’ll also have the chance to meet with Qype to talk about the market dynamics in Europe for local and social search. Stay tuned for that.

Meanwhile, Yelp is now up to 4.5 million total reviews, and today’s move follows its August launch of Yelp Canada, integration of SMB marketing tools, personnel (sales) expansion to New York, and a $15 million funding round in February.

The Egypt Yellow Pages, operated by Dubai-based Al Wahda Express LLC, has launched an online/mobile mapping service. According to the announcement, users will be able to view local businesses on their mobile phones in either satellite or map view.

We believe mobile search will be a critical usage channel overall in the coming years, but even more so in developing markets, where print remains a small niche, Internet penetration is low, and mobile phones far outnumber landlines. Egypt is a nation of 82 million people, with 31 million mobile phones, 11.2 million landlines and just 8.6 million Internet users. In markets with characteristics like these, we expect to see a lot of energy and investment in mobile directory services.

The U.K. online Yellow Pages directory Yell.com has announced a partnership with IdealHomeShow.co.uk, giving the home improvement and garden trade show Web site access to Yell.com’s local business listings in related headings.

This agreement is a first for Yell.com, according to the company, and it appears to signal a new strategic direction toward syndicated Yell content into relevant partner sites in key vertical categories.

Here is a comment from Matthew Bottomley, director of new media product marketing for Yell.com.

“This is an exciting partnership between two great brands — people look to the Ideal Home Show to inspire them with ideas, and then come to Yell.com to find the local tradespeople who can turn their vision into reality. It is natural to bring these two things together.”

Mark Canon, the former Switchboard, AOL and Autobytel executive who now runs Yell.com, gave a keynote address at TKG’s recent Interactive Local Media conference in Santa Clara, California.

In his address, Canon talked about the importance of being a “good symbiot” and not focusing too much on owning every piece of the value chain. It is more important, Canon suggested, that the SMB content Yell gathers is distributed widely to drive more value for Yell’s customers. In particular, Canon argued that a cooperative relationship with Google was the smart play for a company like Yell, which has assets Google cannot or will not replicate (namely contact with SMBs) but cannot compete with Google for traffic.

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.