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Mar 14 2006
Time and Money
I didn�t listen in on the analyst call that McClatchy CEO Gary B. Pruitt held yesterday, but there must have been some chuckles when, according to The N.Y. Times, �Mr. Pruitt, tried to persuade his listeners that newspapers remained vital parts of peoples� lives. He said that while 90.7 million people watched the Super Bowl, on that Sunday 124 million read newspapers.� Yes, well sure, and 175 million people had breakfast.

The fact is that newspapers are important to tens of millions of people, as is watching television, listening to the radio or using telephone directories. eMarketer reports today that we watched an hour more of television per week in 2005 than in 2004 and 14 more hours a week than in 1975. But we all know network ratings are declining because people have a lot more choices today than they used to.

Bridge Ratings completed a survey that found commuters who drive an hour or more a day and use their phones in the car listen to the radio 26 minutes a day now compared with 32 minutes a day in 2003. That 28 percent decline was matched by a 29 percent increase in in-car cellphone usage.

The message is not complicated, but it is subtle. The vast majority of us have a limited amount of money and we all have a finite amount of time. Consumers will balance their time and their money and use them both in ways that best provide for their information and entertainment needs.

At the Drilling Down on Local conference to be held March 26-28, this is one of the topics we will explore:

Mass Media to MyMedia: Profiling the New �On-Demand� Consumer
Each day it becomes more apparent that the Internet, on-demand video, wireless phones and iPods are creating a new global and local media universe � one that is highly personalized, customizable and not tied to time, place or even a single medium. The Kelsey Group will present new consumer research that outlines this emerging consumer paradigm and discuss the most significant implications for advertisers (national and local) as they try to reach these new, more empowered consumers.
Greg Sterling, Program Director, Interactive Local Media, The Kelsey Group

Blog: Local Media Blog
posted by  John Kelsey at  12:54 | permalink | comments [0] | trackbacks [0]

Feb 22 2006
We're No. 2?
If you just read the headline from each of the companies reporting on the new national syndication research results, you could be excused if you thought that a lot of companies are the most used Yellow Pages directories. Some companies are taking the results from a few cities and seem to be implying that they are the national leaders. We are concerned that this is a slippery slope.

Who is No. 1 among cola beverages? If you ask that question in Texas, the answer would be Dr. Pepper. If you exclude fountain sales, Pepsi sells the most nationwide. But overall, Coke is the leader. Frankly, I don't really care. I drink the cola beverage that I prefer.

In the automotive category, General Motors says Chevrolet was the top-selling brand in the U.S. last year, but Ford disagrees. Ford bases its leadership claim on third-party data compiled by auto research firm R.L. Polk. Unlike Coke and Pepsi, which combined have over 90 percent of the cola market share, Ford and Chevrolet face a significant challenger in Toyota, whose brand is closing the gap, particularly when bulk sales of vehicles to fleets aren't counted.

A medium is a different animal than a beverage or a car, but the ability to show your publication as the leader in a particular market, especially on a cost-per-use basis, can be a valuable tool. If syndicated research is here to stay, and The Kelsey Group hopes it will be because it supports our ROI story, we need to have standards that everyone who participates agrees to.

If the Yellow Pages industry wants the credibility that syndicated research gives it, headlines and claims must be reasonable. I am not suggesting that any company has not told the truth in its press releases, but it is most important that the perception by advertisers reflect reality in the particular markets in which they are trying to reach their users. Otherwise, syndicated research won't be taken seriously.
Blog: Global Yellow Pages Blog
posted by  John Kelsey at  16:32 | permalink | comments [5] | trackbacks [0]

Feb 3 2006
Mini Directories March On
One of the more controversial issues in the Yellow Pages business is the subject of companion directories. At last year�s Directory Driven Commerce event, Joe Walsh spoke adamantly against the increasing number of mini directories and their impact on the industry. He said the industry faces a companion directory backlash.

While some of these companions are indeed poor replicas of the real thing, particularly when a normal-size phonebook is simply shrunk by about 25 percent, others can be much more pleasing to the end user. The primary way to accomplish this is by avoiding type that is unreadable.

According to eLink, R.H. Donnelley will begin to introduce companion directories in Trumbull, Ohio; Sussex, New Jersey; and Citrus, Florida. My view is that while these are not RHD's first mini directories, they are the first ones it is building specifically as companions. More are likely to follow, but I was unable to reach anyone who would comment.
Blog: Global Yellow Pages Blog
posted by  John Kelsey at  16:38 | permalink | comments [0] | trackbacks [0]

Jan 18 2006
Volt's DataNational Proves the Exception
Back in the not-so-old days, the rule of thumb for a Regional Bell Operating Company was that Yellow Pages accounted for approximately 10 percent of revenues and 20 percent of net profit for the corporation. This meant an RBOC could count on a steady stream of cash to fund its other businesses. Because publishers faced relatively little competition from other Yellow Pages companies, they were able to price the product in a way that would maximize their returns.

On the other hand, most independent publishers were (and still are) focused primarily, if not exclusively, on the directory business. They are able to compete by charging a rate that is typically half what the incumbent publisher charges. They also compete by scoping differently and by offering smaller directories that fit neatly on top of the incumbent�s book in the kitchen drawer. Not surprisingly, there is often trench warfare between the competing sales forces that leads to animosity.

Volt Information Sciences is an exception. Volt�s primary business is staffing services, which accounted for 82 percent of the company�s fiscal 2005 net revenues. The telephone directory segment�s sales, including their DataNational �Community PhoneBook� brand, accounted for less than 4 percent of the company�s sales but almost 19 percent of its total operating profit. Clearly, this is a critical business for Volt.

The telephone directory segment grew last year by $10 million to $82.3 million through a combination of expansion and sales growth in its current markets. In fact, �DataNational was one of the first true competitors to incumbent BellSouth Advertising & Publishing in its core area markets,� according to our 2005 Global Yellow Pages� report. DataNational competes against BellSouth in many of the same ways other independents rival incumbents, but the rancor does not seem to exist. DataNational CEO Jerry DiPippo is on the YPA board. Vice President of Sales Greg Shearer said that competition was good for the marketplace and that BAPCO was a tough but fair competitor.

DataNational also offers an online Yellow Pages site, It doesn�t yet offer national search capabilities but rather listings for specific DataNational directories. We expect to see enhanced and expanded IYP and local search over the next year. In the meantime, Volt is an example of a company that doesn�t always think that it�s �we vs. they.�

Blog: Global Yellow Pages Blog
posted by  John Kelsey at  16:03 | permalink | comments [0] | trackbacks [0]

Jan 3 2006
Google at $600?
Safa Rashtchy has started off this year with a high profile. The first analyst that I heard on the radio on the way to work was Piper Jaffray�s Mr. Rashtchy being interviewed by CNBC about his prediction that Google will hit $600 in 2006. This follows an increase of 115 percent last year. �Doesn�t it make you nervous that you have the highest target among analysts that track this stock?� the interviewer asked. Mr. Rashtchy responded that this target represents a multiple of Piper�s estimated EPS for Google of $11.91, not at all out of line for stocks with this kind of growth.

The primary reason Mr. Rashtchy is so enthusiastic about the stock is that he expects Google will continue to increase its share of the rapidly growing Internet search market. In particular he expects Google Base will contribute �meaningful� revenue by the end of the year.

Earlier this week a New York Times article about the growth of online purchasing over the holidays indicated that 33 percent of households made an online purchase, up 10 percent over last year. The growth is coming from traditional brick-and-mortar stores that are getting more sophisticated in reaching their customer base. The traditional online leaders eBay and Amazon got their share, but it took advertising and search dollars to get people to shop online at traditional stores. Again, Piper Jaffray�s Safa Rashtchy was quoted, �It is getting harder to make money online.� He clearly believes a major beneficiary will be Google�s ad network.
Blog: Local Media Blog
posted by  John Kelsey at  09:41 | permalink | comments [0] | trackbacks [0]

Dec 26 2005
...Now Give It a Review

Out of curiousity, I was wondering just how long has The Kelsey Group been writing about this topic, and a search of our archives shows the first artcle turned up in a Fax Bulletin (honk if you remember those) on September 19, 1994 entitled, Attention Internet Shoppers: "Home Shopping Network (HSN), the company that originated and popularized video shopping, has trained its sights on the Internet as the next mass market retailing medium. Last week it completed its acquisition of the Internet Shopping Network (ISN). The purchase is one of many recent examples of the accelerating trend toward online commerce on the Internet." We predicted ISN would offer product reviews among other services. Oops. ISN is still HSN's online outlet, but don't look for a review, for good reason, I suspect. They want to sell products. The Times says Consumer Reports provides their testers' results...good, bad or ugly, but sticks with only nice things. Not surprisingly, they have different business models. The point is the Internet is still evolving the user review area and unless you are hopping mad (like at a hotel, restaurant or airline), or an expert (like about a movie), reviewing products or services is not first on anybody's to do list yet. It's too bad, because reviews can be both intereting and beneficial.
Blog: Local Media Blog
posted by  John Kelsey at  22:52 | permalink | comments [3] | trackbacks [0]

Dec 23 2005
Phone Directories Company Sells Canadian Business

PDC has grown rapidly the past few years. John Woodall, President of PDC, told me that overall the business was up 43% this year and that there were over a dozen companies interested in buying the Canadian business before they whittled the bidders down to a manageable number. So what will they do with the money from the sale? Don't expect any of the current PDC management to go on long term vacations. We expect that this group will use the funds to take advantage of the opportunities the Yellow Pages world offers now. There is growth in them thar hills if you know where to prospect.
Blog: Local Media Blog
posted by  John Kelsey at  15:56 | permalink | comments [0] | trackbacks [0]

Dec 22 2005
The Yellow Pages is the Yellow Pages

I have trouble understanding how a top business publication like BusinessWeek can say, ��Believe it or not, among the hottest media bets is the $15 billion a year U.S. Yellow Pages market.�� Why has it taken so long to recognize that a bet on Yellow Pages is a rare example of having your cake and eating it too? Some Yellow Pages publishers are generating EBITDA in excess of 50 percent. How many legal businesses can claim those margins? At the same time, the ubiquitous YP sales force is providing small businesses the one thing they sorely lack to take advantage of the growth of online business: education. Our research shows that SMEs are slower to adopt e-commerce and other Internet services than the consumer. That will change when this holiday season is over and businesses evaluate how they did and what they could do better. The Yellow Pages will be there just as they always have been. Publishers will offer print and online solutions, including pay-per-click and pay-per-phone-call. Google offers a great product, as do Yahoo! and other companies in the local search business. But Yellow Pages is the modern Yellow Pages.
Blog: Local Media Blog
posted by  John Kelsey at  10:52 | permalink | comments [1] | trackbacks [0]

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