The Press, November 2007

Yellow or not? That’s the question many businesses ask themselves once a year. Sometimes it feels almost like extortion – I don’t know if this will work for my business but can I afford not to advertise in the venerable book. As internet-based directories grow should you be shelling out to appear in the Yellow Pages book?

The Yellow Pages Group is big business in New Zealand, as it is around the world. Formerly a division of Telecom, the Yellow Group was sold to CCMP Capital Asia and Teachers Private Capital for $2.24 billion in March.

The company prints and distributes more than six million directories a year (the white and yellow pages), as well as running the 018 directory service and offering an online version of the Yellow Pages. They have also expanded in recent times into niche directories, such as New Zealand Tourism Online and the New Zealand Retirement Guide.

Originally begun in the USA around a century ago, the Yellow Pages concept has spread to hundreds of countries and spurned all kinds of niche publications, from the Christian Yellow Pages to the Gay Yellow Pages. It is a hugely powerful brand, recognised by a very high percentage of people as the way to find local products and services.

But there are some well recognised limitations to advertising in the famous yellow book.

Placing an advertisement in the Yellow Pages is a significant cost. A sizeable display placement can cost thousands of dollars. For a small business it can take a significant number of sales to fund this cost.

It is also inflexible. Once placed your advertisement stays as it is for 12 months. Many other promotional activities can be modified and enhanced over time to find what works best. With a Yellow Pages advertisement, you hope you have hit the right note straight away.

There is also evidence that Yellow Pages shoppers can be more price sensitive than the average. They are looking for the bottom dollar deal rather than a quality product or service. That makes for fickle customers.

Online directories have also grown rapidly. Google has transitioned from noun to verb, i.e. to ‘google’ means searching on the web. Their Google Maps services enables people to use the Internet to search and locate services in their local area.

The Yellow Pages were slow to respond to the online challenge in New Zealand. Their web presence was weak and internally focussed. For example, searches returned results in random rather than alphabetical order, presumably to prevent people from easily downloading lists of advertisers. It was convenient for the Yellow Pages but not for the consumer.

Their web presence is now much better, comparing favourably to location based online directories like Google Maps or Moa.

Experts suggest businesses need to appear on both search sites like Google and directories like the Yellow Pages online. According to e-commerce news website Search Engine Strategies, consumers typically use a search engine to find a product, then a yellow pages online directory to find the store. They estimate that yellow pages directories receive 90 percent of their traffic from search engines.

The good old Yellow Pages book also offers some significant advantages.

It is pervasive. A book in virtually every home in New Zealand is hard to match. And it is a very well known brand, which means people know about it and almost every business will at least have a free listing. While online directories often have incomplete listings, consumers understand that the Yellow Pages will have a very high percentage of businesses in any given category.

As the Yellow Group themselves say, the book delivers buyers rather than readers or browsers like many other advertising mediums. People only pick up a Yellow Pages book and view it when they want a product or service.

The Yellow Pages book is still relevant, for now. Research company The Kelsey Group's Global Directories Forecast 2007 expects the print Yellow Pages segment of the global directories marketplace to grow at about 0.9% annually from 2006 to 2011.

The online segment, which comprises the Internet Yellow Pages and local search advertising, is expected to grow at about 22% annually for the same period.

So should you go Yellow? A free listing is a no-brainer for most businesses, but should you spend serious money on an advertisement in the book?

Here are a few questions to think about:

1. Customer: who are they, how old are they, where are they, what tools do they typically use to decide on a purchase? Are they online often or not?

2. Sales cycle: how quickly do customers make a buying decision? The longer and more complicated the less useful a Yellow Pages advertisement is likely to be?

3. Location: how important is the location of your business to the customer’s decision e.g. they want to find their local garden centre. The more critical locality the more likely an advertisement will work.

4. Measurement: how can you measure any investment you make in the book – in terms of leads, referrals and sales?

Next time the Yellow Pages advertisement comes up for review, think carefully. The book remains relevant, but for how long. Unless you have a clear view of who your customers are and how they buy, you could do as well investing with the TAB.

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