Saturday, November 20, 2004

Yellow Pages evolve, beef up online presence |

This is a pretty good article about Yellow Pages and Internet search that appeared in the Atlanta Journal Constitution.

It shows an advertiser who is not sold on YP, but he believes that it's necessary for now. He also doesn't believe that internet advertising is ready for prime time.

Yellow Pages evolve, beef up online presence |

In the early 1960s, AT&T coined a phrase, "Let your fingers do the walking," to promote the advertising vehicle that many local small businesses can't seem to live without.

Take Summit Auto Service in Decatur, which services and repairs about 300 vehicles each month.

"I keep thinking we might get rid of the Yellow Pages — but I'm afraid to," says Marc Eson, who opened the garage, which specializes in foreign makes, 14 years ago with partner Ty Nguyen.

"People do call," Eson says. "We don't do a good enough job of keeping track of the number of calls. But I know there are plenty of calls."

But while fingers are still walking through the Yellow Pages, they also are waltzing across computer keyboards and cellphone keypads, pressuring the industry's revenue and fat profits.

That's prompted BellSouth and other publishers to beef up their fledgling online directories and strike alliances with Web search engines expanding localized pay-per-click listings.

Earlier this month, BellSouth and SBC Communications — which jointly own Cingular Wireless — created a venture to acquire The carriers plan to fold BellSouth's and SBC's into

"We'll co-brand for the next 15 to 18 months, then we'll go to the single nationwide brand of," says Elmer L. Smith, president of BellSouth's advertising and publishing group. Last year it posted revenue of $2.05 billion and net income of $600 million, or 17 percent of BellSouth's bottom line and 10 percent of its revenue.

The unit also recently announced an agreement to resell advertising on Google.

Rather than butting heads, the rivals are linking up, taking advantage of the strengths of each — technology with the search engines and a proven, effective, commission-based sales force with the publishers.

"Our 1,600 professional salespeople calling on customers and building relationships, that's our biggest advantage," Smith says. "It's hard [for online competitors] to replicate that."

Besides Google, BellSouth plans to partner with eight to 10 other search engines for "keyword" traffic, Smith says.

A keyword search, for example, might include typing in the words "Atlanta florist" in a search field. That not only brings up an index of content but also relevant ads on the right side of the screen.

"We have a group that buys keywords such as 'Atlanta florist' from Google," Smith explains. BellSouth then sells those keywords to local advertisers.

"So we market both the print Yellow Pages as well as the online Yellow Pages," Smith says.

Online advertising is growing rapidly. It's estimated that such advertising rose 20.2 percent last year to $7.3 billion, according to Veronis Suhler Stevenson, a merchant bank specializing in the media, communications and information industries. The increase was driven by keyword search advertising, which more than offset declines in banner ads and other forms of graphical image advertising.

To compare, U.S. Yellow Pages advertising rose just 1.3 percent last year to $14.91 billion, according to Simba Information. That was propelled chiefly by the growth of independent publishers not connected to phone companies, such as Atlanta-based Metro Directories.

In three years, the privately held firm has become the largest producer of independent phone directories in Georgia, distributing more than 2 million copies and generating annual revenue of $18 million to $20 million, according to President Gary L. Fascilla.

This year, Simba Information predicts U.S. Yellow Pages advertising will increase 3.9 percent, to $15.49 billion, helped by better economic conditions.

Yet the industry's share of total U.S. advertising spending is shrinking. It's expected to account for 5.7 percent of the market this year, down from 6 percent last year and 6.2 percent in 2002.

Still, few are prepared to predict the demise of the printed Yellow Pages just yet. For one, online searches can be painfully slow for the majority of Americans still on dial-up service.

But as providers cut prices and boost speeds, more consumers are adopting broadband service.

"Sixty to 65 percent of homes are projected to have broadband over the next six to eight years," Smith says.

That could spur small-to-medium-size businesses to build Web sites, which can be linked to online directories. Only 30 percent have Web sites now, according to the Kelsey Group research firm.

It notes that small-to-medium-size businesses last year spent 46 percent of their advertising dollars on the Yellow Pages. Only 3 percent went into keyword advertising.

Marc Eson of Summit Auto isn't yet convinced of the merits of online advertising.

"Maybe it would be more useful in a few more years," he says. "At this time, it probably wouldn't be worth it."

He bases his opinion partly on the advice of his brother, Jud, a computer systems analyst.

So, for now, Eson will continue to advertise in the printed Yellow Pages. Summit has three one-column, one-inch ads in BellSouth's Greater Atlanta Yellow Pages, which has 17 pages devoted to automobile repair and service.

For its three ads, plus three mentions in the white pages, Summit pays $948 monthly.

Eson and office manager Jane Bashinski can usually identify Yellow Pages callers, who ask if they've reached "Honda Auto Comprehensive Maintenance & Repair," or the similar headings Summit uses.

While Yellow Pages users are ready to buy, they don't necessarily turn into the best customers, according to Eson.

"A lot of Yellow Pages customers are just one-time customers," Eson explains. "But word-of-mouth customers are ready to become regular customers. They come to you with confidence because their friend recommended you and they trust their friend. They wouldn't call me if they didn't trust their friend."


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