Yellow Pages and Wasting Local Business Advertising Dollars

The Yellow Pages have two core advantages that the entire business model is based on.

1) They have consumer behavior that has been continued for decades.

2) They have a sales model where scale matters and one of the only effective channels for selling advertising to millions of merchants.

Both of these advantages are about to break:

Consumer behavior is moving online with an always connected environment. The Local Internet is beginning to deliver as more than a critical mass of Local consumers are on the Local Internet looking for Local Merchants. From SMS search with www.4info.net to local news from www.Topix.net to rich local data from Yahoo Local and Google local, consumers are finding a better experience online---and now that better experience is accessible. Advantage number 1 is about to end.

There is enough money in local advertising on the Local Internet that the industry is looking for an alternative to the "mafia like" tactics of these massive and slow Yellow Pages companies. (most of which are owned by private equity firms trying to extract as much cash as possible out of hard working honest local businesses with little to know results) The tactics the Yellow Pages use are NOT consistent with selling the high performance, inexpensive, and highly effective advertising that the Local Internet delivers. People who sell FEAR like the Yellow Pages can not sell the Hope that the Local Internet delivers. Of course they will try and any major ad network has to look at them as a channel for now because they are the only game in town. (They also have to do things like ride along and sales audits to make sure the Yellow Pages are not ruining the powerful internet brand as the Yellow Pages push to accomplish what so far have been miniscule results in terms of bringing local businesses online to use the Local Internet) A new channel for selling advertising from the Local Internet will be built in the next 5 years. It will be built because a $60B Local Internet advertising market depends on a low cost of acquisition channel for bringing 10M small merchants online. This new channel is going to destroy the second advantage of the Yellow Pages. Building that new channel is what we are working on at www.merchantcircle.com.

With both of these advantages destroyed, the Yellow Pages industry is going to shrink by 90% and in the end they will not be able to afford their sales force. In 10 years, the major ad engines will be selling ads in print yellow pages (because it will be cheaper for them to do it) and the print Yellow Page business will be absorbed by the companies who control the Local Internet Advertising market.



Also check out:
http://www.leverageblog.com/leverage_the_internet/2006/04/the_death_of_th.html#comments
http://battellemedia.com/archives/002524.php#comments

thanks,
Ben