Under the headline "Here's a $14 Billion Print Business That's Loving the Digital Revolution," Ad Age's Abbey Klaassen writes that the Yellow Pages industry "is finding traditional plus digital equals a whole greater than the sum of its parts." What is significant is that there was focus on the total increase in usage indicating that users recognize the value of Yellow Pages broadly defined.
Last week, my colleague Jane Dennison-Bauer wrote a blog analyzing the results of the Yellow Pages Association's annual usage study. Not surprisingly, the number of references was down but by a miniscule amount from 14.6 billion to 14.5 billion. Meanwhile, Internet references grew by 300 million, an increase of 20 percent. In an electronic environment where most of the world seems to think that old media like print Yellow Pages are going down the tubes, Jane's analysis demonstrates the health of the industry. And don't forget, no other medium has margins like the print Yellow Pages.
The Kelsey Report's Program Director, Charles Laughlin, wrote an excellent Advisory last week titled "Print Foundation Solid in Australia, New Zealand." Indeed, TKG research shows that while 61 percent of consumers in the U.S. turn to print Yellow Pages first when searching for a local business (and 52 percent do in Europe), 73 percent go to the book in New Zealand. Telecom Corp., New Zealand's largest telephone company, was reported to be "considering selling its Yellow Pages directory unit" to focus on high-speed Internet and mobile services. Telecom is right to keep its options open, but it would be wrong to sell it for less than 16 to 18 times earnings.
Five years ago we didn't know which local media would be hardest hit by the Internet. It is clear now that the Yellow Pages business is a long-term survivor. We don't know of a private equity or venture capital firm that has lost money investing in Yellow Pages. Usage numbers and market research suggest that the present value of the highly profitable print Yellow Pages business and the rapidly growing IYP/local search industry is higher than anyone has paid to date.
That's why we are pleased to see Advertising Age, which usually doesn't pay much attention to YP because of its low sex appeal, recognize that this is a helluva business.