Ike Harris, president of BellSouth's Advertising & Publishing Group, kicked off Day 2 of DDC with a keynote that stressed the opportunities afforded by changing industry and cultural dynamics — thought by some to be a threat.
There is a clear trend toward consumers' desire to control their media. This was the theme of our Drilling Down on Local conference in March. Harris showed data that indicated proliferation of Internet video, video on demand, MP3 consumption and DVR penetration (currently at 18 percent, according to Harris).
A main theme underlying Harris' address was that these consumer trends represent an opportunity and not a problem — if directory publishers can handle them correctly. To the same extent, trends in generation Y, Hispanic demographic growth and an aging population represent different opportunities to gain share by reactively adjusting or enhancing the product set.
Generation Y, Harris posited, should be a particularly salient target as it grows in age and in buying power. This generation, according to Kelsey Group data, looks online first to find things locally more than any other medium (not surprisingly). Advertisers are also demanding the more discernable ROI afforded by paid search, IYPs and other interactive advertising, which serves to exacerbate this trend.
Print references are dropping 5 percent per year, according to Harris, while print revenues are rising 1 percent per year. This means that revenue per reference is going up, which is a strong indicator of perceived value on the part of the advertiser. He also contended there is a better opportunity for print than a 1 percent annual increase in revenues, and that BellSouth will continue to innovate the print product to raise the value to the advertiser and ultimate reference and revenue growth. This includes following cultural trends and enhancing the product accordingly. Larger fonts for books that target senior populations was one example he gave, as was distributing books on CD ROM and in server-based formats.
"This could free us to do some things that we can't do today," he said, citing examples of being able to update the book with the click of a mouse and integrate it with Voice over IP technologies for click-to-call functionality. Syncing up with the IPTV efforts of AT&T also represents a significant opportunity, as mentioned yesterday by Dennis Payne.
Mobile directory solutions also await, given usage trends among younger generations that will increasingly envelop the adult buying-empowered consumer population. The affiliation with wireless subscription leader Cingular puts BellSouth (soon to be AT&T) in a strong position to address the mobile search and directory opportunity.
IYPs: Where are they going, where have they been?
Kelsey Group Associate Steve Marshall presented data from an upcoming Special Report about qualitative and quantitative measures around IYP products. Though IYP ratings have gone up overall since the same study was done two years ago, the performance gap between IYPs and local search has increased. Search portals, in other words, have increased in quality and usage more than IYPs have during the same period.
Among the overall qualitative deficiencies of IYPs, the most prevalent included confusing site structure; thin content or poor integration of content from different sources; insufficient user-generated content; and an inferior level of feature sophistication when compared with standards set by search portals and other online players.
Predicted trends in the IYP space include blurring of distinctions across categories including classifieds and business listings. There will also be more industry consolidation and an increase in the amount of user-generated content infused with IYP offerings.
The panel that accompanied Marshall's presentation agreed that user-generated content is important, as is building all forms of content. Deeper content equals greater relevance when it comes to search engine optimization and search engine marketing, contended Chris Scotton, president and CEO of Innovectra.
Building a comprehensive user-generated content site is a challenge, although Yelp, Insider Pages and Judy's Book were all given credit for effectively developing social search models. Gaining this scale of user reviews represents a sizable challenge for IYPs, however, given the depth of headings, and should represent an important challenge for IYPs going forward.
Sieg Fischer: An industry speaking in tongues
Sieg Fischer, president and CEO of Valley Yellow Pages, spoke about the strengths of this industry and of the print product in doing things that no other advertising medium can do.
"This directional medium exclusively brings buyers and sellers together. That's all we do. Period."
Clarifying that goal and correspondingly optimizing the ways to go about reaching it is important. More importantly, according to Fischer, we have failed to do a good job at communicating that to the consumer, since the breakup of the bells. This event, in effect, caused the leaders in the industry (now manifest as RBOCs) to begin to "speak in tongues." Each RBOC had different marketing messages and there was no longer a unified message to the world about the value of Yellow Pages advertising. This led to competition and infighting amongst RBOC directory businesses that has continued to this day, and continues to harm all players. These negative ad campaigns (mostly television ads) are partly to blame for the industry’s declines in usage and overall advertising market share, Fischer contended.
Fischer, unlike many other keynoters, expressed a bearish attitude toward online products. The technology isn't yet at the point where it deserves an investment level, he believes. Other independent publishers, he pointed out, have invested in online products to certain levels but currently experience the same top-line figures as Valley Yellow, which hasn't made these expenditures. Online will be important, he believes, but not quite yet for Valley Yellow Pages. He further contended that IYP development should involve a strong sales channel, as feet on the street are Yellow Pages' greatest asset.
"For anyone trying to employ a self-serve model, good luck," he said. "I will participate in [IYP] in the foreseeable future, but the shift isn't there yet. I follow money where it goes, and I don't see the need to waste it on unnecessary or foolish experimentation." Many companies in the room would clearly disagree that the appropriate time for investment and experimentation hasn’t arrived.
Directional advertising is also unique in that it is the final point before a conversion happens. Most other media by comparison come into play a few steps earlier to stimulate interest. The goal of the Yellow Pages industry in signing national advertisers (that are more inclined toward awareness advertising) should therefore be to support it with directional advertising. In other words, don't compete with mass media such as television, but instead communicate to auto manufacturers the value in combining auto ads with dealer listings (for instance). This could, however, experience some resistance from national advertisers that believe listings would compromise the quality and production value of their advertising. This is especially true in the auto vertical.
Paolo Cellini: Bringing mapping to the next level
Lastly, Paolo Cellini, EVP of Internet for Italian publisher Seat Pagine Gialle, gave a demo-rich presentation of some of the innovations his company is working on around digital directories and mapping. Though Amazon's A9 and Microsoft's Windows Live Local have each tried to integrate street-level mapping with their local search products, these have largely stayed in beta form with spotty functionality. Cellini's demonstration (though not yet available in commercial form itself), exhibited a level of quality and interactivity not seen before in any other commercial online mapping products.
It involved high(er)-resolution aerial mapping, highly functional street-level navigation (first-person driving perspective) and flight simulator technology to pan back and "fly over" an entire country. These are all integrated with business listings, search functionality, and have room for other developments such as classifieds. If this product will be as good as Cellini's demonstration, it should be a compelling online tool and something to watch closely as a leading indicator of the mapping technologies that could be developed (or improved, in most cases) by leaders in the U.S., such as Google and Microsoft. Although, it doesn't seem like the quality advantage of Pagine Gialle's mapping tool is a matter of a higher level of technological ability (it's highly unlikely that a directory publisher could outwit Google and Yahoo in tech department), but rather a higher willingness to invest in it.
There were several other panels and much more to talk about, which we will continue to do here and in various written reports over the coming weeks. And before we know it ILM:06 will be here. As always, stay tuned for more.