Idearc Singles Out National Channel for Poor Showing

I listened to the replay of last week’s Idearc Media third-quarter earnings call, and a few items stood out. First, Idearc made the assertion that through nine months of 2007, most of its challenges in the print business were the result of poor performance of the national sales channel (CMRs). National was also blamed for weaker than normal third-quarter online performance (+15 percent compared with more than 25 percent year-to-data growth).

Further, the publisher said it has been aggressively working to bring national advertisers directly into the Verizon Yellow Pages via a pay-for-performance model.

This is a clear sign that Idearc is not pleased with the growth it has been getting out of national, and plans to disintermediate CMRs, at least on a limited basis, in order to restore growth. It also shows it will move more aggressively in offering pay-per-performance in print as well as online.

Through nine months, Idearc reported total revenues of US$2.4 billion, a 0.5 percent decline over the same period in 2006. Print was down 2.3 percent and online was up 25.7 percent for the first nine months. Online accounted for about 9 percent of total revenues through nine months. Idearc posted net (total less allowances) year-to-date print revenues of US$2.02 billion, a decline of about 3.2 percent.

Another notable comment (among many) was Idearc President and CEO Kathy Harless’ assertion that print directories in major metro markets are not struggling more than the business as a whole, which contrasts with many other major publishers worldwide that say large metro books are struggling compared with the business overall.

The Kelsey Group will offer more detail on the call in an upcoming Client Inquiry Brief.

Update 11/6/07:

We put out several calls to CMRs asking for a response to Idearc’s assertions about the performance of CMRs.

Stuart McKelvey, president and CEO of TMP Directional Marketing, said his agency, the largest, maintains a good working relationship with Idearc, but he took issue with the degree to which Idearc blamed CMRs for its growth challenges.

“When the numbers are bad, CEOs talk about external factors. When the numbers are good, CEOs talk about internal factors.”

Herb Gordon, president of the Association of Directory Marketing, said the following:

“It’s a stretch to try to lay the softness on the national channel, which accounts for only 15 percent of total Yellow Pages revenue. The media landscape is topsy-turvy amid a shift in consumers’ media habits, the dip in print references, a proliferation of other media vehicles, competition from other publishers and movement of dollars to search engine marketing. It makes sense [that] some of these factors are coming into play.”

This Post Has 3 Comments

  1. Elizabeth Gage

    Hello Charles,
    I find this posting a little one sided. While I don’t do a lot with Idearc it would be nice to hear the opinion on Idearc’s model from CMRs on the US side who do a lot of national business with Idearc. In Canada PCM is a big proponent of the pay-per-call pricing model as it makes sense since it puts the customer first.

    Sincerely,

    Elizabeth

  2. Charles

    Thanks for the comment. My purpose was to put something out that reports what Idearc said about the national channel, since I don’t think it had been reported anywhere else. Sort of the nature of this beast. Last night I made a round of calls to CMRs seeking comment and I’ll have an updated post at an appropriate time.

  3. Troy

    Idearc will need to start cutting cost soon which will mean downsizing. They are not growing the
    top line which means they will need to start cutting the fat.

Leave a Reply

Your email address will not be published. Required fields are marked *

eighteen − eight =