Today, Yellowbook is launching a group buying/deal-a-day product called Weforia.com in three of its markets — Boston, Phoenix and Ft. Myers, Florida. This makes Yellowbook the first U.S. Yellow Pages publishers to enter this space, which has become a local phenomenon thanks to the success of Groupon.
Yellowbook’s Mike Wilson told us this morning that the company is confident that the trial will be successful and Yellowbook will roll it out across the country, reaching at least a dozen markets by the end of the year. Wilson tells us adding markets will be relatively easy, since Yellowbook will already have sales and customer support assets in place in markets where it expands.
“All we will need to do is flip a switch,” he says.
In Canada, Yellow Pages Group announced its own deal-a-day program through its Red Flag Deals Web site. YPG is currently gathering subscribers for its deal-a-day program, which will launch first in Toronto and Montreal.
Yellowbook’s Wilson tells us there are a number of benefits to entering the group buying space, in addition to the obvious new source of revenues. One key benefit is the excitement around deal-a-day products gives Yellowbook an entree into sales calls with non-advertisers and former advertisers that wouldn’t be there if the topic of conversation was print Yellow Pages.
“I really like our chances in this space,” Wilson told us. He fully expects the group buying space to become crowded, which could lead to price competition. He believes Yellowbook’s organizational scale, profitability and diverse product set enable it to ride that out more easily than a start-up.
In addition, Wilson says Yellowbook has the ability to offer deals on a more hyperlocal basis in order to avoid the phenomenon of the small business that sells too many deals and cannot fulfill them all, causing a consumer backlash (and nasty Yelp reviews).
Groupon and its leading competitors have been taking measures to make offers more geotargeted and personalized, as my colleague Peter Krasilovsky reports on the Local Media Watch blog.
Wilson says Yellowbook already understands neighborhoods, has asked all members to sign up with their ZIP code, and plans to arm its reps with optimal deal limits based on category and geography.
The basic mechanics of the product are similar to Groupon’s. Once a deal tips, Yellowbook pays the merchant what was collected, less its commission, which Wilson says is in the range of 50 percent, similar to Groupon. This represents the first time Yellowbook has collected money directly from consumers, rather than from the SMB advertiser. “That really changes the conversation with the advertiser,” Wilson says.
Yellowbook did not build the deal-a day-platform internally, but rather has partnered with a third-party software firm. Yellowbook would not reveal the firm, but it is believed to be NimbleCommerce. Yellowbook is currently selling deals and signing up users. It plans to open up offers to consumers around mid-September.
Wilson will be a speaker at the upcoming Directional Media Strategies conference in Dallas, but on the unrelated topic of iPad development. The event will also feature a session devoted to the deal-a-day phenomenon with Perry Evans of Closely and Tim O’Shaughnessy of LivingSocial.