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For 2013, Canada’s Yellow Media reported solid digital revenue growth and deeper penetration of its signature multimedia bundle — Yellow Pages 360°. The company is on the verge of majority digital status, with 45 percent of revenue last year from online and mobile products and services. Digital revenue grew by 10.6 percent in 2013, to C$406 million, though when factoring out discontinued operations, the growth rate was 12.5 percent.

Today’s was the first earnings call for new CEO Julian Billot, who took over in January, replacing longtime CEO Marc Tellier.

The first phase of Yellow Media’s digital transformation involved several key elements. These include improving the company’s brand image (leading with mobile in its ad campaign for example), attracting more consumer traffic, expanding the product suite for SMBs to include digital services, improving sales effectiveness, investing in talent, and focusing on advertiser growth. While advertiser growth was less than it needed to be last year, the trend improved in Q4.

“In 2014, we will develop a more compelling and differentiated user experience by improving on the quality, completeness and relevance of the content we deliver to our properties and partners and by developing compelling sites and applications for local discovery,” Billot said on the call.

The second phase of transformation “will focus on long-term revenue growth,” Billot said.

Overall revenues fell by 12.3 percent in 2013, though some of the declines comes from discontinued Canpages print books. Factor these out and the decline was 10.7 percent. On its own print declined by 23.6 percent, a significant drop, but one Yellow Media leaders fully expected.

“It remains too early to forecast when print revenues will stabilize,” said CFO Ginette Maillé.

For the full year, Yellow Media generated total revenue of C$972 million, with EBITDA of C$416 million. The company’s EBITDA margin feel sharply in 2013, from 51.4 percent to 42.8 percent. To explain the compressing margins, the company cited revenue pressure, investments in future growth and a shift from higher to lower margin products.

Customer acquisition remains a key challenge. The company ended 2013 with 276,000 customers, down from 309,000 at the end of 2012. Most of the churn is among smaller advertisers, with larger accounts tending to reduce spend rather than churn off completely. Last year the company focused on retaining larger accounts with its Digital PowerPlay and SEM TouchPoint services, which offer a more highly customized approach to bigger spenders.

Yellow Media acquired 13,600 new customers in 2013. While this pace is insufficient to offset customer loss, there was an improvement in the rate of new customer acquisition in Q4.

Billot said the improvement in the penetration rate of the Yellow Pages 360° was key, since it ties directly to retention. In 2013, penetration grew from 16.5 percent of advertisers at the end of 2012 to 27.1 percent at the end of 2013.

“The more products our customers have, the lower the churn,” Billot said. “That is why Yellow Pages 360° penetration is so important.”

 

 

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