An overview of the directory and IYP business marketplace:
As it pertains to local search and advertiser content
by Jack Brandt
In an overview of the directory business, IYP, local search, and search, electronic directories seem to be an integrated part of the directory business. The stress is to keep both the print and on-line counterparts alive and profitable while satisfying the needs of the users and the advertisers both.
The concern specifically is content driven search. It drives Web Site sales, Pay per click sales, flat fee sales and more. While most users primarily use the Internet for search, both the directory and search provider are in a grey area of being recognized as both a competitor and a potential partner. For instance, the inference has been made about search being president or governor, and the directory service being the mayor. Where the president and governor have a broad view of their world the mayor knows much more about is small geographic, and they can work together for the interest of the people, in this case the user.
Studies by several YP and IYP groups show that the use of print directories is dipping only slightly while a local online search is growing at more rapid pace. There currently is no clear leader in the print vs. online bout; however there are opportunities for growth in both sides of the converging markets.
Currently search is very successful in converting advertising through paid pay for performance opportunities for advertisers. Companies of all sizes can play in this sandbox with little barrier to entry less their advertising budget. Thus helping to make search the choice by users as the favored information resource overall, despite of the information hunted by the user. Ease of use, extensiveness of content return, and fast infrastructures are the mainstay for search helping them to be successful in their pay for performance models as well.
There is much controversy and argument over how users search and what tools they will use to search first. While each user seeks information differently the average user is thought to use search first to acquire information regarding an idea or for wide range content on a particular subject and narrows the search from there. The next stage is that of decision and comparison to plan their action whether purchase or other. Again, it is argued that first search can take place either on or off line while narrowing. Eventually the user takes a preferred path to their decision or outcome.
On to the IYPs or “Internet Yellow Pages.” IYPs have been historically known for offering local content, while your search provider offers non-geographic information. As reported at the EADP conference in Europe several weeks ago; 41% of users preferred IYPs and only 29% search tools such as Google when looking up local business information in their immediate living areas. Further graphed were statistics which stated that those numbers fell 32 – 43 percent when searching for businesses outside their immediate areas, while the IYP numbers fell to 8% for the same type of search. 71% of those search users then reverted to a more traditional search engine for that “non-geographic” search.
There are clear advantages for YP/IYP providers over search engines. IYP are capable of providing local business information for those companies which are not online, and can isolate information for a specific local area. There are three instruments which local IYP searches excel: Their own usage routines, benefit expectations by the user, and fast lookup, less the idea of a broad search.
Internal search integration for IYP, and fast IYP search practice raise the question of additional revenue streams and how to accomplish pay for advertising models. Many IYPs are plagued with such questions as fixed fee vs. pay per click when the average IYP advertiser does not understand most advertising models. There is a need to balance advertising revenue for top of search advertising and pay per relevance or “who has paid the most,” which is the model most SMB advertisers understand.
So with paid advertising models which are the most popular method of the search advertising models, and IYP models looking to adopt a profitable similar advertising model which fits the needs, requirements, and client expectations; they are struggling to make it easy for buyers (advertisers) to understand. IYPs have learned that it is their sole responsibility to make it easy for their clients to understand so that users can easily find what they are looking for in the fastest possible time using the simplest interface plausible. IYPs can further break down this advertising in to their respective categorical channels which are their standard print directories, Internet, and mobile directories, which are becoming increasingly popular. To that end they can offer additional expanded advertising opportunities to a demographic on the go where there was no previous market present.
One condition to all of this is a quality interface returning pointed content. When searching locally there is very specific data and not much for refining, less any advertising content. However, one might argue that refined advertising content can give the IYP or YP a competitive edge on the online marketplace allowing them more dynamic data and allow for optional content publishing in closely competitive geographic areas. This then puts the advertiser in more “local” areas if they wish to appear there, and challenges the user to make a choice during their local search. It does however stretch the model of local search to the edge of the envelope bordering on traditional paid inclusion search.
Several IYPs have partnered or are in the process of partnering with traditional search engines to compliment with search. They are realizing their largest competitors can be allies, in using them as a sales pitch to refine and sell the local advertising content more effectively. The Search providers on the other hand are getting into local areas and searches they may not otherwise experience as they would be subject to a geographic search normally.
IYPs are growing. Some are growing more rapidly than others. One thing is ringing true among them, and that is that traffic is representative of revenue. Search engines invented the traffic equals revenue model, and IYPs are moving towards it as they mature. It will become increasingly popular as SMBs become smarter about their own Internet growth and inclusion in the future. SMBs should be made aware and recognize that both search and local search models are converging and if both mediums are not embraced they are not truly marketing the way they need to for success.
Statistics state that 85 – 95 percent of all SMBs in the U.S. do not yet have web sites. These figures are documented by several reputable sources. IYPs have been servicing and are continuing to service the Web Site needs of the SMBs. Some are doing better jobs than others. While some are experiencing 2% churn a month others continue to struggle and recognize upwards of 30% churn. Some also say that the brochure – ware business is part of a key to empowering search paid inclusion and stickiness for additional advertising revenue for IYPs. The key possibly is a good mix of all media located in print and Internet with the right expectations and the right IYP partner behind the business.
So how do the players search and IYP plan on addressing the market to maximize their profits? Each one currently has their own burgeoning business model or farms their YP sales out to an organization which manages the local territory sales for them. They also are continuing to question the IYP model and refine it as the user and advertiser savvy changes daily. Historically speaking in this maturing market place, local search is the primary realm of the IYP or YP. YPs’ are the sales teams on the streets “meeting and greeting” their new and existing customers. Search still struggles to hold captive this local market, and they compete fiercely, even if it is not apparent to the IYP or search company comparatively. So there are no clear winners in the market and there are no clear losers yet either. Both mediums must share the SMB advertiser as both mediums are relevant to co-existing in the SMB space. IYP and search partnerships can therefore be said to be a necessity to deliver optimal performance and results for both the user and the advertiser respectively.
Search is the second most popular activity on the Internet next to e-mail. Surveys say that e-mail accounts for 85 – 95 percent of user activity, while 81% of user activity pertains to search engines and 62% research products and services say sources.
According to the Yellow Pages Association the most popular searches are: Restaurants, Hotels, Physicians, Auto Dealers, Florists, Auto Repair, Auto Parts, Schools, Attorneys, and Insurance. Many of these searches are very popular in other advertising medium such as TV, radio, etc. All are or can be directly associated with search and IYP. Most can be associated with having a Web Site presence to provide content about how they can satisfy the needs of the user. Thus it may seem that Web Site sales should be the first step in gaining the additional trust of the IYP to the advertiser, especially when presenting them with metrics they may not understand or care about initially. Second, the IYP or search provider has to provide a comfortable, easy to use interface for usability by the user providing relevant results with clean output to increase future return and usage by the user. This allows for a more quantifiable argument with discussing pay per or flat fee advertising models with the YP/IYP advertiser and Web Site owner.
There is a lot of money on the table to be made in the IYP marketplace for the IYP. There are several categories which can be addressed which are relevant from a business perspective regarding the previous statement as well. First is both IYP branding and advertiser branding. Focusing more on advertiser branding, it becomes the YP/IYP’s responsibility to help the SMB to extend their brand to their advertisers’ clients and future clients. Quantifiable results and realistic expectations must be maintained or the IYP will experience unwanted churn and struggle to recognize a lower than normal attrition rate. They will find them self questioning and reacting to a new business model of client retention while struggling to build new business and advertising revenue results. This will obviously lower the ROI of the IYP and the expected or “hoped for” ROI to the advertiser.
Branding for the IYP gives them diversity from the search engine mode, as well the SMB may recognize the YP/IYP brand more readily. It is much easier for the IYP to sell local search concepts to the advertiser as a trusted advisor as they are already there in that geographic periodically. It is also important that they differentiate themselves though as the recognized brands of say, a Google, MSN, or Yahoo! as those mentioned search providers can easily be perceived as an IYP engine because of their brand type. As mentioned earlier, as mayor or their town, they YP/IYPs should be the B2B connection that makes the difference for the SMB entering the Internet space.
Also mentioned earlier, client retention of their IYP offerings has been a real issue. Lets face it, and to be candid, YP sales teams are trained to sell print ads. They are good at it. Many of them are straight commission positions and they reps have been with the YP for years working the same territories. Many of them are good sales people but not equipped to sell online advertising options and must be trained extensively to understand whichever model the YP/IYP chooses to employ. Further the YP representative is also equipped to make the sale and move on to the next prospect, not hand hold a non – net savvy client through a Web Site sale, pay per or flat fee advertising sale, and then answer post sale questions about how the they are supposed to utilize SEO tools. And frankly neither are the customer service divisions of the YP or IYP organizations at this time, except for a select few. Sales reps need to be trained to hand hold more and to handle the complaints from the advertiser more effectively so they can diffuse a potentially unsafe situation. Or, YP/IYPs should consider employing Internet only sales people to follow the original sales call with the YP rep to close the sale, then associate themselves as the first step in resolving questions and support issues with those clients. The model is open for change and interpretation. CLECs used to employ voice sales people and data sales people as to not to confuse the customer with strange and different offerings at the same time. The same model can be applied to the advertiser in this instance of IYP emergence as a player in local search.
Quantify, Quantify, Quantify. This should be gospel. IYP advertisers who know nothing of what they are buying and buy because they feel they must, many times feel they are paying more for less in the world of the Internet. They cannot justify results. With YP advertising they do not have to quantify result as it is accepted as a small business as a “must” to advertise in the local YP directory (this is a perceived view by the advertiser). The strategy must be a multimedia strategy for all print, Internet, and mobile directories. Bundling the services with the advertising allows the advertiser to feel as they have received incentives to advertise and will create a sticky loyalty. This can be achieved a multitude of ways including long term agreements, buy more pay less, but always, always quantify the results with reporting so the end justifies the means.
So which business model to use? I say do not rush into any one too quickly. Review your current offerings, review your competitor’s offerings, and review search’s offerings. Compare them with a fine tooth comb. Chart them and compare them to each other. Go as far as polling your customers to see what appeals to them, and then create a test model to quantify what works and what does not. Don’t assume your competitor has it all figured out. Your competitors are doing what works for them, and possibly just reacting to the market in a different demographic. But, you should understand first and foremost the needs of your clients. Offer and develop solutions which meet those needs such as multi tiered Web Site Solutions, Paid inclusion solutions, Pay per position solutions, SEO solutions (also multi tiered), CPM, etc. Make as much of the data you can report on the back end available to the advertiser without giving yourself away. Build rich relationships with your advertisers as they are looking to you to be their trusted advisor for future advertising. Make sure you have a clear sales process to deflect the objections of your client and that when signing the paperwork they feel they are receiving significant value.
So what is the first step? Research. Then design a program from end to end that fits the needs of your advertisers from the beginning of the sales cycle to the end of their existence. Start with their existing ad, and add a Web Site (email, domain, and Web Site creation solution) as a bundle. It is basic starting point beyond their listing or a pay for position listing. Add SEO or an SEM offering where it fits to drive the web site, and add additional paid inclusion to augment the IYP ad and web site if it fits. Add additional services to help increase traffic, and build it into a one invoice model. Small businesses like a one bill and not five, especially when related to advertising or technology. Create value incentive programs and bundles to create urgency and value. And always quantify the results.
These are only suggestions and the article is the result of quite a bit of time studying the YP and IYP marketplaces. Search and Local search markets will converge as it is the natural progression of the marketplace. Be sure you are in a position to partner with the organizations that will compliment your offerings to your clients the most.
