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Section 1:
Industry Overview

This section will help you better understand both print and Internet yellow pages. It answers questions such as..

• How extensively do consumers and advertisers use print and Internet yellow pages?

• What options do advertisers have with regard to where their ads appear in print and Internet yellow pages directories?

• How are ads placed within print and Internet directories?

• What is the relationship between consumers' use of print and Internet yellow pages?

As an advertising medium, the term "yellow pages" includes both printed yellow pages directories and Internet Yellow Pages (also known as electronic or online yellow pages directories).

Yellow Pages global revenues are now about $31 billion, with slighly less than half of those expenditures taking place the United States.

Print Directories

Types of Advertisers

Yellow pages print directory advertising revenues come from about three million national and local advertisers.

National advertisers account for about 14% of print directory advertising revenues. Leading national Yellow Pages advertisers include ServiceMaster, State Farm Insurance, U-Haul, Roto Rooter, VHA and Ford. These national advertisers represent three types of Yellow Pages advertiser:

• Advertisers like Ford have very large advertising budgets and use a broad range of media, including the yellow pages, to reach their target audience. As a result, while Ford is a large yellow pages advertiser, the yellow pages' share of Ford's overall budget is nevertheless relatively low.

• Advertisers such as State Farm have relatively balanced media allocations, with a significant portion of the overall budget allocated to the yellow pages.

• Advertisers such as Servicemaster and Roto Rooter concentrate the majority of their advertising in the yellow pages.

National advertisers who use multiple media typically take great care to ensure that their yellow pages advertising is coordinated with their advertising placed in other media. Yellow pages advertising for these businesses, while responding to directory users' need for information, still carry through the feel and key copy elements of advertising placed in other media. This is seen in the Enterprise yellow pages print directory ad below, which utilizes the visuals and copy from Enterprise's print and television advertising.

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(Click for larger image.)

Local advertising accounts for about 86% of print directory advertising revenues. Many of these advertisers do not advertise in other media and, as a result, the print directory is their sole means for attracting consumers. Given this reliance on the yellow pages, it is not surprising that nearly half of all advertising by small and medium-sized businesses is estimated to be spent in the yellow pages. (Source: Kelsey Group)

Advertiser Decisions

Headings

Print yellow pages directories are organized alphabetically by heading where references to some headings are greater than others. The most heavily referenced print directory headings are shown below.

Given the organization of print directories, an advertiser must first decide in which heading to place his/her advertising. For many advertisers the decision is straightforward. A lawyer, for example, would advertise in the "Attorney" heading and a florist would advertise in the "Florist" heading. For other advertisers the choice may not be so straight-forward. Where, for example, should Sears advertise? Under the "Siding" heading? What about "Appliance-Repair," "Auto Repair" or "Tires?"

Types of Directories

About 7,000 different directories are published nationwide every year. These directories give both national and local advertisers a wide range of options for where they place their ads once they have decided on which heading or headings to use. Directory options can be viewed from three perspectives: type of publisher, directory area of distribution and type of directory.

• Type of publisher. Publishers of yellow pages print directories fall into two groups: "telephone company related" and "nontelephone company related." Telephone company related publishers are those directly associated with telephone service providers, such as AT&T and Cincinnati Bell. Valley Yellow Pages and Yellow Book are examples of independent, nontelephone company related, yellow pages publishers.

• Directory area of coverage. Different directories have different areas of distribution and, as a result, cover relatively larger or smaller geographic areas. "Suburban" or "Neighborhood" directories cover smaller, more finely targeted geographic areas. "Area wide" (also known as "overlay") directories combine multiple small markets or multiple neighborhood books into a single directory.

The maps below illustrate the difference between these two types of directories. The map on the left shows the area-wide directory's coverage area (shown in bright yellow). This directory covers all of the northwest portion of the city. The map on the right shows the coverage area of three neighborhood directories (shown in blue). Each neighborhood directory targets only a small portion of the area covered by the area wide directory.

• Type of directory. Beyond the standard directory, advertisers also have the option of using specialized directories to reach their target audience. Specialized consumer directories include foreign language directories, bilingual directories, ethnic directories (e.g., Hispanic, African-American), and situation-based directories (e.g., university directories, driver's directories). Business-to-business directories are available in some markets for advertisers who primarily sell to businesses rather than direct to consumers.

Internet Directories

Internet Yellow Pages sites fall into two distinct categories:

• those built by publishers who also sell ads in phone books, for example, Supermedia's Superpages.com, AT&T's Yellowpages.com and R. H. Donnelley's DexKnows.com.

• those provided by Web brands such as Yahoo Yellow Pages.

In their most basic form, regardless of their source, Internet yellow pages provide names, addresses and telephone numbers for local and national businesses. An individual comes to one of the Internet yellow pages sites, types in a business category or specific business name, and the site then provides business information. The types of search results provided by an Internet yellow pages directory reflect the searcher's level of specificity when initiating the search. When a business category is the basis of the search, the Internet directory provides a listing of all businesses that fit the search criteria. However, when a specific name is the basis of the search, then the results page provides only the information relevant to the target business.

Basic listings which give just name, address and telephone number are provided at no cost to businesses by the directory publisher. Similar to the print directory, however, Internet Yellow Pages permit businesses to expand their basic listing. While specific expansion options differ across Internet Yellow Pages sites, common addi­tions to a basic listing include: additional lines for advertising, links to e-mail, maps and additional information, links to the advertiser's web site, and additional space for graphics and logos.

Similar to the print yellow pages directory, all Internet Yellow Pages allow advertising. While options differ across sites, the most common options include home page advertising and within and around the search results. In some Internet Yellow Pages directories, advertisers also have the option of having their ad displayed before consumers actually begin to browse through their search results. Here, the ad may be displayed on an intermediary search page.

It seems clear that Internet yellow pages are meeting consumers' needs. The most frequently referenced Internet Yellow Pages headings are shown below.

Characteristics of Internet Yellow Pages

Information Provided

In their most basic form, Internet Yellow Pages provide names, addresses and telephone numbers for local and national businesses. An individual comes to one of the Internet Yellow Pages sites (Superpages.com or Yellowpages.com, for example), types in a business category or specific business name, and the site then provides business information.

Basic listings which provide just name, address and telephone number are given at no cost to businesses by the directory publisher. Similar to the print directory, however, Internet Yellow Pages permit businesses to expand their basic listing. While specific expansion options differ across Internet Yellow Pages sites, common additions to a basic listing include: additional lines for advertising, links to e-mail, maps and additional information, links to the businesses' web site, and additional space for graphics and logos.

Internet Yellow Pages sites realize that some consumers who come to the site have multiple needs. A young mother, for example, might need to find businesses that provide child care, children's clothing and child health services. Performing a search for each of these business types would be quite time consuming. As a result, many Internet Yellow Pages sites have created "Guides," an organized collection of resources, information and direct-by-topic yellow pages searches.

Advertising Options

Similar to the print yellow pages directory, all Internet Yellow Pages directories allow advertising. While advertising options differ across sites, the most common options include home page advertising within and around the search results. In some Internet Yellow Pages directories, advertisers also have the option of having their ad displayed before consumers actually begin to browse through their search results. Here, the ad may be displayed on an intermediary search page.

Section 3 discusses advertising options in greater detail.

Relationship Between Print and Internet

The appearance of Internet Yellow Pages caused quite a bit of speculation within the yellow pages industry. While all acknowledged that Internet Yellow Pages would change the dynamics of the yellow pages industry, some thought that Internet Yellow Pages would replace the print product, while others believed that print and Internet options would complement one another. Recent research indicates that the latter perspective appears to be correct.

• Internet shoppers continue to use print yellow pages directories. Over 75% of those who shop on the Internet in an average month also referred to the print yellow pages directory.

• Internet Yellow Pages and print directories appear to serve different needs, as some of the top search items differ across each delivery medium. The top search terms for Internet Yellow Pages are "books, toys, music, antiques, furniture, and sporting goods" while the top search items for the print directory relate to "health care, cars, pizza, restaurants, and hardware/building materials."

It appears that Internet Yellow Pages users are more likely to make reference to categories that are less time-sensitive and/or where close proximity to home is not required. On the other hand, print directory users are more likely to turn to the print directory to meet immediate needs from a business/service that is close to home.

Given the complementary relationship between print and Internet Yellow Pages, it is not surprising that there is significant overlap between the demographics and behaviors of print and Internet Yellow Pages users.

• The demographic profiles of both groups are similar. They tend to be younger, well educated and living in households with higher annual incomes.

• Frequent users of the print directory are also frequent Internet users. People that subscribe to online services use Yellow Pages 23% more than people who do not subscribe to online services. In addition, frequent yellow pages print directory users are 18% more likely to have made purchases on the Internet and 27% more likely to have spent over $1000 on Internet purchases. (Source: CRM Associates)

The synergy between print and Internet Yellow Pages, coupled with the rise in Internet directory usage, has led many to believe that a fundamental shift may be taking place in how consumers research and arrive at brand and product preferences. The Kelsey Group believes that consumers will increasingly take advantage of all sources of directory information (e.g., print directories, Internet yellow pages, vertical directories, mobile directories and search engines) in their efforts to determine which businesses to contact. The result would be a longer, more precise, considered and informed decision-making process.

Yellow Pages Advertising Agencies

Local advertisers, such as your local furniture dealer, typically deal directly with media outlets to place their advertising. The same is true with the yellow pages. Local yellow pages advertisers place their advertising with representatives of the directory publisher or place their ads directly with an online yellow pages site.

National advertisers such as McDonald's, Gap and Ford do not interact with media outlets directly. Each of these companies has an agency that acts on their behalf to create media plans and work with media outlets such as television stations and magazines to place their advertising. In order to maintain synergy and consistency across media, these same agencies typically are also involved with the advertiser's online advertising. The same is true for national yellow pages advertisers.

National yellow pages advertisers use CMRs - Certified Marketing Representatives - to develop creative plans, media strategy and execute media placement for their print and Internet directory advertising. These are the same functions provided by traditional advertising agencies.

Beyond their planning and support functions, CMRs are a necessity for national advertisers because of the complexity of yellow pages directory media placement and buying. CMRs seamlessly execute media plans for national yellow pages advertisers in spite of different print and Internet publishers' pricing plans, different closing dates, different ad specifications, multiple billing sources and multiple publisher representatives.

For more information on CMRs please visit the Association of Directory Marketing (ADM), the CMR trade association.