This week I was asked by one of our (prospective) clients for assistance in building a business case to shift ad dollars from the Yellow Pages to Google and the also rans (aka Yahoo and MSN). After putting the word out that a $10 Starbucks gift card awaited the first Spur employee to find some good data, I put the question out on LinkedIn Answers (often a great venue for connecting with gurus who can answer tough questions).
I realize I’m a bit spoiled by the immediate gratification I often find online; so after 15 minutes passed without a single no LinkedIn answer, I decided to do some research myself. What I found should be of interest to all marketers who rely on Yellow Pages for local advertising.
According to Search Engine Watch: This year, local advertisers are expected to shift $13.1 billion of their budgeted funds to the Internet, according to Borrell Associates. The number is up 50% over last year. In 2009, local online ad spending is projected to grow another 40% to $18.2 billion in 2009″… “Online advertising is cheaper than traditional methods of marketing and is thought to be the reason for the change. According to Borrell, internet CPMs average $3.65, the lowest of any media, while an offline Yellow Pages ad carries an average CPM of $9.29.”
My take: In addition to lower CPMs, search is much more targeted, actionable and measurable. And it’s increasingly becoming a preferred way to find local vendors quickly and easily by people of all ages.
I also found some interesting info at RBR.com that compared the fate of Yellow Pages to that of newspapers in recent years: “…the recession is forcing small-business advertisers to be more careful with their ad budgets. Over the next five years, Borrell is predicting 39% of the ad spending on print yellow pages revenues will vanish as small businesses shift marketing budgets online… The key drivers of these changes are broadband penetration and the growing sophistication of search engines and interactive directories. Between 2005 and 2007, 10.4 million adults stopped using the yellow pages “during the past month.” Assuming Borrell knows what they are talking about, those are some compelling stats!
I have spent the last 20 years selling media and the last 5 selling both Google, Yahoo, MSN and Print YP. I can tell you that the answer is not one or the other. It is highly dependent on your type and size of business. There is also a huge difference between the advertising industry’s obsession with CPM and a business owner’s obsession with cost per call and ROI. For service businesses in particular, there is no substitute for print in ROI terms. Period. We have run thousands of ads with tracking phone numbers that print nowhere else but the YP including directory assistance. Consistently I have seen businesses like plumbers, AC, Roofers, remodelers, and attorneys pay $4,$5,$6 a call (not click) with average values of a new customer ranging from several hundred to several thousand $$. A typical small business needs less than 1 new customer a quarter in these types of business to post a profit and typically the smallest ads are yielding 20-30 calls/month. In addition, read the latest article in Ad Age by Peter Francese and you will see very compelling information including the average head of household is now 49.5 years, and the enormous spending power of 55 yrs+ head of household.
That being said, there is no question that most every business I talk to is encouraged to start migrating a portion of their ad budget online. I think eventually you will see most commerce on this medium, however for certain small businesses it is sex appeal and popularity, not rational thought or evidence driving their migration. As an example, in some markets I have the pay per click prices are running $3-$6 a piece and conversion rates from clicks to calls typically run 2%-5% based on tracking.
Is there empirical evidence as to the shift? Not quite, but nonetheless, there is certainly a shift happening. That much is inarguable.
Greg Sterling had an interesting bit from a presentation Dan Hobin gave at SMX Local and Mobile in San Francisco a few weeks ago that is, at the very least, observational data from G5′s Media Dashboard. That dashboard can compare advertising results across all media types, so it’s a somewhat reasonable assumption that the numbers are solid.
You can see that here:http://gesterling.wordpress.com/2008/07/28/new-yp-reality-leverage-all-channels/
Oh. And great job on your blog. Now where is my Starbucks card?
You bring up a great point when talking about ROI. It is almost a sure thing that CPM will be lower on a search engine simply because people who use the Yellow Pages are looking for a specific product of service in a specific georaphic area. This means that they are ready to buy and not in the research phase like most onine search. The fact is that you can find more locally relevant information in a phone book and online yellow pages than on a search engine.
You are right when you say that search is more measurable if you are talking about clicks. It becomes much harder to measure what happened to the click and if it resulted in a sale. Yellow Pages conducts call measurement studies allowing a business to calculate the exact number of phone calls that an ad generated, and from there they can track their actual ROI.
“Yellow Pages sales return on investment is more than 27:1 for national display advertisers and nearly 13:1 for local display advertisers” Sourcehttp://www.marketingvox.com/yellow-pages-deliver-robust-roi-for-advertisers-037813/
I can tell you that the last few years the yellow pages has taken a SERIOUS DIVE. Fortunately I moved quickly and place my bets (advertising dollar) in the direction of Google, Yahoo and MSN. It was a great move to say the least. I was so happy that my ATT sales people told so long by our management because I was getting a little tired of them brainwashing me over the years. Yellow Pages print ads are going to die superfast. I am however a little impressed with their surge to go online themselves and try and win the local search market. I expect they will ultimately be squashed by Google/Yahoo.
Steve: I’ve come late to this party but I welcomed reading John’s inputs. There’s no question that the Googleplex is gaining dollars from YP but YP has worked hard to build and maintain credibility.
The ability of the Yellow Pages to direct sales to specific businesses is still rather remarkable; and although various pubs’ salespeople are about as pushy as God can make salespeople, I don’t think YP is outbound quick so soon. Ta for Wednesday.
hi steve
The online local search sites ( not necessarily only the big ones ) will eat away the print YP market pie to some extent but the market is also growing and i would hazard to guess that there is at least 60-70% local business that are un represented in either print/classifieds or online/online classifieds.When they grow or realize that advt works they will choose a composite approach and print will have its share albeit less compared to the galloping online stallion.Local ads is a feet on the ground process and adnetwroks at the moment wont is not the answer.Hence traditional YP companies with integrated marketing platform approach will gain substantially from their feet on the ground sales force for both online/offline
This advice is really going to help, thanks.
Yellow pages have been taking credit for simple phone number look up and calling it lead generation for years.
I started an online directory 3 years ago and had about 200 existing customers from my previous venture. I spoke at length with them about the yellows and current trends. One test I asked them to run was instead of merely asking their YP callers where they found the phone number, as the callers what they were looking for when they went to the yellow pages. Did you go to the yellow pages looking for a plumber and found my ad or did you go to the yellow pages looking for my number because you already knew you wanted to call us? The results were amazing. 40-50% of yellow page calls were people looking for their number.
Needless to say, when you eliminate half your leads, the yellow pages becomes far less valuable.
Print is dead and all the statistics and “facts” the yellow pags publishers offer wont change that fact. Print is dead!