Once an industry with almost unrivaled profitability, Yellow Pages (YPs), like many other must reinvent itself to maintain relevance in the Internet era. Let's take a look as to how this transition can take place, while also envisioning how Yellow Pages providers will emerge from such a transition.
The most natural transition would be from Paper Yellow Pages (PYP) to Internet Yellow Pages (IYP). There are multiple reasons why this is not sufficient. For one thing, IYP listing prices must be lower than PYP listings. Also, PYP's monopoly typically has disappeared while IYPs must now operate in a space where search engines dominate.
So what strategies can YPs follow? Generally speaking, they can try and ride on the back of the search mammoths or, alternatively, undergo a complete paradigm shift
Nearly all users look for an SMB using a search engine; search engines therefore determine where traffic goes.
Because IYPs live and thrive on traffic, they need to find relevance in the shadow of the almighty search engines. A well-structured, SEO optimized directory can harness its scale and grab prime SERP positions for specific business verticals local search queries thus adding value on top of their on-portal search. We will not elaborate on such strategies, since we believe that a winning strategy can to depend on the whims of search engines algorithms. We therefore advocate a paradigm shift.
YPs have several valuable assets:
- A large customer base of SMBs
- Advertising prowess that generates business for SMBs
- A strong brand
- The ability to sell to, and serve many tens of thousands of customers
- An IT-based culture
What do SMBs need? SMBs are lost when forced to go online. They need effective, transaction focused, online presence on multiple platforms (desktop, tablet, mobile) and on multiple online touch points (web, social). They need marketing tools that will generate traffic, and engagement tools like appointment schedules, coupons and e-commerce, that can translate the traffic into leads and transactions.
Only a small fraction of SMBs can handle DIY solutions. Instead, most seek a trusted vendor to provide all of their online presence and marketing needs. [Thrive Survey 2013]. While web agencies meet these requirements, they generally can't do so at an affordable price. This opens the door for big service providers to provide affordable, high quality service to large numbers of SMBs. There are very few large service providers in this space, opening an opportunity that IYPs should be and are seizing. We will use the term Super Web Agency to describe such an operation.
The Competitive Landscape. According to this strategy, Super Web Agencies compete with Web Agencies. They can win! Here are the most notable differences between the two:
|Web Agency||Super Web Agency|
|Number of customers||Dozens to hundreds||Thousands to tens of thousands|
|Relations with customer||Personal||Efficient|
|Offering||Bespoke or semi- bespoke||Production line|
|Breadth of offering||Varies||Wide Offering|
To compete with Web Agencies, YPs target large numbers of customers by offering lower prices. It's difficult for a Web Agency to compete both on price and breadth of offerings. Furthermore, YPs' strong brand and existing relationships with SMBs help to position them as trusted vendors. Their offerings are wider than most web agencies because they can build on scale and on technology.
The Necessary Cultural and Organizational Changes. A major challenge to the implementation of such a strategy is the need for cultural change. PYPs were quite unique in several aspects. They were often a monopoly in their territory, their margins were huge and, and a large percentage of their staff (often ~ 50%) was comprised of salespeople. The remainder of their workforce operated a rather simple factory. To grow as Super Web Agencies, YPs must undergo significant cultural and organizational changes:
|Revising the Sales function||The new product line requires a change in the sales function: |
1) Replace the yearly visit of a sales-person with a new mode of interacting with as trusted advisors to customers.
2) Build an efficient lead-generation and telesales organization.
3) Develop a powerful website to sell online. This is necessary to compete with web-agencies, with DIY solutions and hosting companies quickly entering this market.
|Quality||The quality of service and of delivery required when competing with Web Agencies is higher than what was required when operating solely as YP.|
|Management||In most cases, PYPs' organizational structure was comprised of very few senior managers, and operators with rather limited authority. This needs to change in a Super Web Agency, where an empowered middle management makes an organization thrive.|
|Pace of change||PYPs were used to operating in a slowly changing world. This is radically different than the pace of change at Web Agencies where technology, competition, market expectations and opportunities require YPS to move much faster than they've been accustomed to.|
|New skills||Providing online presence and marketing requires the YP to acquire a broad set of new skills not only in marketing, but also in sales and fulfillment. This is accomplished by retraining and re-positioning, hiring new talent, and via acquisitions.|
|The need to innovate||The pace of change and the underlying technologies require YPs to continuously innovate with their products and services. This is a big change for an organization used to operating as a PYP factory for several decades.|
|M&A and partnering||Part of the change is often achieved via mergers and acquisitions. It also involves partnering with others able to deliver certain aspects of required solutions. In both cases, a significant cultural change is required.|
|The KPI of growth||In the Internet world, growth is an important KPI. It is often difficult for cash-generating organizations like PYPs to redefine their KPIs to include growth. However, such a revision is often needed for long-term success and to deliver shareholder value.|
Technological requirements. IYPs choosing to operate a Super Web Agency need the right technology to handle increased quantities, highly quality and the sheer breadth of offerings. Moreover, it is mandatory to integrate systems; the Super Web Agencies' systems must strongly integrate with its IYP assets, as well as offer a tight integration between all the online tools and services offered to the SMB.