Every year, beginning around this time, trucks shunt around cities and visit every household in North America, and indeed most of the world, depositing these 6-7lb. volumes in stacks as an edifice to a pre-internet era.  Small businesses waste thousands of dollars each in perfecting their ads and emplacing them in a book that, nowadays, most of us will never demean ourselves to open.

There is substantial waste in this business:  whether it’s the energy expended in physically delivering these books to your doorstep every year, or whether it’s the paper (usually recycled — but that still uses energy) that could go to other uses it’s hard to ignore this big yellow hunk of tree when you trip over it while fumbling for your keys — twice a year in some cities as there’s now competition.

Us New Media types like to portray the Yellow Pages business as an anachronism — an embattled dinosaur searching for relevance in an era when we can Google ’til we puke to find the things we need.  Since this is 2009, a Facebook group has emerged, rather unambiguously called “The Yellow Pages Must Be Stopped“, to demand that the industry adopt an “Opt-In” practise.  I personally have not used a Yellow Pages for anything other than as a monitor stand since the last millennium — except when I was once desperate for a Pizza in a Long Island hotel room.

But unfortunately, the Yellow Pages business is not yet the death march that the Web 2.0 kids have hoped it would become.  … This may say a lot more about the new media of web, telephony, and mobile and their capabilities than it does about the old medium of schlepping giant books door-to-door for punters to thumb through.

For one thing, the Yellow Pages is still the number one tool used by consumers to find local business; the industry continues to forecast growth in the bellwether US marketplace from $10.3 billion in 1996 to a projected $18 billion by 2010 — yes, some of their revenue comes from online, but that number is pegged at between 25% and one-third.

Oh.  And people still (gasp!) turn to their Yellow Pages more frequently than anything else for finding products and services that are local to them.  According to research released a couple of months ago from Knowledge Networks, nearly half (48%) of consumers report print Yellow Pages as the resource they turn to most often for information on a business or service, and more than three-quarters (77%) use the print Yellow Pages overall.

As you would expect, age represents the greatest cutoff point.  The print books are for the olds:  54 percent of respondents over 35 years old said they prefer the Yellow Pages, compared to 29 percent of 18- to 34-year-olds.  I would also hazard a guess that the dividing line dissects social class and educational background as well.

So it might be a little bit early to plan the funeral for the dusty old Yellow Pages, though the companies that produce them are clearly being forced to diversify their product offerings and revenues.  They’re also adapting new standards, such as the shift to recycled paper and soy-based inks.

The Kelsey Group, a Research firm which services the Yellow Pages industry, does forecast turbulent waters ahead for the Print business.  This cut comes from their core base of advertisers, small businesses:

Print Yellow Pages is now in a challenging situation … overall, the accumulated data show small and medium-sized businesses’ spending on advertising has dropped, and the distribution of ad spending by bracket appears to have deteriorated. The assessments of the effectiveness and return on investment performance of print Yellow Pages are also weak. There is strong sentiment to reduce print Yellow Pages spending, and advertisers no longer view category position as a sufficient reason to maintain their current spending levels. In broad terms, SMBs that advertise in print Yellow Pages tend to be more consumer-oriented, established businesses. As a relatively expensive medium, Yellow Pages has lower uptake among younger, growing firms. These findings suggest directory publishers have work ahead of them in reestablishing their value proposition to small-business advertisers, particularly as these advertisers seek partners to help them find customers through nontraditional channels like the Internet, voice and mobile.

Google is not yet good at selling or positioning truly local advertising in scale.  In fact, there is not a single substantial advertising network pursuing this opportunity at the moment:  the problem isn’t in building the technologies that match advertising to your locale — the problem is in having a customer acquisition and sales engagement model that cost-effectively pulls in the mom & pop businesses that are the bread and butter for such an advertising network.

What the Yellow Pages is learning is that perception is their greatest enemy.  While surprising numbers of people still use their dead trees to find services and businesses, their advertisers are pulling out.  Other forms of advertising (even local newspapers) are more trackable and accountable than a static ad in the Yellow Pages that changes, at best, once per year and so there exists a greater perception of value in these.  Ironically, even though it’s still reaching customers, people are starting to realize that for most businesses the Yellow Pages isn’t cost-effective.

The real problem is the lack of a viable alternative.  This is actually where the Yellow Pages businesses stand to benefit.  They practically have a first-right-of-refusal in the small business advertising game already.  They have a scaled-out sales force and a revenue model that supports them — and, if it wasn’t already patently clear, a mandate to protect that structure — therefore they can cost-effectively engage with these small-scale advertisers.

What the Yellow Pages industry needs to do is sell more SKUs.  Today they sell advertising in the printed publication, as well as a range of services within their freestanding online directories.  In fact those Online Directories are #3 behind Search and the Printed Directory for how people find local businesses.  But that ain’t enough.  They need to become advertising networks.  They need to engage with the market of local bloggers, like Vancouver’s own Miss604, and give them advertising inventory that is relevant and can be targeted to their local audiences.

In other words the Yellow Pages businesses need to turn themselves inside-out and, instead of attempting to divert everyone into their silos and cathedrals, free their advertising to integrate with the wealth and breadth of the bazaar.  Locally-focused content sites, which today are starving because the best they can hope for is directly-retained advertising revenue or Google Adwords, could use the help — and in return they stand to generate substantially greater advertising exposure at far less cost than the online yellow pages businesses are attracting today.

It’s a simple shift but one which, I suspect, will have difficulty gaining traction within businesses that emerged from the Incumbent Local Exchange Carriers (Ma Bells) and which have inherited much of their managerial culture.

But there is a breakaway business opportunity here.  If they can make the shift then I believe the Yellow Pages can experience their third renaissance — and avoid the death by a thousand cuts that awaits them from environmentalists, web 2.0 kiddies, the expiration of their primary demographic, and online media empires alike.

> From: Jeffrey Kay
> Date: Tue Sep 23, 2003 7:20:55 AM US/Pacific
> To: FoRK
> Subject: Verisign’s Domain Redirects
>
> Seems like DNS is in trouble yet again. This is a pretty interesting
> issue.
> One could argue that managing a root gTLD server is a public trust and
> Verisign is violating that trust.
>
> — jeff
>
> VeriSign stands firm on domain redirect
> Last modified: September 22, 2003, 6:07 PM PDT
> By Declan McCullagh
> Staff Writer, CNET News.com
>       
>
> VeriSign said Monday that it would not abandon its decision to point
> unassigned domain names at its Web site, but representatives did say
> the
> company would form a technical committee later this week to look into
> the
> problems caused by the change.
>
> During the last week, criticism has steadily grown over VeriSign’s ”
> SiteFinder ” service, which has caused problems for network
> administrators
> and confused spam-blocking utilities. A number of Internet standards
> bodies
> and administrative groups have asked the Mountain View, Calif.-based
> company–which enjoys a government-granted monopoly over the .com and
> .net
> registry–to stop, and a second lawsuit seeking an injunction against
> the
> practice was filed Monday.
>
> On Monday, VeriSign spokesman Tom Galvin said SiteFinder would remain
> in
> place because “we think the technical review committee is the
> appropriate
> mechanism before making any long-term decisions about the service.” The
> committee members who will be chosen by VeriSign and will report to the
> company will be announced later this week, Galvin said.
>
> “All indications are that users, important members of the Internet
> community
> we all serve, are benefiting from the improved Web navigation offered
> by
> Site Finder,” VeriSign Vice President Russell Lewis said in a Sunday
> letter
> to the Internet Corporation for Assigned Names and Numbers (ICANN).
> “These
> results are consistent with the findings from the extensive research we
> performed.”
>
> ICANN is the nonprofit organization that oversees Internet domain
> names. On
> Friday, the group asked VeriSign to pull the plug on its “wildcard”
> redirection service.
>
> Since then, ICANN’s Security and Stability Advisory Committee has
> published
> a more-detailed critique of the technical problems caused by VeriSign’s
> move. The committee–which includes a VeriSign representative–said it
> would
> hold a public meeting in the Washington, D.C., area on Oct. 7 and has
> asked
> for feedback to be sent to secsac-comments [at] icann [dot] org.
>
> “VeriSign’s change appears to have considerably weakened the stability
> of
> the Internet, introduced ambiguous and inaccurate responses in the
> (Domain
> Name System), and has caused an escalating chain reaction of measures
> and
> countermeasures that contribute to further instability,” the
> committee’s
> critique said. “VeriSign’s change has substantially interfered with
> some
> number of existing services which depend on the accurate, stable, and
> reliable operation of the domain name system.”
>
> VeriSign’s new policy is intended to generate more advertising revenue
> from
> additional visitors to its network of Web sites. But the change has
> had the
> side effect of rewiring a portion of the Internet that software
> designers
> always had expected to behave a certain way. That can snarl antispam
> mechanisms that check to see if the sender’s domain exists, complicate
> the
> analysis of network problems and possibly even pollute search engine
> results. Because VeriSign will become a central destination for
> mistyped
> e-mail and Web traffic, its move also raises serious privacy questions.
>
> On Monday, domain name registrar Go Daddy Software filed a lawsuit in
> federal district court in Arizona seeking to halt the SiteFinder
> redirection. “VeriSign has hijacked this entire process,” Bob Parsons,
> president of Go Daddy, said in a statement. “When the user is sent to
> VeriSign’s advertising page, VeriSign gets paid by the advertiser when
> the
> user clicks a link to get off the page, to the tune of $150 million
> annually, as estimated by VeriSign.”
>
> It appears to be the second lawsuit filed in response to VeriSign’s
> move.
> Popular Enterprises, the parent company of search provider
> Netster.com, sued
> VeriSign over the SiteFinder redirection last week, alleging antitrust
> violations, unfair competition and violations of the Deceptive and
> Unfair
> Trade Practices Act.
>
> Also in response to VeriSign’s move, the well-respected Internet
> Architecture Board published on Saturday a document titled
> “Architectural
> Concerns on the use of DNS Wildcards,” referring to the domain name
> system.
> It says the danger of “wildcard records is that they interact poorly
> with
> any use of the DNS that depends on ‘no such name’ responses.”
>
> jeffrey kay
> weblog pgp key aim
> share files with me — get shinkuro —
>
> “first get your facts, then you can distort them at your leisure” —
> mark
> twain
> “if the person in the next lane at the stoplight rolls up the window
> and
> locks the door, support their view of life by snarling at them” — a
> biker’s
> guide to life
> “if A equals success, then the formula is A equals X plus Y plus Z. X
> is
> work. Y is play. Z is keep your mouth shut.” — albert einstein
>
>
>

Add Technology – AP to My Yahoo!

By MICHAEL LIEDTKE, AP Business Writer

SAN FRANCISCO – Yahoo! Inc (NasdaqNM: YHOO -news ). on Monday snapped up Overture Services Inc. (NasdaqNM: OVER -news ), the pioneer of pay-for-placement online search results, in a $1.6 billion deal that fortifies the Internet powerhouse for a looming showdown with Google and Microsoft.

The cash-and-stock acquisition valued Overture at $24.82 per share — a 15 percent premium over the stock’s closing price last week. The price consists of $312 million in cash and 0.6108 Yahoo shares for each of Overture’s 65.7 million outstanding shares.

The deal’s value will fluctuate with Yahoo’s stock until its expected closing date in the fourth quarter.

Overture’s shares rose $2.54 to close at $24.05 Monday on the Nasdaq Stock Market, where Yahoo’s shares gained 1 cent to close at $32.20.

The acquisition continues a recent flurry of dealmaking in the lucrative business of online searching, a crucial axis on which much of the Internet’s utility depends.

By buying Pasadena, Calif.-based Overture, Yahoo gains control of one of its most important business partners and strikes a blow against Google and Microsoft.

A fierce rival of Google, which offers ad-based results distinct from its popularity-based search rankings, Overture now threatens to become more formidable by tapping into Yahoo’s greater resources, which included $1.1 billion in cash as of June 30.

Privately held Google, which provides some search results to Yahoo, declined to comment on Monday’s deal. Microsoft, whose MSN service, like Yahoo, has been collecting steady profits from Overture, was circumspect.

Lisa Gurry, MSN’s group product manager, said the software giant will make its next move after examining how Yahoo’s deal might affect its relationship with Overture.

Although Yahoo executives said they hope to maintain Overture’s existing alliances with partners such as MSN, it seems improbable that the rivals will want to subsidize each other, said Danny Sullivan, editor of the industry newsletter Search Engine Watch.

“This hurts MSN because Overture had been one of its best buddies,” Sullivan said.

MSN has been pouring more resources into online searching in an effort to become less reliant on services provided by outsiders. Besides relying on Overture for some of its search results, MSN also draws upon Inktomi, a search engine service that Yahoo acquired earlier this year for $279.5 million.

During the past 18 months, Overture has become increasingly valuable to Yahoo, prompting predictions that the two companies eventually would unite.

Overture has played a pivotal role in Yahoo’s recent financial revival, accounting for roughly 20 percent of Yahoo’s revenue of $604 million during the first half of this year.

Conceived by dot-com entrepreneur Bill Gross in 1997, Overture developed a search engine that sorts its results based on how much advertisers are willing to pay to be ranked under specific words.

Overture’s commercial database feeds search engines at popular Web sites such as Yahoo and MSN, which display the advertising links along with results generated by objective, algorithmic formulas.

Ridiculed just a few years ago, the so-called “pay-for-performance” concept has turned into an online gold mine. Pay-for-performance search is expected to generate $2 billion in revenue this year and U.S. Bancorp Piper Jaffray expects the lucrative niche will reach $5 billion in 2006.

Overture has cashed in on pay-for-perfmorance’s popularity, attracting 88,000 advertisers while generating earnings of $114 million since it first became profitable in the summer of 2001.

But the company’s success attracted more competition, most notably from Mountain View, Calif.-based Google, which has lured away pivotal partners such as AOL and EarthLink and spurred pricing concessions that have lowered Overture’s profit margins.

Although it followed in Overture’s footsteps, Google now has a slight edge over its rival in the United States. Domestically, Google’s network generated about 54 percent of all paid search results compared to 45 percent for Overture, according to market research compiled by comScore qSearch.

The competitive pressures prompted Overture’s management to lower its profit projections earlier this year and contributed to a downturn in the company’s stock, opening the door for Yahoo’s offer.

The deal supplements Yahoo’s recent acquisition of Inktomi with two other search engine services, AltaVista and Alltheweb.com, that Overture bought earlier this year for a total of $207 million.

Putting all those search engine tools under one roof is likely to create overlap, Sullivan said.

Yahoo executives believe all the services will help further its quest to overtake Google as the Web’s most popular search engine.

“We now own all the crucial elements of an end-to-end search offering,” Yahoo CEO Terry Semel said during an analyst call Monday.

Google continues to provide some of Yahoo’s search results. Semel declined to comment how the Overture acquisition will affect Yahoo’s relationship with Google. “I didn’t lay awake last night wondering about that,” Semel said in an interview Monday.

As a counter-punch to Yahoo’s moves, Microsoft seems more likely to acquire a search engine company, Sullivan said.

Potential candidates include Ask Jeeves Inc., FindWhat.com Inc. and, perhaps even Google.

MSN’s Gurry declined to comment on the company’s possible interest in Google.