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Yellow Pages Well-Read

Posted on: Friday, 30 December 2005, 15:00 CST

By David Ranii, The News & Observer, Raleigh, N.C.

Dec. 29--Those thick yellow pages directories may seem so 20th century, but they're demonstrating remarkable staying power.

Many local businesses continue to depend on their yellow page advertisements to attract new customers. And, although a minority of adults have spurned the books in favor of the Web, most people wouldn't even consider sitting down at the computer to seek out a plumber when their kitchen pipes burst.

"It's kind of a misnomer that the Internet is going to put the yellow pages out of business," said Christopher Bacey, spokesman for the Yellow Pages Association, an industry trade group.

This year yellow pages ad revenue should grow more than 3.3 percent nationwide, said David Goddard, senior analyst at Simba Information, a market research firm. That would compare favorably with the overall advertising market, which grew 3 percent through September, according to TNS Media Intelligence.

Confidence in the industry's future has played a major role in a mergers-and-acquisition trend that is sweeping the yellow pages industry. Also fueling the trend are stable profits, hefty cash flow and a belief that bigger can be better in the face of online competition.

The latest big deal originated at Cary-based R.H. Donnelley, which agreed this fall to pay $4.2 billion for Colorado-based Dex Media. That deal, which will make Donnelley the country's No. 3 yellow pages publisher, will be submitted to shareholders of both companies on Jan. 25. The acquisition is expected to become final shortly afterward, assuming shareholders give it a thumbs-up.

Donnelley, which publishes yellow pages under the Sprint and SBC brand names, expects to have annual revenue of $2.7 billion after the deal closes.

"We certainly believe there is a big future for our industry," said Donnelley spokesman Tyler Gronbach. To be sure, the yellow pages industry isn't enjoying robust growth, but what mass media outside of the Internet is these days? On the other hand, the industry managed to snag more revenue even when the bursting of the dot-com bubble sent most ad-dependent industries -- including Internet publishers -- into a funk.

Moreover, like newspapers and magazines, yellow pages publishers have responded to the Web's popularity with Internet offerings of their own. And they leverage their relationship with advertisers by bundling ads for the hard-copy and cyberspace versions into one neat package.

Indeed, this summer the industry bubbled with speculation that Google would team up with a major yellow pages publisher in order to gain access to battalions of sales reps. BellSouth, for example, has more than 1,200 salespeople in the Southeast. And Donnelley has made it clear that Dex's success with its online yellow pages was a major lure. "We saw the opportunity to accelerate our own Internet presence with the acquisition of Dex," Gronbach said.

One sign of the industry's continued strength is that publishers continue to start new directories. More than 450 directories were introduced this year, bringing the total number of yellow pages books nationwide to 6,917, according to the Yellow Pages Association.

The Triangle is a competitive battleground among yellow pages publishers. In Wake County, publishers distributing books either throughout the county or in limited areas include BellSouth; Verizon; White Directory Publishers (publisher of The Talking Phone Book); and Donnelley, whose local books are published under the Sprint brand name.

BellSouth, the No. 1 Yellow Pages publisher in the Triangle, distributes 900,000 directories in Wake County and more than 1.2 million across the Triangle, said spokesman Ed Patterson.

Meanwhile, competitors are increasing their efforts.

This year Verizon, in addition to distributing 245,000 full-size directories in the Triangle, is for the first time distributing 147,000 copies of a smaller, more portable "companion directory" that people can keep in their car or use elsewhere. Advertisers can appear in both directories for a minimal extra fee, said Verizon spokeswoman Lisa Partain.

Devone Holmes, controller for Clegg's Termite & Pest Control, a Durham company with 13 offices across the state, is convinced that advertising in the yellow pages is essential. "Our industry statistics say about 70 percent of the potential [customers] for our services look in the Yellow Pages first," Holmes said.

Consequently, Clegg's devotes nearly three-quarters of its ad budget to advertising in 60 different print directories, plus online yellow pages. Clegg's tracks the results it achieves by using phone numbers that appear only in its yellow pages ads. "It seems to work," Holmes said.

According to the Yellow Pages Association, 9 out of 10 adults use the directories at least once a year, and half use them at least once a week.

"Where else are you going to go if you have a cracked windshield, a busted pipe, or need a specialty piece of children's furniture?" said Ken Clark, publisher of YP Talk, an online newsletter about the yellow pages industry, based in Holly Springs.

Well, there is the Internet. According to the Yellow Pages Association, 22 percent of adults surveyed last year by Knowledge Networks/SRI agreed completely with the statement:

"I am now using a computer to look for products and services instead of looking in a yellow pages directory."

That explains why the number of times Americans refer to the print yellow pages has leveled off in recent years, while online yellow pages references are growing. Still, most people today do turn to the print yellow pages. Even those ages 18 to 24 -- the adult age group most susceptible to the Internet's charms -- consult the print yellow pages nearly as frequently as the average adult, said Larry Small, director of research at the Yellow Pages Association.

For all the wealth of information on the Internet, most people still find it more convenient to pick up a directory than to go online.

"In my house, there are three computers scattered around the house," said Simba Information's Goddard. "But if someone wants to order a pizza, they go to the yellow pages."

WHAT WE LOOK UP

The categories that people look up most frequently in the yellow pages, based on consumer surveys conducted in 2001-2004.

1. Restaurants

2. Physicians and surgeons

3. Automobile parts -- new and used

4. Automobile repairing and service

5. Pizza

6. Lawyers

7. Automobile dealers -- new and used

8. Dentists

9. Hospitals

10. Beauty Salons

Source: Yellow Pages Association, Knowledge Networks/SRI

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Distributed by Knight Ridder/Tribune Business News.

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Source: The News & Observer

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