Battle of the Digital Directories

Multimedia efforts are an exciting path that vice-president of marketing for Yellow Pages Group Jean-Pascal Lion says will lead the company’s growth over the next decade. He expects online and vertical media revenue to increase by 30% (online represents 7% of current revenue) this year, underscored by the fact that he says 38% of all people using the Internet in Canada already use Yellow Pages-supported web directories.

Lion said there will always be a marketplace for the print book because it fills an immediate information niche. But he understands that the younger generation, tapped into technology as a source of information, is more likely to go to the online or mobile sources for information. And that generation will eventually grow up.

“Online is very important and mobile is just a different way to play online,” Lion says. “What is very important is to be totally ubiquitous. Depending on whatever users are using as tools, they have to be able to retrieve that from the local search.”

Lion lists the different platforms: web-based, browser-based, text messaging, instant messaging and BlackBerry devices – all of these are areas the Yellow Pages Group is looking to expand in the effort to be anywhere at any time for people searching localized business information.

As the Yellow Pages Group fights tooth and nail for the online advertising dollars of local businesses against the likes of Foundlocally.com and Edmonton Web Pages, they are also embarking on an ambitious plan to roll out mobile directory advertising – a business directory that can be instantly accessed over a cellular phone.

“In broad strokes, in my view, it’s the new battleground,” says RBC’s McReynolds. “That’s where you and I as consumers, when we are out and about… on the move trying to do a local search and looking for the same thing we’d be looking for in our living room in the Yellow Pages directory.”
McReynolds does acknowledge that the application of the mobile technology is still in its infancy, but he believes it is important for a traditional print-book company like the Yellow Pages Group to position itself “to be a dominant provider in the mobile platform.”

Leading the way in mobile directory technology is Call Genie (TSX:GNE), a Calgary-based company that has teamed up with the Yellow Pages Group, among other telecommunications heavyweights, to deliver its system to cellular users across North America. Call Genie CEO Mike Durance loves to talk about the potential behind the publicly traded company’s voice-enabled technology, which allows the use of voice commands to find the businesses and services people want – while they are on the fly.
Instead of being business-name-specific, the technology perfected by Call Genie allows the mobile customer to search for businesses based on city, business type, neighbourhood and even by street intersections. It can also be interfaced with maps, video and SMS technology in order to provide users with a full-service directory experience.

Durance believes that voice is an “anchor technology” that is fast-developing a reputation for being one of the most convenient search tools for users who need instant information. He says it is appealing for people to be able to find what they want by using simple voice commands, rather than having to run to the computer or the phone book to find what they want. The hidden gem in Call Genie’s voice-enabled, mobile directories, Durance says, is for the merchants and advertisers.
“One of the most exciting things about what we do with mobile search versus online search is that the mobile consumer is a highly ready-to-purchase consumer,” he says. “If that consumer connects to that merchant, that call is golden. That is a highly qualified lead.

“That’s why the Yellow Pages is able to monetize this as an advertising solution.” With 17 million cellphones in Canada alone, the marketplace for one company is huge, especially when they have agreements with Yellow Pages Group, Telus Corporation and American mobile giant Verizon Wireless. But Durance expects to go global with his company’s technology and put a firm grip on worldwide mobile directory solutions.

The biggest winners in the battle for online directory supremacy could not only be the businesses that advertise but the users searching for them. Local businesses eyeing up ways to spend their advertising dollars are going to have a variety of options available. With companies like FoundLocally.com and Edmonton Web Pages filling niche markets with localized online directories, Internet users are going to be able to find what they want, when they want and where
they want.

The overwhelming popularity of Internet and mobile communications has forced companies to be proactive in their approach to technology or be left behind by those who are. According to analyst Drew McReynolds, it’s going to be the companies that can most effectively and efficiently expedite the buyer-seller exchange that are going to reap the rewards offered in online and mobile directory-based advertising.

While the Yellow Pages Group has been a dominant force in the Canadian directory advertising business for nearly a century, a transition to sensitive, targeted local advertising takes time – and money. Businesses like Edmonton Web Pages and FoundLocally.com are already entrenched in what most believe to be an expanding marketplace and may be difficult to displace.

After experiencing the initial dot-com bust of the 1990s, Mark Ruthenberg quickly developed a survivalist approach to FoundLocally.com. He’s not worried about competing against other companies for online advertising revenue, especially when his goal is domination of the Canadian online directory marketplace. How does Ruthenberg expect to do it when other players like the Yellow Pages Group have big budgets and brand-name recognition? He calls it the “cockroach philosophy.”

“We’ve designed our business so that we can survive on crumbs,” he says. “We’ve realized with our business model and with our pricing structure, even if Yellow Pages threw a hundred million dollars at trying to crush us, they couldn’t. We’d still be there after they ran out of money.”

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