Fragmentation is changing the local marketing industry, with smaller sellers encroaching on a space that was once reserved for large national agencies. During a fireside chat at Street Fight Summit West 2016 on Tuesday, YP CEO David Krantz said it’s getting tougher to sell bigger advertising services with the influx of competition from local agencies.
“The biggest change is the constant fragmentation. When you had the Yellow Pages, it was a beautiful thing, it was a monopoly. Then they went online,” he said. “The pace of change is dramatic.”
Krantz said it’s getting harder to sell bigger advertising services because companies like his own are competing more with local agencies and small businesses who “have a guy.”
“They are formidable competitors that are out there servicing the local market,” he said.
With a sales force that’s grown to more than 4,000, YP has found success by connecting with merchants on an individual basis. Krantz said having a billion dollars in digital advertising revenue gives YP the scale, but he cautions others that having a large sales force can be an asset or a liability.
“It’s very expensive to bring in a salesperson off the street,” he said. “At the end of the day, you have to have enough scale to make it work.”
Small businesses are seeking more direct marketing, and many are drawn to consultants they can work with, rather than generic salespeople who might not understand the opportunities and restraints in their own communities. Some of these very small firms have a deep understanding of the local markets.
“There is a constant learning process and it’s constantly changing,” he said. “To the extent that either a local salesperson or someone like that can help them, it’s important.”
But small agencies face a steep climb as they attempt to grow, and Krantz says very small agencies comprised of just one or two people are starting to be less relevant in today’s market. Agencies either need to be very sophisticated and very local, or they need to be big enough that they can act local and compete with scale.
“If you’re in the middle, it’s really tough,” Krantz said. “That’s when you better partner with somebody else in some way.”
Stephanie Miles is a senior editor at Street Fight.
Photo Credit: Shana Wittenwyler