YP’s 130-year-old advertising platform has been deep in the transition to digital for a while now. In the past, the print Yellow Pages was a dominant source of advertising for SMBs, but the company has engineered a slow-but-steady evolution, to the point where its digital revenue (finally) exceeds that of print — even as the decline of print has stabilized. The company currently counts roughly 62 million monthly unique users between digital and print on a monthly basis — with 72% uniquely digital, 12% uniquely print, and 16% using both.
In a speech at Borrell Associates’ recent Local Online Advertising Conference in New York a few weeks ago, YP’s CEO Jared Rowe, talked about where YP saw its sweet spot. In particular, he spoke of a “blended” print and digital model.
Following his presentation, Street Fight spoke with Rowe about the importance of YP’s longstanding brand and customer relationships, its focus on specific verticals and attribution, and how it helps modern SMBs meet their marketing goals.
What’s been the biggest challenge since you came on [as CEO] six months ago?
It’s more of a redirection of strategy. I wouldn’t even call it a challenge. It’s actually a fairly sizable opportunity.
Because we have a business that is in the midst of transition — and has been in the midst of transition for a while — a lot of the work has been done. What you’re really seeing us do now is kind of hone the operating model and hone the execution strategy in a way that’s really more focused on client value than it has been historically. So, we think there’s a real opportunity with the blended solutions that I was talking about [on stage earlier].
What is your philosophy when it comes to build versus buy?
I’m simple when it comes to that. If something is a competitive differentiator and it’s sustainable, you build it. If it’s not, but it needs to become a component of your overall solution, you buy or you rent it. You will see us probably be a little bit more focused on an owned-and-operated audience, the engagement we can generate off of those properties and we have been for the last couple of years. But we will be augmenting our product set with other solutions that are provided by providers.
We’re currently doing a social pilot and we have a partner who’s really delivering the infrastructure for us to deliver that product to the clients. However, there’s two things that we bring to bear. One is we bring channels. We’ve got distribution channels so we’ve got that. Number two is we have data. We have first party data. We still have over 50 million uniques a month and these folks are coming to our site to buy. They’re lower-funnel buyers. So, applying that data from a targeting perspective and an audience creation perspective allows us to sell to somebody else’s audience and hopefully sell it in a sustainable and profitable way.
Part of the concern I have with audience extension is that when you sell to someone else’s audience the margin gets compressed over time. This will allow us to sell to somebody else’s audience, but we think do it in a way that gives us a right to do it and in a way that makes sense for our clients to buy it for less. One of the things you’ll hear me talk an awful lot about is I’m very client-centric.
Tell me a little bit about the way you think about verticals.
What’s interesting about this business is it has been verticalized and its largely been verticalized by consumer usage.
And what they’ve done is they’ve recognized that we’re verticalized and they’ve come in and they’ve started to chip away at these different verticals. But when you just look at the audience composition and you look at the usage rates we are verticalized. It’s why 50 percent of our revenue comes from the top six verticals in our business. That doesn’t happen by accident. It’s the money following the value that we’re delivering into the marketplace.
So, really what you’re hearing me say is we’re going to lean into it. We’re not a horizontal search provider. There’s only a couple of those and if you’re not the biggest one it’s not a good place to play. But when you look at home services, we have the largest home services business by audience and revenue in the country, have for years. Nobody talks about it, but we do.
So, you would build a specific product for home services given that that’s such a strength of yours?
Yes. Yes, lean in. So, as we think about how can we leverage our strength in home services? From a consumer intent perspective and from a client knowledge perspective to make the experiences more relevant to both sides of the party. So, yes, absolutely. So, as we think about this we do think about more verticalization across the verticals that we’re strong in. And again, they’re considered purchases, which makes them more valuable. Legal, medical, home services, so on and so forth. People are looking for a trusted brand. They need help making these decisions.
What we’re really thinking about is how can we lean back into our heritage and then build upon it? I like our brand. We’re not going to run away from our brand. We’re going to modernize and contemporize our brand. But ultimately, how you build trust with consumers is making key promises through the product. And so, YP means something. I’ll share with you a statistic. When we were on SEM campaigns and we used YP as the brand. and then we run the exact same SEM campaign and we used Yellow Pages as the brand, the click to rate on the Yellow Pages branded one was 30 percent higher than YP.
That tells you something about how consumers resonate with the brand. They click on it, they trust it, they want to use it, they know what it is. You’re going to see us lean into that and like I said then modernize and contemporize it.
Is your customer base still mostly SMBs and independent contractors, or enterprise businesses as well?
We do franchise. We have a couple of different ones. We have franchising agency networks. We do and we’ve got a good business there. We also have larger regional players who participate. But at the end of the day, it’s all about the local activation for us. So, as we think about dealing with national players we think about it from the standpoint of how can we help you activate the local?
If you want to do brand building, there are other places to put your money. If you want to activate local and make the phone ring we can do that. We’ve been doing it for 130 years. We can help you with that.
When you’re talking about “make the phone ring” — what are you doing in the realm of attribution?
Most small businesses today know whether or not they’re getting more or fewer phone calls and know whether or not the price is going up or going down. So, they’ve already got that measure in their head. What we’re really doing is driving adoption of call tracking numbers. We’re also adopting lead definitions that are more aligned with our clients.
Again, what you hear a lot in digital media and this may sound odd coming from me, but we make up these measures. We create these measures of a click-is-a-proxy-for and then we train and we train, but at the end of the day our clients are really caring about, “Okay, I got it. But did the sale that you generated for me is it costing me more or less than it did a week ago? More or less than it did a year ago?” I think we stay focused more on that.
Call tracking number adoption. A super simple thing. We more than doubled it in the last couple of years. You’re going to see us more than double it again. Because if we’re going to lean into that as our value metric, well, then we better be able to measure, we better be able to talk about it and as we talk about what a quality call is it shouldn’t be an artificial creation of ours where there are different verticals that we focus on, because each one’s a little different. A lawyer has a different set of criteria for a call than a doctor does, than a roofer does and a plumber does. And so, better aligning around that is what you’ll see us do as well.
Do you think small businesses are getting more savvy generally?
They are. I’m somebody who’s always thought that the local business people are some of the most sophisticated business people in the world and I mean that. Because these are people who take real personal risk. And so, just because they don’t use the words that we use doesn’t make them savvy or not savvy.
So, I’m going to ask you the same question I ask every time we have an interview.
Good. I’ll hopefully give you the same answer.
When will the last print Yellow Pages be published?
Not for the next five years.
You were very pro-print in your presentation.
I am. Everybody is bad-mouthing print. I will tell you we expect print to decline — can’t stop it. But every point of print is worth a lot of EBITDA.
So you’re not in any hurry to kind of get out of it.
No. And it’s not going to zero anytime soon, because people still use it.
In your presentation you said that traditional print is better with digital and digital is better with print? Tell me how that dynamic works.
It’s with the activation side of it. So, on the print side I can activate it in digital in a way that reinforces the value. So, I can only do so much in a double-truck ad in the Yellow Pages, but if I drive that consumer to a website I can do more. I can tell them more about me. I can have video content. I can have coupons. I can have content that doesn’t become stale.
And so, is it basically just directing people to a website?
Moving them back and forth. Moving them back and forth, and in between. So, think of it as: we’ve got the book, we’ve got websites, and we’ve got audience extension. And it’s moving the consumer back and forth between these and making certain that when we see the consumer we’re putting the advertiser in a position to be successful. That’s all. And again, it’s a simple strategy but it’s a traditional media strategy and it’s one I think we’re really well positioned to execute.
David Hirschman is a co-founder of Street Fight. This interview has been edited for length and clarity.
YP’s Jared Rowe will be a featured speaker at #SFSNYC on June 12-14 in Brooklyn. Join him and hundreds of other local luminaries at the best Street Fight Summit ever! Click here for tickets and more info.