Three Lessons from the Dex Media/YP Merger

Whispers of the rumored Dex Media/Yellow Pages merger began months ago — buzzing in my ear like an aggressive bee chasing a floral scented perfume. Already facing delay after delay in our efforts to integrate our tech into third-party sites, my company could hardly afford to pursue another partner with “lots of moving parts.”

So, the ongoing negotiations posed a threat to my own collaborative efforts with each. Yet, the inevitability of delays also meant that we couldn’t afford to eschew the biggest and best opportunities out there. That meant continuing to request introductions, recite my elevator pitch, and raise my company’s profile among team members and decision-makers at both Dex Media and YP. My team continued to do all these knowing that even the most enthusiastic advocate would inevitably bring up timing and those pesky “moving parts”. 

Now that their merger is official, I’m optimistic, not simply because key decision-makers have are back on solid ground with a demystified vision and the mental bandwidth to dig into our value proposition. I’m also optimistic because the realization of DexYP proves that the company already gets some key principles that I would often spend time arguing. For Dex Media and YP to become DexYP, they had to teach one another three lessons that every business in the local space should know: the primacy of distribution, the fallacy of stagnation, and the inevitability of market consolidation.

Distribution is kingdom
My company learned the importance of distribution years ago when we offered free leads to available snow-plowers to help folks get through a major storm. Before then, we relied on content and salespeople to generate interest and build our marketplace; the uninitiated never got exposed to our service. This strategy stunted our growth and disappointed many of our first-time customers whose service requests came back with no response. Then, we discovered that sending leads even to companies that had never heard of us before created an organic sales pipeline. Every lead sent from an underserved market became an opportunity to get discovered by new businesses and grow our business network in new areas.

As we pitch our technology to other local search companies, we try to sell them on the value of prioritizing distribution. And, since Dex Media valued YP’s sprawling distribution among SMBs enough to sign onto a merger, I’m confident that the new DexYP would be willing to explore more risky distribution methods like an organic lead pipeline composed of non-paying businesses. Of course, they aren’t the only ones. Angie’s List created a freemium membership level for businesses and consumers because it realized that quality content is a pauper among kings if it doesn’t have a strong and growing kingdom.

Being and staying innovative beats becoming innovative
YP, like Angie’s List and some other legacy brands, had been making significant strides in terms of returning to its innovative roots. The company that once owned the local search market by flipping its incredible publication into one of the first online directories had begun billing itself as a  “multi-platform solutions company focusing on up-to-date search” and expanding its digital offerings. Still, according to BIA/Kelsey, other large directory companies were more aggressive in their push towards digital– aiming to become a primarily digital company while Yellow Pages was only on track to getting half of its revenue digitally. In the long run, even with its partnerships with Yelp and Google, its buyout of voice-based search company eFusion, and its new web and mobile app offerings, its relatively glacial evolution would have spelled extinction for the Yellow Pages.

Meanwhile, HomeAdvisor and other powerhouse brands are illustrating the power of being a trusted but ever-evolving brand– leveraging a trust to gain early adoption for ongoing innovation. HomeAdvisor was the first local search app for the Apple Watch and showed up early for Amazon Echo. HomeAdvisors 38% growth rate compared to YPs 6% shows just how powerful a difference ongoing innovation can make.

Yellow Pages (and so many other companies who’ve been shaken from complacency) often feels tempted to avoid partnerships to develop and launch new features internally. Unfortunately, the process of becoming innovative is no match for the knowledge, capacity, and dexterity of companies that already are. YP proved its acceptance of that fact through its partnerships with Yelp, Google, and others and through its merger with multi-media powerhouse DexMedia.

Market consolidation through collaboration
The fragmented nature of the local search market was a problem that everyone in search aimed to solve. Customers have to search several different platforms to find the one with the right available business in their community. Businesses would sign up for a lead generation service or social media platform only to learn that all of their potential customers are searching elsewhere. Fragmentation was a pain point we all aimed, and most of us aimed to solve it through market domination. All of us brands, large and small, believed that if we developed a compelling enough solution and marketed it the right way, we would disrupt our competitors right out of the game. Facebook and Google came close, but even they are discovering that collaboration is necessary. In the case of Facebook, my own TalkLocal is among its partners.

So many prospective partners hesitate to work with a technology provider that will work with their competitors. That narrow thinking results in inferior products throughout the industry and weakens demand from local businesses. Fortunately, the local search space is full deal-making among competitors, expanding and diversifying networks and improving customer experiences.

The local search space has undergone a paradigm shift. Where once I considered myself to be a prophetic heretic for preaching the value of distribution, constant innovation, and collaboration, I now am pleased to find myself preaching to the choir.

Manpreet Singh is Founder and President of TalkLocal, a local startup with apps on iPhone and Android which help consumers find and speak to high-quality local professionals in minutes. Follow him @MSinghCFA.