Article from YP Talk
YP Sales & Marketing Section
The "Business of Yellow Pages" - What's Really Happening and Who is Contributing
- Noëlle M. Mullin, President & Founder of YP\Assistants
OK - I'll admit it. I am a Yellow Pages geek. I have worked with the media selling and servicing it for several years on the CMR side. At present, I have my own consulting firm that assists Yellow Pages advertisers in their agency selection and marketing needs. This change in position provides me a new "client's perspective" of the media, CMRs and publishers. I am fortunate to have had the opportunity to examine the media from multiple vantage points and I am continually amazed at the advertising prowess of those little yellow books.
Print and online directories are conducive to ROI test - unlike many other media sources such as television and radio. Print directories are updated and refreshed once a year - not necessarily so with Internet content. Yellow Pages ads are freely researched by potential customers - vastly different in delivery to web pop-up ads and email spam. Moreover, unlike most media sources, almost everyone in America has immediate and at-their-discretion access to Yellow Pages with a copy kept in most people's junk drawer.
With an advertising vehicle that is so measurable, current and universally found, why is it that the "business" of Yellow Pages has become so difficult to manage for those of us in this industry? Why do clients have so many misconceptions? Are competing CMRs being pennywise and pound-foolish? Why are publishers seemingly biting the very hands that feed them? The "business" of Yellow Pages has become a bit of a different animal than it was just a few years ago. So who can we blame?
- The Advertiser?
First off, let's look at the client or advertiser. What has been one of the biggest shifts in client mentality towards Yellow Pages? It's simple - the advertiser's advertising departments have lost control. A recent hazardous trend is that the advertisers' procurement departments are in the driver's seat when it comes to overall Yellow Pages agency selection and decision-making.
There is no doubt that purchasing specialists should be vested and involved in the Yellow Pages program agreements their corporate entities approve. After all, the purpose of a procurement team is to challenge their fellow departments' spending in order to streamline expenses and create economies of scale. Nevertheless, the Purchasing Department (many times) are given the reigns entirely and there is a cost to the advertiser, the CMR, and ultimately the industry.
WHAT'S REALLY HAPPENING?
Procurement's major concern is not marketing strategy, ROI testing, or media usage - instead emphasis is placed upon the upfront cost of Yellow Pages advertising and how it impacts the advertiser's bottom-line. These purchasing specialists do not pay attention to the (many times larger) internal program savings a strategic Yellow Pages program can create through directory testing, publisher incentives, IYP bundle-buys, and CMR strategic media planning. And while these tactical initiatives cost up front in service and execution, they usually produce highly successful ads which generate profitable conversions for the advertiser thereby substantiating the cost of the advertising placed and the cost of the CMR service needed to support the advertising.
OUTCOME:
CMRs are in a delicate balancing act of how to provide the client with the large discounts they request while still maintaining the profits needed to pay their staff to service the account in a manner that will prove the optimum strategy and value of Yellow Pages and make the media work to build the client's business.
- The CMR?
What about the CMR (Certified Marketing Representatives)? How are they hurting Yellow Pages advertising? Simple - they are competing with the very discounts imposed by the advertiser's procurement departments to a level that is many times to their own detriment and to the overall downfall of the media. How? Many CMRs are having to resort to offering exorbitantly large discounts to advertisers without providing them full disclosure as to how their account will be handled (or not really handled as the case usually evolves). It truly is a matter of simple math and deductive reasoning.
WHAT'S REALLY HAPPENING?
Let's say there is an account that is looking for a new CMR. The account value is one million dollars and a bidding CMR offers an unreasonable discount of 10% to appeal to the client's procurement team and unscrupulously secure the business. Let's be optimistic of publisher commissions being at 20% overall - the CMR is left with 10% for profitability. Now chop away at that 10% with the following:
- Payroll to the CMR account team, CMR operations team and support staff (finance, billing, creative)
- Unbillables, uncollectible, and write-offs - no account team is flawless and local sales cause pricing disputes (discussed later)
- Management of billing, invoicing and collections - no client always pays all invoices without billing questions, on time and in full
- Overhead to the CMR location that manages the account.
At this point, the 10% that is left is mostly a wash and we haven't even discussed marketing, testing and strategic planning costs that play in to a quality program. What often happens is the CMRs that offer high discounts are simply not offering strategic planning, testing and marketing to their clients. How can they when their meager self imposed profits are easily absorbed in the day to day activities of business? But at least they secured a million-dollar client - right? WRONG!
OUTCOME:
An already skeptical client's procurement department (noting their lack of advertising and marketing expertise) is provided with a lack luster Yellow Pages program that offers no proof of efficacy. The client is further unsatisfied with their CMR account teams lack of attention, who (unbeknownst to the client) are stretched thin handling too many accounts in order to keep the CMR's costs down. In the end, many clients aren't sure that Yellow Pages advertising is a wise use of limited funds with no proof of value. They in turn drastically cut their program - or worse yet - they completely drop their Yellow Pages advertising altogether.
- The Publisher?
And finally - we have to direct some focus to directory publishers - both print and online. It is no industry secret that the level of competition between the local and national sales channel is already ruthless. Many times local sales teams, in an effort to make their numbers, offer their ads at lower rates than the national channel causing severe confusion within the channel. CMRs are usually forced to "eat" the difference and match the local cost if the client isn't already turned off by the inconsistencies between the two channels and how it makes Yellow Pages look devious and like a scam.
WHAT'S REALLY HAPPENING?
Local sales claim they do not always know that an account is national. The fire starts when they inform their prospect, an existing CMR client, of the pricing differences for ad units. The advertiser is in an uproar and grills their CMR account team as to why this local sales guy could offer the same ad for so much less. This only solidifies the client's growing perception that the CMR is not giving their account the attention it deserves.
OUTCOME:
What can the CMRs do? Re-educate the client? All that is left is for the CMR to apologize, eat it and match the price, which leaves the client open to talking to other local salesman to see if they can continue to chop away at cost of their national program. It becomes a vicious cycle.
Yes, there is a solution...
So what can be done? Basically, one of the players needs to step up and start the flow of change. I believe it needs to start with the CMRs. CMRs need to take the first step in halting the high discounts and get back to the business of selling Yellow Pages on value.
First, virtually every client and prospect I reach lists dissatisfaction with their CMR due to lack of attention as their main reason for reviewing their agency - not program expense. If CMRs can focus more on proving the value of the media with testing, case-studies, and success-stories, advertisers will respond. My clients have consistently indicated they will pay for a $1000 ad if it generates $10,000 in revenue - independent of a discount.
Second, without the pressure of high discounts, CMRs will hone the very proficiency they are noted for - client service and media expertise. A CMR armed with relevant powerful case-studies based upon client successes is much more of a strategic support resource than a CMR just offering a high discount.
Third, as a direct result of CMRs being focused on their clients, the client's procurement department would be less likely to get involved. Why? Because a CMR that operates only as a high discount price-house usually only touches the client with little more than an invoice. A full service CMR that operates as an extension of the advertiser's advertising department touches the client with media planning, test results, strategic planning models and other reports and agendas - a combination that even a procurement group will smile about.
And finally, if CMRs can step up their level of client-care, the competition with local sales would be quieted. Local publisher's sales already have plenty of work with local leads. National clients want and need a strategic partnership with their CMR to full realize the results of their Yellow Pages program. That level of support will be difficult for a local sales person to match.
Go Team!!!
If one of members in this endless kill-or-be-killed circle can break the chain, all of us will truly be back to fighting for business based upon the quality of our work, fairness of price, and the strengths and merits that make clients want to hire us in the first place. This $26 billion dollar worldwide sandbox is big enough for all of us.
In the end, I remain a stead-fast Yellow Pages geek and inexhaustible Yellow Pages educator. I will never accept business that seeks to destroy the industry I call my sandbox. I live with the optimism that my efforts with advertisers, however small, will lead to stronger relationships with their CMRs, a fundamental belief in the effectiveness of the Yellow Pages and an on-going robust, energetic marketplace for all of us in this industry.
