Yellow Pages, the Internet, and Browsers

Some people might say that the yellow pages are the original business data base. Researchers of business history find these time capsules buried in such places as Baker Library at the Harvard Business School. They are a fascinating snapshot of what people once bought and sold.

The Yellow Pages, a history

The first yellow pages were not yellow at all. They appeared in New Haven, Connecticut, in 1878 and contained no phone numbers. At the time the operator simply connected the caller. The first yellow pages contained fifty names and consisted of one sheet of paper.

The actual yellow pages emerged by chance one day in 1883. During a regular telephone directory print run, the printer ran out of white paper and, in a moment of invention born of necessity, he switched to some yellow paper stock he had on hand. Three years later, Reuben H. Donnelly, published a directory with names, addresses, products and services. In 1909, coupons became part of the yellow pages.

Some might say utilizing the yellow pages was an early "net browsing." In 1961 AT&T introduced the slogan, "let your fingers do the walking."

According to an article in FindArticles.com - The Reach Of The Yellow Pages - Industry Overview American Demographics, Nov 1, 2002, by Sandra Yin, as of 2002, there were over 7000 different books calling themselves Yellow Pages (YP) published by over 240 companies. Yin describes the familiar book:

They are decidedly unglamorous. The big, bulky Yellow Pages are the directories most commonly hidden in drawers, tucked away in closets and tossed under sofas. Sometimes they even double as booster seats for children too small to sit at the dining room table . . .

Although many consider YP publishing to be a mature industry with little potential for growth, this old ad medium has managed to survive in an era of new technology and is even undergoing a makeover to ensure that it becomes more relevant.

Ordering a book on-line or a pizza or even booking that trip to Hawaii - or is it Cleveland this week - or checking the bank account while we're at it, seems to be the way of the future. And in a world where people, and not their fingers, are doing the walking - replete with cellular phones - it is more likely the YP will stay under the couch or under junior.

Besides the phone going mobile, a generation of keyboardists has grown up knowing how to touch-type and are ready to buy based on what they see on a screen. Additionally, other on-line directories calling themselves "yellow pages" have entered the market as well. Thus, when speaking of yellow pages, it could be any of the over 7000 directories calling themselves that.

Yet the YP are resilient and Yin tells us that 119 million Americans, that's 57-percent, look in the YP once a week. That means they serve more people than are wired for the Internet.

Yet, the direction of the tide is clear, notes Yin. ". . . annual revenue growth for the industry has been slowing, dropping to a projected 1.5 percent in 2002 from 7.1 percent in 1999." She cites factors such as an aging population and an influx of those for whom the yellow pages are not part of a tradition. And she goes on to say, "In 2001, almost 1 in 3 (27 percent) said they used the Internet to look for products and services instead of consulting the YP, up from 17 percent in 1998 . . ." One wonders what that number is in 2005, but according to an older source, circa 2000, Evolving the last mile: digital-loop-carrier approach, "By 2002, it is estimated that 12.9 million DSL lines will be put into service, up from 770,000 in 1999, according to Piper Jaffray in US Bancorp's February 2000 report. It is expected that 60% of these lines will serve the residential market."

The Internet Cometh

The Order Entry Department now is the computer in every home.

In the 1980's, American Hospital Supply Corporation, AHSC, rolled forward with ASAP. In this concept, AHSC brought Just-in-Time (JIT) inventory control to hospitals. Placing computers at every purchasing agent's desk who would have one, the computer channeled orders to AHSC warehouses, and trucks with hospital supplies rolled up once or twice a day, sometimes more, with fresh inventory. The AHSC warehouse was now the hospital's warehouse. The best part was, the hospital no longer carried the inventory.

Two decades later, with computers increasingly making their way into homes, the concept that AHSC implement in the 1980's almost seems quaint.

Telephone vs. Internet

The interesting thing is that the telephone and computer operate over the same system - telephone lines.

Originally configured for voice transmission, telephone lines now carries far more data than they do voice.

In a recent television commercial for a travel service, contestants in a "Family Feud" style show had to book a hotel room in Hawaii to win the round. Straightaway, one of the families got a hold of the polite reservations operator at the hotel. The other family won by simply entering the data on-line.

Point made.

Instead of talking to an operator, agent, or order processing representative who keys in the information, the buyer simply does this directly and faster and probably more accurately. A customer is less likely to mis key their own name than is someone on the other end of the line.

Thinking back to the original one-sheet yellow pages, in 1878 the caller told the operator the name of the firm. The caller did not need the number. The call was placed and business transacted. At least two additional human-to-human interactions were made to whatever other interactions were required to fulfill the caller's request. With the advent of telephone numbers and the yellow pages, interaction with the telephone switchboard operator were reduced to a minimum. Today, the computer now makes it possible to by-pass the order processing center altogether and the customer's requisition, through a secure server, goes straight to the shipping department and to a courier and it is possible to track the parcel from the loading dock to delivery.

But not everything can be bought sight unseen or used over the net. Sandra Yin writes,

And the directories deliver: The typical YP display ad for an attorney pulls in an average of 900 calls per year and generates $17 in sales per ad dollar spent (bankruptcy lawyers generate an average of $31 in sales per dollar spent), according to CRM Associates. Restaurants take in $3.50 in sales per dollar spent, and at the higher end of the spectrum, car dealers and car services average $280 in sales per ad dollar.

Clearly, it is better to hire an attorney face-to-face. A leaky faucet is not effectively fixed via the telephone and only take-out has taken-off as a form of ordering food. Buying a car or refinancing a home over the Internet never quite ignited as a concept, although they keep plugging away.

She goes on to say,

Total circulation for the four Bell regional directory publishers, which accounted for 83 percent of YP ad sales [in 2001], was flat, at 373 million, compared with the previous year's circulation.

The Exodus Continues

The Yellow Pages are far from gone and they will continue to thrive. But the first sign of decline of the YP is that growth has flatten. The Achilles heel of the traditional YP is found its strength - its unity.

People can have the Model T in any color - so long as it's black.

Henry Ford (1863-1947)

Categories are the sections in which the yellow pages collect similar products and companies. The Yellow Pages are not a magazine where advertisers can bring their tailored message and special selling points to a specific customer group. Whereas a search on Google can narrow the choices, the YP has a different concept, and it clusters them. The Yellow Pages is a level playing field directory with specific slots and, in an era before relational data bases and search engines, this made perfect sense. While researching this article, this writer looked at the choices offered by the regional Bell YP. What is striking is how well they have organized the menu structure to shuttle the potential advertisers into a book-searchable category. And the categories are logical. Once the category is narrowed, an array of names, phone numbers, and addresses are offered. Some have small block ads - and now the real sifting begins. Who are these people? Can they meet my needs?

The web browsers break with this concept by competing outside the yellow-pages-style categories. This change in the way people make purchasing decisions is not easily matched by the way the YP have traditionally served although, ever adaptable, the major YP have gone on-line. But the model endures. The Yellow Pages are a searchable directory, not the entire Internet.

The modern search engine has accelerated this trend and changed the landscape dramatically. In just one month, March 2005, Google carried 2.3 billion searches out of the Nielsen, estimate of 4.3 billion searches, dwarfing the estimated 159 million people who look at the yellow pages at least once a month. Granted, the search engine traffic is not entirely pure commerce while it can be argued that that is true for the yellow pages. Yin says,

What makes YP users especially valuable as potential customers is their mind-set: They're ready to spend. No other ad medium can claim that 9 in 10 customers who see its ads ultimately make a purchase, according to New York City-based Simmons Market Research Bureau.

What the engines are doing, and what is shifting the way people buy, is that the eight words of the search engine query narrow down the search - beyond the YP categories.

Some marketing firms are encouraging business to push their product out through the web. The key, according to those who advocate this strategy, is to rank high in a search. Spam, pop-up ads, web page ads are part of the strategy to push the message out onto the Internet.

The alternative to the push strategy is the pull strategy. It is where the person at the other end of the Internet pulls the site because it fits a searcher's specific needs - and this is where a web site is a big asset to a small firm.

For example, enter the word "plumber" in Google and about 3.4 million hits appear. Add the word "Denver" to the search and I am down to 100,000 possibilities. Add the word "faucet" and it drops to 10,000. Add "24-hour" to the search and it is down to 282. Further refinements get me to the plumber who will come fix my faucet in the middle of the night.

Placing an advertisement in the yellow pages, due to the category structure of the pages, turns the product or service into a commodity - a no-no in the minds of many marketing professionals. Yet, there is good reason to continue to advertise in the Yellow Pages for certain customers will only come along this avenue.

On the other hand, the Internet offers several advantages. The founders of pingV recognized this trend and created the firm in order to address the new reality.

1. Search engines have changed how people get information.
2. Search engines have, in many cases, replaced existing channels of distribution.
3. Businesses are finding they can cut cost by fulfilling orders over the computer and customers seem to welcome that way of doing things.
4. The Internet offers a new way of getting a message out - and web sites can be rapidly adapted to reflect changing circumstance.
5. Small business are all too often ignored by larger web service corporations whose offerings are targeted toward other large corporations.
6. The largest web site growth with be among small business who can play on a new "level playing field" - the search engine.
7. There is a real need for world-class work, at an affordable price, by people who cater to businesses that are not part of the Fortune 500.