{"id":19290,"date":"2016-11-18T16:41:46","date_gmt":"2016-11-18T21:41:46","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/yellow-pages-evolving-to-survive-mass-extinction\/"},"modified":"2016-11-18T16:41:46","modified_gmt":"2016-11-18T21:41:46","slug":"yellow-pages-evolving-to-survive-mass-extinction","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/yellow-pages-evolving-to-survive-mass-extinction\/","title":{"rendered":"Yellow Pages: Evolving to Survive Mass Extinction"},"content":{"rendered":"

In the 90s, nearly every home in North America had a thick book printed on yellow pages that listed the telephone numbers of all the businesses in the local area.\u00a0 This book, compiled, published, and distributed by Yellow Pages (TSX: Y), served as a two-sided information sharing platform in local markets, amassing a network of local businesses (SMEs) and matching them with a large consumer base who need the products and services provided. \u00a0For decades, YP defended its network of SMEs and consumer with an aggressive sales force that sold ad space and a robust distribution network to make sure a phone book was delivered to every home.<\/p>\n

As the Internet became the most popular information sharing platform, YP\u2019s printed directories are more likely to be found in recycling bins than next to\u00a0telephones.\u00a0 In 2016, 40% of Americans use a directory at least once a month compared to in the 1980s, when 50% of Americans used a directory every day.[i]<\/a>\u00a0 Businesses quickly flocked to the cheaper, more effective advertisement online.\u00a0 The print directories platform was trending toward a death spiral as its networks shrank below critical mass on both sides.\u00a0 By 2009, three major directory businesses had filed for bankruptcy.[ii]<\/a><\/p>\n

\u00a0\"yp-phone-books\"<\/a><\/p>\n

Source: http:\/\/businessmodelinstitute.com\/final-nail-in-coffin-of-yellow-pages-business-model\/<\/p>\n

Evolution from Print to Online<\/strong><\/p>\n

Unlike its competitors, YP was quick to react to the changing landscape.\u00a0 It began to acquire online directory companies in 2007 and had made 11 acquisitions by 2010.[iii]<\/a>\u00a0 Realizing that companies like Google are providing directory services for free, YP shifted its business model from directories to a full service, multi-channel marketing solutions company.<\/p>\n

Yellow Pages\u2019 Transformed Market Positioning[iv]<\/a><\/strong><\/p>\n

\u00a0\"yp-market-position\"<\/a><\/p>\n

To create more value for SMEs, YP bundled print and online directory services with marketing consultancy services such as multi-channel marketing plans, search engine optimization, social media placement strategies, and consumer data analytics.[v]<\/a>\u00a0 To create more value for consumers, YP made its directory easier to use across multiple platforms and industries.\u00a0 The YP platforms are available across industries, including business & people search, real estate, retail, and dining.[vi]<\/a><\/p>\n

To support these initiatives, YP has restructured the organization by creating over 400 positions in digital marketing, media, and IT and shedding 300 positions that are not aligned with digital operations.[vii]<\/a>\u00a0Despite the changes, YP has maintained its sales and customer account services functions to continue its focus on providing top service to both business and consumers.<\/p>\n

Additionally, YP is pursuing a \u201cReturn to Growth Plan\u201d<\/strong> focused on four operational levers to improve growth and profitability and it transitions its business model:[viii]<\/a><\/p>\n

    \n
  1. Extend brand promise:<\/strong> launch advertising campaigns across media channels to highlight improved content and search functionalities available on the mobile app and online platforms<\/li>\n
  2. Strengthen media assets:<\/strong> Improve user experience for consumers<\/li>\n
  3. Enhance go-to-market strategy:<\/strong> Increased customer (SME) acquisition and retention by investing in sales force, providing data analytics, and improving customer service through a B2B solutions website<\/li>\n
  4. Improve business efficiency:<\/strong> rationalize the shrinking print segment of the business<\/li>\n<\/ol>\n

    \u00a0<\/strong>Yellow Pages Today<\/strong><\/p>\n

    Despite growth of the digital business as a % of the total revenue, YP\u2019s top line has consistently shrank since 2013.\u00a0 After a disappointing earnings release earlier in November 2016, share price dropped 13.6% from C$22.00 to C$19.00.\u00a0 Worried by a declining customer count, many research analysts have expressed concerns about YP\u2019 growth in the digital segment and downgraded its\u00a0rating. [ix]<\/a><\/p>\n

    \u00a0\"yp-onlines-sales\"<\/a><\/p>\n

    Next Steps<\/strong><\/p>\n

    YP has found a way to survive, but it is by no means thriving.\u00a0 Profitability has been declining as the digital segment is replacing the more profitable segment.[x]<\/a><\/p>\n

    \u00a0\"yp-profitability\"<\/a><\/p>\n

    In order for the company to still exist in the next 5 years, YP needs to:<\/p>\n

      \n
    1. Differentiate from competitors by focusing on smaller and local businesses.<\/strong> YP needs to leverage its well established brand and network in local geographies to compete with newer, more tech-savvy companies like HubSpot.\u00a0 YP can use its local expertise to develop bespoke marketing strategies for local SMEs to create this differentiation.<\/li>\n
    2. Keep print segment to generate cash.<\/strong> Although the industry is shrinking, print directories is still a $3 billion industry.[xi]<\/a>\u00a0 It provides stable cash flows, and its target customers (people over the age of 60) have high disposable income, may not be comfortable with using the internet, and have expensive service needs like home repair and healthcare.[xii]<\/a>\u00a0 YP should try to keep this segment alive and profitable for as long as possible.<\/li>\n<\/ol>\n

      Although YP survived the mass extinction of print directories, does its current business and operating model have enough flexibility to allow it to thrive in this new environment?<\/p>\n

      (788 words)<\/p>\n

       <\/p>\n

      Cited Sources<\/strong><\/p>\n

      [i]<\/a> \u201cHow Do the Yellow Pages Still Make Money.\u201d\u00a0 https:\/\/www.thumbtack.com\/blog\/how-do-the-yellow-pages-still-make-money\/<\/em>.\u00a0 Pub Date: Oct 2015, Access Date: Nov 2016.<\/p>\n

      [ii]<\/a> Palank, Jacqueline.\u00a0 Dex Media Files for Chapter 11 Bankruptcy Protection.\u00a0 http:\/\/www.wsj.com\/articles\/dex-media-files-for-chapter-11-bankruptcy-protection-1463453027<\/em>. \u00a0Pub Date: May 2016; Access Date: Nov 2016<\/p>\n

      [iii]<\/a> Company Filings, Capital IQ<\/p>\n

      [iv]<\/a> Company Presentation, https:\/\/corporate.yp.ca\/media\/filer_public\/9f\/85\/9f8513d5-677a-4b85-9c16-782e93b2f6d4\/q2_2016_investor_presentation_english_only.pdf. <\/em>Access Date: Nov 2016.<\/p>\n

      [v]<\/a> Woodie, Alex.\u00a0 \u201cHow Big Data Keeps Yellow Pages Group in the Black.\u201d https:\/\/www.datanami.com\/2013\/12\/02\/how_big_data_keeps_yellow_pages_group_in_the_black\/<\/em>. Pub Date: Dec 2013, Access Date: Nov 2016.<\/p>\n

      [vi]<\/a> Company Presentation, https:\/\/corporate.yp.ca\/media\/filer_public\/9f\/85\/9f8513d5-677a-4b85-9c16-782e93b2f6d4\/q2_2016_investor_presentation_english_only.pdf. <\/em>Access Date: Nov 2016.<\/p>\n

      [vii]<\/a> \u201cYellow Pages Announces Corporate Realignment Following Sustained Progress in Digital Transformation. https:\/\/corporate.yp.ca\/en\/yellow-pages-news\/press-releases\/yellow-pages-announces-corporate-realignment-following-sustained-progress-digital-transformation\/<\/em>. Pub Date: Oct 2015, Access Date: Nov 2016.<\/p>\n

      [viii]<\/a> Press Release, https:\/\/corporate.yp.ca\/media\/filer_public\/5a\/7b\/5a7baeaa-e556-4154-afb5-acb8ff69eaeb\/2014q2_press_release_and_financial_highlights.pdf<\/em>, Access Date: Nov 2016<\/p>\n

      [ix]<\/a> McReynolds, Drew.\u00a0 \u201cLess Confident on Near-term Re-Rating Potential; Downgrading to Sector Perform.\u201d RBC Capital Markets.\u00a0 Pub Date: Nov 2016, Access Date: Nov 2016.<\/p>\n

      [x]<\/a> Company Presentation, https:\/\/corporate.yp.ca\/media\/filer_public\/9f\/85\/9f8513d5-677a-4b85-9c16-782e93b2f6d4\/q2_2016_investor_presentation_english_only.pdf. <\/em>Access Date: Nov 2016.<\/p>\n

      [xi]<\/a> Kadet, Anne.\u00a0 \u201cYellow Pages Hang On in Digital Age.\u201d http:\/\/www.wsj.com\/articles\/yellow-pages-hang-on-in-digital-age-1466157601.<\/em>\u00a0 Pub Date: June 2016, Access Date: Nov 2016<\/p>\n

      [xii]<\/a> \u201cHow Do the Yellow Pages Still Make Money.\u201d\u00a0 https:\/\/www.thumbtack.com\/blog\/how-do-the-yellow-pages-still-make-money\/<\/em>.\u00a0 Pub Date: Oct 2015, Access Date: Nov 2016.<\/p>\n

       <\/p>\n","protected":false},"excerpt":{"rendered":"

      The internet and search engines have made printed business and personal directories obsolete. 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