Advanced Development Should Be The Future For Yellow Pages

There’s a lot of discouraging news for the yellow pages industry these days. A combo of unhappy financial numbers mixed with reorganization and layoffs has demoralized many in the industry. Is it “game over” for yellow pages companies? Not necessarily. Not if leadership works on future strategy.

A few years ago, I warned the industry that online searcher trends indicated problems for the yellow pages. It’s been a near “perfect storm” for the yellow pages industry since then, and the pace of blows seems to have ramped up further as we go into 2011, with layoffs and possible mergers continuing in widening ripples following notable Chapter 11 reorganizations.

Even among some executives in yellow pages companies, there is some resigned belief that print yellow pages usage and associated ad revenue may erode as more consumers get business information via Internet and mobile search. Sadly, some of the upper-hand that these companies enjoyed in the earlier days of the Internet appears to be rapidly transforming into lost potential in 2011.

The difficulties in replacing gigantic amounts of revenue from legacy printed advertising products with newer, cheaper Internet ads, coupled with a sluggishness to innovate, while attempting to compete against a plethora of online local companies (not least of which is Google) — seem to be increasingly insurmountable.

Some belief in inevitability of YPs to evolve and compete seems to be further pervading Wall Street, as analysts seem to be considering it “just a matter of time” before YP companies are inoperative, and some asset-sales virtuosos seem to be sharpening their knives and salivating at the prospect of cutting the companies up and selling off the pieces.

I have some level of idealism, so I dislike the short-term strategy that I see infecting the industry. I think it’s terribly short-sighted to think that there’s no hope of transforming the companies into new money-making machines — it shows a lack of imagination and a completely ruthless dedication to the short-term profit while wasting the potential of a future.

Aside from my idealism, I think there actually are some highly-compelling reasons to consider that the game doesn’t have to be over. Time and again, some of the more visionary people in the yellow pages sector have innovated products that continue to give Google a run for its money.

As I challenged the yellow pages industry two years ago in my post, “What Could Save The Yellow Pages? 10 Ideas“, these companies should really be pushing innovation. They should be creating agile advanced development units that are empowered to experiment with local products.

They should be beefing up the personnel in these units, using significant salaries to attract top talent, and insuring that they retain the real innovators they already may have in-house.

It’s not widely-known, but Google Maps didn’t originate map-based search interfaces — yellow pages companies did it first. Google merely tweaked the concept with some seductive AJAX and tacked it onto the huge audience of consumers using regular web search.

Some yellow pages companies, particularly in Europe where Google hasn’t developed the local search marketshare it has in the U.S., are innovating and doing a pretty good job at coming up with products that are compelling and sticky for consumers.

For instance, Yell.com‘s work in 3D map navigation imagery and augmented reality are arguably better in some ways that Google Maps. (I mentioned seeing some demos of this when Yell’s Matthew Bottomley presented some of their work at the BIA/Kelsey DMS conference.) Here’s a video demo of their application:

[youtube]https://www.youtube.com/watch?v=tOw8X78VTwg[/youtube]

The race is not over for the yellow pages and other local business information sites in interfaces such as the iPhone, Android, iPads, and other tablet PCs or smartphones. Gaining a foothold in these sorts of interfaces could translate back into increased marketshare in the regular Internet.

Unfortunately, a number of companies and executives appear to be squandering the future in return for comparatively minor cost-savings in the current financial quarters.

It’s quite clear that if there’s to be any future at all for yellow pages companies, it’s to be in their interactive departments. If you’re going to cut employees, you’d better only be doing it on the legacy print side of the house.

Otherwise, the message you’re sending to employees, stockholders and Wall Street is that you don’t plan to be around very long. Don’t you think stockholders might want to have a viable stock that could work for them for many years as opposed to only a few dollars in this quarter?

Oh, and one other thing — I don’t think the best innovation can come from oversees outsourcing. Particularly in terms of local interactive products. People who have grown up in a country which barely has street addresses and are not highly familiar with our culture will not be as effective at creating the local products for our market.

So, make your choice, yellow pages industry! Accept some risk through putting your remaining eggs in the basket of innovation, or else take the easy and predictable route of dying a death of a thousand cuts through repeated cost-cuts and layoffs of your primary assets.