Yell Group’s CEO Mike Pocock said a strategy overhaul is coming this summer and imparted at length the logic behind his current digital plan, as the group reported another quarter of lower revenue…
“Yell’s challenges stem from both economic pressures and, more fundamentally, from the shift to digital media. However, Yell also has clear strengths including its brand, its relationships with 1.4 million SME customers, the quality of its people and its powerful cash flows.
“We expect print to continue to decline steadily. That said, print remains highly cost-effective for our advertisers and it will continue to be so, complementing digital for many years to come. In this reducing print market, we believe that Yell continues to gain market share.
“The digital marketplace is rapidly growing and highly fragmented. It is one where the consumer is a leader and a small market share can mean big business and strong growth.
“General search is consolidated. Local search is not, and Yell is already the source of many of the local listings produced by general search engines, as well as growing its own Yell destination sites. The foundations of web print are established; Yell’s website creation and management services are developing and growing rapidly; Yell has successfully entered the mobility space, itself still very young, with apps on smartphones and iPads; and it is beginning to explore social networking and recommendation.
“All this can be radically built upon to provide solutions for consumers and to be a solutions provider for the SME, making Yell as relevant in the digital age as Yellow Pages was in the print only age – perhaps more so.
“Doing this will change Yell’s structure, products, systems, culture and prospects. It will open up not only the opportunity for digital revenue streams but also for substantial synergies through group-wide operation of key functions and it will bring with it new strategic partnerships.
“It will take time to change the revenue trajectory and to secure the available synergies but we can see a course for Yell to return to sustainable profitable growth and we believe Yell has the business base and financial strength to achieve this.”
— Digital revenue up 10.4 percent to £342.2 million.
— But print revenue down 18.4 percent to £936.6 million.
— So group revenue fell 11.8 percent to £1.35 billion.
The problem with Pocock’s argument that “general search is consolidated, local search is not”, is that many people no longer see a difference between Googling for info on a web page and Googling for their local hairdresser’s phone number. Supplying the search engines its local business data likely cannibalises Yell’s main raison d’etre, leaving it to search for other income streams.
The company says it’s making 5,000 websites a week for its advertisers, and says it recently hooked up with group buying site Weforia and reputation management tool Chatterhub.
Pocock’s hints about the new strategy point to cost cuts – but Yell already made £19.2 million in savings. On Yell.com and YellowBook.com as well as in the printed Yellow Pages, Yell’s advertiser count is falling, though it is managing to extract more digital spend from fewer advertisers.