As I mentioned earlier, I had the opportunity to dine with Lincoln Milstein and Peter Negulescu last night. Peter, or Petey as I like to call him, is an old friend who started with IBM and ran through all sorts of interesting companies, including Excite, before landing at the helm of SFGate (the San Francisco Chronicle’s digital arm), which got him just in the nick of time, to my mind. Lincoln was the number two guy at the New York Times Digital before jumping over to Hearst earlier this year.
The conversation wandered happily all over the place, but an interesting tangent focused on local search and its impact on the Yellow Pages. Given that Hearst runs a bunch of newspapers, including the Chronicle, and that the Chronicle has scores of ad sales reps and a strong brand in its local region (I know, “strong” is an arguable term, but let’s leave that one aside for now), I asked Petey why SFGate isn’t an aggressive player in the local online advertising market. While I can assure you Peter has very interesting plans in the content space, he chided me for my ignorance regarding the 800-pound gorilla of local markets – the Yellow Pages. “They have like 6-700 local sales people in every major region,” he told me. “They visit every merchant in town.” In other words, the Chronicle can never compete.
I then asked their opinion of an idea I have been turning over in my mind for some time – that of Yahoo becoming the new Yellow Pages. Stay with me here, it might take a while for me to explain. My idea is this: Given that Yahoo Local is a very well received service, and given that it basically builds a web page on the fly which describes a local merchant’s offerings, and given that that local merchant can upload basic content to Yahoo Local about his or her business for free, why isn’t Yahoo aggressively courting local merchants with, in essence, the equivalent of online Yellow Pages ads? Turns out, Yahoo *has* launched a rudimentary “premium” listings product (I covered it here), and I can imagine the day when that service becomes a real force in the local listings market, one that could eventually unseat the Yellow Pages, if Yahoo plays its cards right.
In my first post on this subject, I wrote:
… it became increasingly clear to me that were I a small business owner, I’d want the ability to edit my listing so I could make my business look more appealing. In fact, if Yahoo Local were sending me leads, I’d very much want to be able to buy my way into a better listing – perhaps post stellar reviews of my establishment, snappy come ons, the like.
The more I think about this, the more I think it will happen. If I run a small deck construction company, and I notice that Yahoo Local is sending me leads, I really am motivated to have that first page have all sorts of things on it that are not there now – a picture of a beautiful deck, testimonials from happy customers, etc. And I want the ability to update that site as often as a like – unlike the Yellow Pages, which updates once a year. (Verizon does allow for these kinds of updates already on its site.)
So with all this in mind, I spoke to Paul Levine, who runs Yahoo Local. And I learned a lot. My first question was basically the same as the title of my first post: With services like Yahoo Local, who needs the Yellow Pages anymore?
That’s when my education continued. Turns out, Yahoo has a significant relationship with the sales forces of three major Yellow Pages publishers: SBC, Verizon (for Canada), and BellSouth. That’s more than 5000 local sales reps who carry Yahoo Yellow Pages (*not* Local, interestingly) in their bag, right alongside their own print and online listings. That relationship is “very productive” for Yahoo, Levine noted, and he took pains to make sure I understood he does not subscribe to my nascent “Yahoo is undermining the Yellow Pages” riff.
However, the fact that this sales relationship exists only convinces me further that in the end, change it is a coming to this space. Yahoo has a history of working with partners until such time that the partnership is superseded by Yahoo’s own business needs – just ask former partners Overture and Google about that trend. And Levine did acknowledge that the grassroots demand from merchants who want to work directly with Yahoo to update and add value to their listings was “exceeding expectations.” As Yahoo develops this market, I expect they will also develop a very sophisticated internal sales force to manage their merchant relationships, one that probably can do the job currently being executed by those 5000 Yellow Pages reps in a far more productive and efficient manner.
Will online replace the Yellow Pages? Ask anyone under 35 that question – to most of them, the Yellow Pages represent an unwieldy doorstop, an irritating drag on the recycling bin. Most of the growth is online, and the Yellow Pages industry certainly knows that.
The fact is this: it’s always less than ideal to depend on a third party to carry your products in their sales bag. And as online becomes the key driver of local sales leads, expect Yahoo, in particular, to become a very aggressive player in the space. For now, Yahoo and the Yellow Pages are happily co-existing. But when Yahoo’s base of local merchant relationships hits a tipping point, expect them to become significant competitors.
Update: I neglected to mention Yahoo Local has a cool new mobile feature, driving directions to your phone, Gary has the scoop here.
Great post John. I’ve been following the Yahoo! local search play with interest, especially as you point out, within the context of them becoming the ‘next Yellow Pages’. Your friend Petey is bang on when he notes that he can’t beat the 600-700 local sales reps per market fielded by Yellow Pages.
You might be interested to note that here in Toronto, we’ve launched an offering – CentrSource.com (www.centrsource.com) that directly addresses the challenges and opportunities you speak to. We provide an open market intranet ASP solution (www.responseexchange.com), that any advertiser, agency or media can access to create microsites we call ResponseBoxes. These ResponseBoxes are effectively perishable mini-ecommerce sites that can be associated with advertising in any media, or they can serve as stand alone directory listings. This content can be accessed not only through our website, but also through any advertiser and/or media company that wants to provide a link to us on their website. Why would they do this? Because on clicking on the link, the consumer would be exposed only to the ‘live’ content that is locally relevant to them. This means the consumer in Seattle could be exposed to offers unique to that market, vis a vis a consumer clicking on the advertiser site in Miami. The microsite can be changed on the fly, meaning that merchants can have daily (or hourly) offers.
Our key differentiator is that we not only provide a directory solution, we enable the advertiser to give the tools to the consumer to indicate their place in the purchase cycle – put me on your email list, vs. CALL ME THIS VERY MINUTE!
We too have to beat the YP gorillas out there. Our solution is to pre-vet and load transactional (ie: etailer) websites on our system. For our current beta market in Toronto, we have loaded over 6,000 advertiser websites. These include over 2,000 local advertisers and thousands of international, US and Canadian websites. We have now started the process of going back to these advertisers to direct them to our self service pay for performance system. They only pay when the consumer clicks on a specific action item designed by the advertiser – and you will see we present many opportunities for the consumer to do so.
What you’d probably be most interested in though is our view regarding the CEO Consumer, the empowered user for whom we built a new online utility – CentrSource.com. You can find out more about our point of view – and our business -at http://centrsource.typepad.com.
Great Post. I’m 23 and I can’t tell you the last time I’ve even cracked open the yellow pages. They of course are dropped of to my apartment every year, but they never get past my recycling bin. The idea of digging through a 2000 page book to find an address seems much too painful, slow and inadequate. I prefer using the google search bar with the subject I’m seeking and the place I’m seeking it, a process of about 2 seconds. You can’t beat the 2 second search plus the ability to get driving directions and possibly see the company’s website. I believe what you have said about Yahoo is right on target for where things are going. As more local companies realize the power of online yellow pages there is one feature I would like either yahoo or google to add. I would love the capability to see reviews/feedback built in to the local listings of both yahoo and google. One thing I find useful about shopping on ebay is that I can see how the buying experience with that particular seller has been for others before, and I think this feature for the yellow pages would be a natural fit. I would love to know what others thought of “jon’s plumbing” or “dale’s cleaners.” Just a thought.
The key issue in local is not the size of market or the natural and clear value of being on the web, but the sales cost…Someone has to crack a zero cost of sales to make this really work on mass scale. Zero cost of sales, so that you can be an order of magnitude cheaper than existing vehicles like the yellow pages and the other leader in local, Valpak.
“For now, Yahoo and the Yellow Pages are happily co-existing. But when Yahoo’s base of local merchant relationships hits a tipping point, expect them to become significant competitors”
Can you make changes to your Yahoo! yellow page ad at will? If so, would make sense to me as a business owner to drop the paper pages for something I could change to reflect current sales/holidays/incentive programs. (Can’t change my paper ad during the year!)
Added bonus would be the stats/info via a tracking system they could provide. That would be invaluable info to me and not available with the paper pages.
Wonder why they are happy to co-exist….
Very good post. Lots of thoughts. We should have lunch/discuss. Simplified adoption (ala Local Listings, which Yahoo is pushing pretty hard) is key to local market. Lots going on . . . behind the scenes. Very interesting/complicated area.
Come to our show in Santa Clara: http://www.kelseygroup.com/dd2005/dd2005_day1.htm
No mention of Citysearch? They already provide all the information / functionality everyone is asking for at the local level and have the most robust local / merchant information on the planet.
“Local Search – The Internet IS the Yellow Pages,” is the name of an article I wrote for the just mailed February IEEE Computer magazine. It is relevant to this post. (You can access the article here: http://www.longhill.com/docs/ieee-local-search.pdf )
In April, 2000, Vicinity (where I was employed) and Northern Light Search released Geosearch, the first large scale deployment of a geo-enabled search engine. (The NL corpus was about 300 million pages.) The basic idea is that Geosearch would transform addresses and some phone numbers on web pages into a form that could be efficiently represented in search engine indexes. This allowed NL to do true proximity searching, retrieving relevant pages with addresses/phone numbers within a geographic region. Geosearch was on the air for two years. Google Local appeared in 2003, and is similar to Geosearch, except that Google Local adds an additional step, trying to connect the geographic information it finds on web pages with Internet Yellow Pages (IYP) data. Microsoft bought Vicinity in 2002.
The fundamental observation made possible by Geosearch is that local content permeates the web: 20 percent of the pages we examined had either a USA or Canadian address, or a geocodable North American phone number. It is the web itself that is the obvious source for aggregating local content. Not the print YP, not the IYP – a repurposed direct mail mailing list compiled from printed phone directories – not even content from vertical content aggregators. It is the democratically contributed, distributed content that IS the web that will be the richest source of local content in the future. It is the millions of web pages that contain addresses and the associated local content that these addresses usually imply.
Geosearch also allowed us to discern that local content on the Internet is about far more than commerce. What the Internet enables that other distribution mediums do not is timely dissemination of niche information, what I call idiosyncratic local content. The current focus of local search on YP-like data discounts the value of this potentially most attractive piece of local search. My hunch is that if taken together, this idiosyncratic content, each with small individual constituencies, comprises the majority of what people would use local search for. Support groups, local artists, activities that are not yet or not quite mainstream, hobbyist get-togethers. Storefronts don’t change much, social gatherings do.
The “Yellow Pages” is a trusted brand name, and an almost idiomatic expression for any source of easily accessible information on storefront businesses. There is a natural tendency to conflate Local Search on the Internet, still in its nascent stages, with the Yellow Pages, which recently celebrated its 117th anniversary. I think this will change. The proper domain of local search is the geographically-oriented activities of daily life. Local search should tell me what IS in my neighborhood, and what IS HAPPENING in my neighborhood.
Our experience with Geosearch convinces me that the end result for local search will not be that one supercharged proprietary directory will muscle out another supercharged directory. Data is open source. It is good that Yahoo lets businesses enhance their listings. But won’t businesses enhance their listings at Google and Microsoft, too? At some point, aren’t businesses going to say: “Look, this is the information that describes my business, if you want it, here it is, come and get it.” This is how the web works, and I think reasoning that posits that local search is fundamentally different is wrong. There are differences, but nothing that a bit of infrastructure, and structure, won’t fix.
Any local search solution that cordons off YP data from the general web corpus is making too big a sacrifice, and an unnecessary one. There is too much good local content directly on the web.
But Geosearch or Google Local alone – just unstructured content, can’t compete with the YP on two important playing fields. First, YP data is trusted – people rely on it for at least basic information on consumer-oriented businesses. Second, YP data is thin, but it is broad and consistent. You can reason about it because it has some structure. Businesses are categorized with a consistent scheme, such as SIC codes. It is an anomalous but fortunate circumstance that addresses ARE metadata. National Postal Services saw to that, to ensure the efficient delivery of land mail. But an address is not quite enough metadata to suffice for local search. That Google Local cross-checks web content with IYP data is a partial solution at best. The matching is imprecise, and though the IYP doesn’t contribute much information, what it does contribute is metadata.
Rich but anarchic, poor but orderly. Can these two disparate methods for aggregating local content be harmonized? I think so, and all roads lead to metadata.
The first foray into annotating web content was several years ago, by Dan Bricklin when he was at Interland. He proposed the Small and Medium Business Metadata (SMBmeta) initiative (http://www.smbmeta.org) as a way for enterprises to present essential information about themselves. This information would be in consistently named and structured XML files located at the top-level of participating enterprises’ domains. Since SMBmeta files have a consistent structure across websites, search engines could easily find and interpret them.
The question I pose and try to answer in my article is “What would it take for the Internet to duplicate and enhance the functionality of the print and Internet Yellow Pages?” A key challenge is to aggregate information for the millions of businesses that don’t have a web presence. One way to do this is to decentralize the job of collecting this data, to entities that are close to these businesses, such as Chambers of Commerce, or trade organizations. These entities have relationships of trust with both the public and the businesses they represent. They can act as gatekeepers, ensuring the data they collect or certify is authentic. There’s more in the article.
The little known part to this issue is the emerging technology on which which players like Yahoo do not have their hands. Interactive, voice activated yellow pages brought to you on your television via data (phone) lines. Until Yahoo, Google, Amazon and the like own those little cables to your house they won’t take over local search. In the short run they may build an online product and steal some market share but the local phone companies are positioned to firmly hold local search based on tech trends.