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.