In a new forecast, Borrell predicts that spending on print directories will fall from $12.7 billion in 2008 to $7.8 billion in 2013
Nothing quite speaks to the power of local Yellow Pages as a medium for small business advertising as their ability to fend off incursions by the internet during a time when the web was decimating local newspapers' classified advertising.
But now it looks like the Yellow Pages are about to take a tumble. They too are about to see a major shift in ad spending to the internet.
A new forecast has Yellow Pages ad revenue plummeting 39 percent over the next five years as local businesses shift more and more of their ad dollars into keyword advertising, interactive directories and online video ads.
What's behind the shift is the tough economy.
Feeling the pinch, businesses are looking to trim costs, explains Gordon Borrell, CEO of Borrell Associates, a firm that tracks local online spending. "They know they need to advertise but they are cutting back. The Yellow Pages are where they advertise, so that is the most vulnerable."
In a new forecast, Borrell predicts that spending on print directories will fall from $12.7 billion in 2008 to $7.8 billion in 2013.
But there are other factors at work as well.
For the longest time, the Yellow Pages were an ideal ad medium for local businesses because they're so highly targeted, serving the function of search advertising in a print venue. They enabled the advertiser to put his or her ad on the very pages they knew consumers would be turning to for their products or services.
That ability to target so effectively was one reason Yellow Pages were able to hold onto advertisers even after the internet came along.
In fact, Yellow Pages advertising had actually been growing in recent years. Back in 2000 ad revenues were at $13.2 billion. They grew to $15.2 billion in 2005 and only then started declining.
What's changed in the past several years has been the growth of local online advertising and the rise of more and more online directories as local advertisers came to see that online advertising worked.
Never cheap, Yellow Page ads started to look at lot more expensive by comparison, with the average print ad running between $3,600 and $3,800 a year. That's about three times the cost of an online ad, according to Borrell.
But another major factor has been the large army of sales people on the street talking up the virtues of online over print, and these were not just from pure-play online sites either. Traditional print outlets, including Yellow Pages, were cross-training their sales people to also sell online products.
Indeed, Borrell reports there are now some 34,100 local sales reps touting online products, far more than those selling print.
"That, in the big sense, is fueling a lot of sales. It's not just that advertisers are quietly buying this stuff, it's also because you have a lot of sales people out there peddling it," says Borrell.
In fact, directories now capture a larger percentage of their gross revenues from online sales than many other traditional media sectors.
In its forecast, Borrell sees the low-cost online video commercials category climbing from $1.4 billion this year to $7.6 billion in 2013, putting it ahead of spending on both search and banners.
"Video is something that every advertiser has always wanted to do but has never been able to afford because of the broadcast schedule. Now they can pay the production costs, and the promotions schedule online is very cheap," says Borrell.
Yellow Pages Heading for Rough Times
