Nov.
 2004

Here’s a potential recipe for newspaper disaster:

Take: One weekly pennysaver-type publication, with lots of auto and real estate ads, especially from private parties, and dozens of display ads for specials from small retailers and service businesses.

Add: A comprehensive listing of every local business, including brands sold, hours of operation, qualifications like “In business 42 years,” address, phone number, a map and more details.

Mix with: A detailed search engine tool that reviews all the information in every ad and makes it available fast, with just a few keystrokes.

Serves: Audience and advertisers.

Leaves out: The local newspaper.

Think it can’t happen? It’s already started.

In Australia and Sweden, major directory publishers have acquired pennysaver publications with plans to merge the ads and the local business database in an online service that competes directly with daily newspapers and other shopping resources.

Take a look

Visit Sensis.com.au. Looks a little like Google, doesn’t it? Two simple boxes: “I’m looking for” and “in this location.”

While it works only in Australia, you get the idea. It’s simple, it’s clean, it’s effective - or it will be when it’s fully integrated (which they say will be fairly soon) - and it’s owned by the leading Down Under publisher of white- and yellow-page directories.

Sensis also offers BuySell.com.au, AutoTrader.com.au, CitySearch.com.au, Whereis.com (a mapping site) and JustListed.com.au, a real estate site. JustListed says it’s “Sydney’s fastest growing real estate Web site [with thousands of listings] - all types of Sydney property available to buy, rent and lease.” (Sensis also uses that JustListed database for a Web-to-print real estate publication directly competing with newspapers. It’s more than 100 pages, sells for $1.50 at newsstands and is distributed free by real estate brokers. But that’s another story for another column.)

Sensis is owned by Telstra Corp. Ltd., the telecommunications company that’s in turn part-owned by the Australian government. Telstra dominates the country’s telecoms - land-line, mobile, data and broadband. Its BigPond ISP is No. 1 in Australia, and it has a major share of the largest cable TV company.

Other examples? In Sweden, directory publisher Eniro AB bought classified publisher Gula Tidningen from Trader Classified Media. In Hungary, TCM bought directory publisher Kisokos. In Canada, Yellow Pages Group offers local search in a pay-per-click ad program with FindWhat.com.

Challenges brewing

What’s wrong with this?

Nothing if you’re a capitalist. Perhaps everything if you’re a newspaper. Because as competitors aggregate more and better local advertising information and make it easier for customers to find what they need, and as audience(s) migrate steadily toward online and other interactive media, the ad pie gets sliced again. This, in a more challenging environment than ever.

It can work both ways, of course. Newspaper owner The Hearst Corp., long an owner of yellow pages in Texas, recently announced it’s buying White Directory Publishers, a large independent yellow-page publisher in the United States. Although Hearst has been quiet about its plans, integration with newspaper advertising databases, where possible, is an obvious and logical strategy.

Now, it’s unlikely that your newspaper owns the local yellow pages. Few do. And as competitors, yellow page companies rarely work with newspapers - other than occasionally as sponsors, or perhaps through a cross-brand advertising and marketing relationship, on the paper’s and the directory’s Web site.

So what can you do to compete?

*Build comprehensive online local service directories at minimal cost for advertisers and then upsell into print. This may require a whole new sales model for your company, perhaps even a new sales unit (of one person?).

*Offer an effective self-service advertising tool and promote it heavily. Several vendors provide modules that let advertisers design and place their own ads, for print and/or online, paying with credit cards. If you could add just 0.5 percent of your total revenue next year in new sales from self-service advertisers, wouldn’t it be worth it?  

*Explore how to provide pay-for-performance advertising online. Pay-for-performance is anathema to most newspapers, but if Google Local and Yahoo Local can do it, shouldn’t you consider it? It can be especially valuable in categories that appear heavily in yellow page directories (attorneys, plumbers, dry cleaners, etc.) but rarely run in newspapers.

Newspapers - all media, for that matter - are undergoing painful and challenging transitions. They’re evolving from mass to targeted; from a single audience to multiple audiences; from a single medium (in newspapers’ case, newsprint) to various media; from ad-takers to ad sellers; from offering a relatively simple product (“the paper”) to a wide range of products to meet the needs of various advertisers and audience segments.

If the yellow pages can do it, you can too.

Editor’s note: Classified Intelligence recently published a free report, “EBay, Craigslist, E-Commerce and Newspapers,” sponsored by CityXpress Corp., which is available for free download from ClassifiedIntelligence.com.
 

Peter M. Zollman is founding principal of the AIM Group and Classified Intelligence LLC, consulting groups that work with media companies to help develop profitable interactive media services. He can be reached at 407.788.2780 or via e-mail at pzollman@aimgroup.com.