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Yellow’s Last Gasp – Will They Survive 2012?

An independent investigation into the NZ Yellow Pages New Online Services

scottYellow Pages new CEO, Scott Pomeroy has a grim task ahead. Transforming Yellow into a true online marketing services provider. One of his first stated goals is to work closer with Google and they recently signed up to become a Google AdWords Reseller. Earlier Yellow CEOs talked about working with Google too. Here’s an article dating back to 2009 which just resulted in Yellow using Google maps technology.

Yellow, Selling Google Services?

Yellow Australia (owned by Sensis), signed up as an AdWords reseller a year ago. However the success of this arrangement is unclear and seldom reported on. Like Yellow here, they’re trying everything they can to stay relevant and in the game.

Frankly, I can’t see it working well, especially in the first year. There will be major conflicts between the old and new. Working out the sales incentives will be the big one. Yellows own products will have a sales rep commission that will be hard to match with Googles AdWords, unless they mark up Adwords beyond market rates. And what happens when business clients discover this, or realise that the say $300/month they spent on their new Google AdWords, is getting them 5x more leads than their current $300/mth Yellow Pages listing, which they’re still locked into? Selling a vastly superior competitor offering, alongside your own outdated one isn’t easy…

YellowToolBox – New Online Products and Services

Aside from re-selling Googles Adwords, the other new ‘product’ to come out is Yellowtoolbox, hastily thrown together over the last couple months. They only purchased the domain name in August, meaning there wasn’t a lot of planning involved. And it shows.

Toolbox is the place NZ business and Yellow customers are asked to go to for an affordable website and a social media presence. In concept it’s a good idea and there’s much hype around it from Yellow reps, but few real-world results yet with only a handful of their 100,000 small biz clients signed up. I suspect there will be a lot of special deals, time payment arrangements and service bundling, which Yellow has a history of to ensure clients are locked inPreferably to both their online and obsolete print offerings.

The Yellowbox site itself is visually lively, but the coding is poor and SEO non-existent. It’s slow to load and virtually invisible on Google.

If companies don’t have the skills to grow their website traffic, they can just throw money at it

It could take a long time to get this new website to show up in normal Google search result for website design, video or Facebook marketing. The Yellowlocal website has the same problem. Just because they have ‘the brand’ and some cash means nothing online when it comes to getting traffic. Everyone starts at the bottom. Website traffic has to be earned. Somewhat ironically, the solution to running any new website with a poor online profile and crappy SEO coding, is to advertise using Googles Adwords, which Yellow does an awful lot of.

NBR reminded me recently that Yellow are still the largest single buyer of AdWords in NZ. Yellow likely spends tens of thousands every week promoting it’s own second-rate yellow.co.nz online directory on Google. On average, they run around 60 different ads at a time on Google, directed to different categories on their Yellow online directory website. It likely boosts their traffic considerably.

Now there’s even more cash pouring into promoting its new website services, with cost-per-click ranging from $2 to $5 each!  I’ve recorded 66 different ads displayed for the new toolbox site, examples below.  (Now they’re an AdWords reseller, will they get discount? If so, at what point in the future will Google expect to make up the shortfall?)

But Google is in a win-win game. If companies (or their hired web designer-developers) are lacking SEO skills and ignore Google’s guidelines, the result is a website that can’t be found.  i.e. A low ranking and little traffic. Website owners will often end up buying search traffic instead, using Googles popular pay-per-click AdWords service.

High Google Rankings and Expert SEO

The Yellow websites sales pitch video quite clearly says “…You’ll Get High Google Ranking… Expert SEO…” Good to hear. But we have definative data that shows the opposite is true in most cases. Should we advise these clients they’ve been short-changed, or should I tell the Commerce Commission? Maybe the SEO and High Google Ranking is an option?

Yellows 12, proudly displayed showpiece client sites, aside from some commendable Youtube efforts, are mostly cheap designs, poorly optimised for Google search. In fact it was hard to find keywords or pages they ranked well for. The best was fashion-recycle that ranked for 2 keyword phrases. Unfortunately, their main competitor ranked for 79. Like Yellows own toolbox site, it means these sites will seldom show up on page one of an organic search for phrases that could bring them new business. The only solution to this is to have the client spend thousands more on specialist SEO work and/or buy some AdWords online advertising.

A Cunning Plan Maybe?

Maybe this is the secret strategy. e.g. Sell badly coded, non-optimised websites to guarantee that customers will at some point need to sign up for the more costly Yellow-supplied Google AdWords. If true, it’s a really cunning plan, as Blackadder would say…. However I suspect there’s really no plan at all. They’re floundering around in a new market they know little about, with low quality offerings, using their name and reputation to woo hapless customers in.

But Yellow aren’t the only people building cheap, poorly optimised websites. Most NZ small business websites running today fit into this category. If they build up their know-how and sales skills, this is a nice opportunity for Yellow and their new AdWords service.

Or Maybe We’re Dreaming…

Are Yellow grasping at straws? With limited budgets and skills available within the company for website building or SEO work, Yellow are likely doing what most big corporates do in this situation. Promote a new digital service, then outsource as much as possible to local amateurs, or to India, to maintain margins. Much of the AdWords work, if it does take off, will probably be done in India or the Philippines. It’s a low risk strategy, since these contracted staff can be quickly dispensed with if the new services don’t work after 6 or 12 months.

Sales is not so easily outsourced. Building the skills to sell adwords and online will be a challenge. Selling or re-signing people up to simple entries in print and online directories is one thing. But the selling of Websites, Social Media and AdWords another. I worked for Xerox for many years as they migrated from copiers to digital printing, forced upon them by technological change. Most of their salespeople struggled to adapt. It took more than just a handful of new product training sessions.

Google AdWords – Who Benefits the most?

It’s not just about profit margins, but also advertising effectiveness.

What’s not often realised, is that the cost, quality and results of AdWords campaigns varies widely. User polls tell us that around half of AdWords users love it and get amazing returns, the other half say it’s erratic and far too costly. Why is this?  Margins aside, it largely depends upon the skills and instructions given to the person setting it up, then maintaining it each month. There’s also numerous tricks around the offer, landing pages, CTR optimisation, use of forms, analytics etc. Done right, it’s much more complex than making the old paper or digital display ad, which is what Yellow staff are familiar with.

For example, we recently rebuilt a clients costly $1,500/mth Adwords campaign, that resulted in a  $700 per month saving, for the same number of click-throughs, in this instance being over a 1,000 per month. It won’t be in Yellows (or Googles) best interests to setup and provide such super-efficient, highly optimised campaigns! What’s best for the client, isn’t always ideal for the service provider. Financially it would make sense for Yellow to set up ‘less effective’ AdWords for their existing clients, be it deliberately to gain more income, or through plain lack of skills. 

To Know the Future, Look to Auz

For a look of things to come, here’s a commentary from Australia last year entitled Yellow Pages Scam. It’s a conversation between a customer and their Yellow Pages (Sensis) rep selling Google services. Expect similar ‘misrepresentations’ here in NZ – Especially when they pitch their new Yellow Page Website offerings that supposedly have good SEO. (Yeah, right). The average customer will be totally confused and likely just take Yellow at their word.

It’s all profit-focused. In one case AdWords was ‘resold’ by Yellow Pages Australia (Sensis) who billed AdWords at $27,000 pa, which should have cost around $500-700/month if the client had done it themselves. Resellers can legally do this. New, naive small business customers just don’t know enough to argue. Commentators suspect that Sensis is targeting industries with low tech knowledge. They’re also informing them they have a ‘special’ relationship with Google and can guarantee them a number one ranking…

What’s the Yellow Offering? Is it too Late for NZ?

As Scott Pomeroy, CEO of Yellow Pages NZ said in that recent interview. “The success of it [Adwords] will now depend on how well Yellow executes.”  Based upon their execution of their new Toolbox website services, I’m not optimistic. Yes, there is a dire need for a major organisation with a big client base to sell AdWords here. I’m just not convinced that Yellow was the best option for Google.

It’s difficult to see what Yellow has on offer that isn’t done better (and cheaper) by someone else. What’s their value proposition? Yellow have dabbled in lots of new technologies and services over the years. In spite of the money spent and grand promises made, none have been a standout success, or even turned a profit. Years back, profits from the print division would carry things through. Now that print is dead and cashflow has dwindled, options are limited. They missed their opportunity window.
They should have taken the deal offered by Google back in 2006 when Google wanted access to the Yellow Business listings and database which would have been worth a lot to Google. It could have been a really great partnership too, but Yellows pride likely got in the way. They thought they could actually compete with Google in the online space…. Now they’re on the back foot, begging.

End of an Era

It’s looking like a sad ending on the horizon for what was a fine NZ-owned company I once loved. I sincerely hope the Yellow-Google Adwords ‘service’ does work out for them and their clients, but there’s a big learning curve ahead for all. New services always take twice as long to get into profit than any business or marketing plan allows for. Two years is typical. Can Yellow, in their fragile financial state, really wait that long? I’m less optimistic over their new toolbox products, which will appeal only to the most desperate or gullible.

Many Yellow customers have been suitably ‘conditioned’ to have low expectations

Sadly, there’s lots of people out there who happily take Yellow at their word and not want to know about all the geeky SEO stuff I’ve outlined above. They trust Yellow. I also suspect that many of their customers are used to paying out hard-earned money each month, for few returns. They’ve been ‘conditioned’ to have low expectations, which may be what will keep Yellow in the game longer than they deserve.

Yep, it’s hard work turning around an old, fading corporate and keep customers happy. Good luck Scott. You’ll need it.


p.s. This time last year I predicted the demise of Yellow pages, after they posted one of the biggest corporate losses in NZ history.  Read about if on my Ezimarketing website. A year on and little has changed. The banks simply can’t keep Yellow afloat forever…. The really interesting factor is Scott Pomeroy. He has previous experience with struggling companies and may be in the role just preparing the groundwork for Yellow to shut up shop. He was the CEO of a failed Yellow Pages Publishing operation in the US.. Obviously, if the Yellow board was really serious about online initiatives being the way forward, they would have appointed someone with a more appropriate background.


 

Discussion

10 comments for “Yellow’s Last Gasp – Will They Survive 2012?”

  1. This is hard to believe. From what I’ve been able to find out, if you exclude the videos, their websites alone are quite cheap at around $100-$150/mth. So I guess we all just get what we pay for.

    Posted by Dale | January 9, 2012, 10:11 pm
    • There seem to be a lot of assumptions in this article.

      I’ve been advertising with Yellow for years and the products that I have chosen have been recommended to me by a very skilled rep who knew my business.

      I only advertise with Yellow (print and online) and I’m still in business.

      On your Google Adwords rant, you are right, most small businesses are naive hence they don’t do Adwords. I have tried many times to DIY Adwords and fallen on my face becasue I don’t understand it. Hence, Google resellers do it on behalf of naive businesses (i.e. me, thanks for calling me naive).

      At the end of the day everyone has their own opinions and the above dribble is yours.

      And at the end of the day, opinions are like arse holes, everybody has one.

      Yours sincerely,

      Naive Small Business Owner

      Posted by Duncan | February 22, 2012, 2:00 pm
    • $100 to $150 per website is not cheap!!!

      Posted by Karl | November 5, 2012, 9:32 am
  2. Hate it or love it, they are still winning. And who are you to predict the future Mr Kevin T?

    Posted by Luke | February 22, 2012, 10:47 am
  3. Hi Kevin,

    Your opinion is an interesting one. You make a few claims that strike a chord as I am in business and have used Yellow for marketing in Print and a little online for around 9 years. I indeed wanted to look into the Google fever pitch and rang around a few companies for options that would suit. The cheapest option given was $500 per month but I then had to sit down for 12 hours over 4 days to get information together for them, which I wonder if I had spent that time simply learning about the adwords I could have done it myself cheaper. But time is the biggest thing in business that you cant get back.

    I have recently been approached by yellow with regards to their offerring and I am amazed at how easy it is. No time, cost effective and an expected result for my outlay.

    The thing I find really interesting is that they actually have been the biggest Google buyer in NZ for some 7 years and have a huge amount of data to show they are proven to get results.

    This is the information that they have access too so the adword campaign they have put together for me, is not only relevant but proven.

    I didnt have to do much more than sign the $250 per month contract and already the results are better than the $500 per month I was paying a “Specialist”.

    The other thing I found encouraging was that when i asked the rep if their adword campaign can garuntee me #1 position they frankly said no. Adn upon further investigation with the rep and outside independant reasearch I see that it really is impossible. They sold it to me on the fact they can give me the best results for my budget based on their own 7 years of results.

    im happy with that and if it continues to work as it has, I will continue to grow this service as the return on myinvestment is being covered easily.

    Regards
    Joel

    Posted by Joel | February 22, 2012, 5:03 pm
    • Thats for the feedback Joel. I’m pleased if Yellow are giving good service. I’m not against Yellow as such, just have doubts of their ability to deliver! Am happy if I’m ultimately proved wrong as the use of Adwords in NZ does need a boost. Time will tell.

      Posted by Kevin T | March 4, 2012, 6:38 pm
  4. Interesting… Their website prices appear to be $100 or less yet have 3 and 4 google page rankings… Not bad considering most SME sites are 3 or less.
    Will be interesting to see how the company adjusts to the changes in the market, especially with the recent staff redundancies.

    Posted by John | March 1, 2012, 8:46 am
  5. We have a business that used to spend $12,000 a year with Yellow but more recently have spent around $600.

    Because we are in a keyword competitive space Yellow’s search results are pretty much worthless (though they may be useful for motor mechanics, auto upholsterers and other industries).

    However it seems they have changed the way they handle the links from the yellow directory and there may now be value from an SEO point of view in having a listing. Conversely Finda, which they are bundling, seems to have changed in the opposite direction and made it less worthwhile.

    Posted by JD | March 14, 2012, 10:06 am
    • Thanks for the feedback. I’ve written earlier on the need for companies to still invest something in listing themselves in third party online directories like Yellow, finda and gopher etc, This is not because a lot of people use these for search, but simply that it [ironically] gives you a higher search ranking if you have a website! It’s all part of the need for website owners to have other sites linking back to them…. Google uses reputable directories as citations which validate who you are online. This is especially important if you have a google maps/places entry for local search. As you’ve found out, you don’t have to spend $12,000 to do it. The cheapest online listings are just fine. Setting aside a total of $50-100 per month for this is ample. Any more is wasteful.

      Posted by Kevin T | March 14, 2012, 10:13 am

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