Yellow Pages publisher Yell Group must fight off not only the decline of its traditional print directories business but also now that of its online directories, which lost a quarter of their users last year. All the while, Google (NSDQ: GOOG) is making a new landgrab for Yell’s customer base.
In Q4 interim earnings announced Tuesday, Yell pre-tax profit fell 12 percent from a year earlier to £108.6 million, on 15.1 percent less revenue.
- Yell’s print directory business, which makes up 70 percent, lost over a fifth of its sales.
- Its online directories like Yell.com and Yellowbook lost 15.7 percent of sales.
- But its digital services revenue, where Yell is trying to turn the company around by building websites and advertising networks for small businesses, saw 111.8 percent sales growth.
Now, however, Google is making a play for that area with a new, development agency-backed workshop programme, Getting British Business Online, that aims to give free websites and search visibility to UK small business owners for two years.
Yell built 337,000 customer websites last year. Its total digital revenue hit 29.5 percent of the business as the digital customer base grew 9.8 percent to 945,000. But annual digital revenue per customer actually declined 2.5 percent to £508 million because they were taking cheaper services.
“The deteriorating macro environment and a more competitive digital directory market are … driving a faster rate of directory revenue decline,” CEO Mike Pocock said (via release).
“Our digital services revenue continued to grow strongly, reaching an annual run rate of over £140m. We expect this growth to accelerate as our strategic new products come to market.”
Google’s reach-out to small businesses, which is rolling out with workshops in Wales, Liverpool and Africa, is backed by an array of business agencies and sees it refer small businesses to build free websites through Yola.
A turnaround plan Yell unveiled last summer charges it with building out “the first local emarketplace platform for consumers and small and medium enterprises to connect and transact locally”, including loyalty programmes, payment services and business operations.
It aims to flip its revenue make-up to be digital-led by 2015, with digital product development all funded from cash. And it sets out to simplify Yell.com on a self-service ad sales model, and to cut £100 million in costs over 2012 and 2013.
To do it, Yell is going global and looking outside for leaadership. MSN executive producer Scott Moore became Yell Group’s chief digital officer in October, with the group opening new offices in Seattle, a month after Yell announced a new partnership with Microsoft (NSDQ: MSFT) Advertising. In January, it hired as chief strategy officer the consultant who helped it pen that strategy at Booz & Co.