Imminent Death of Paper Phone Books? Not Quite.

Image by smallritual via Flickr

Time to offer some advice. 

A friend forwarded an article citing a study proclaiming the imminent death of paper phone directories.  Don’t believe it.  In fact, if you’re a small business and you’re looking for a cost-effective advertising investment, phone directories might be a better value today than they were just a few years ago.

First…a disclaimer.  I sell advertising that includes phone directories.  I also sell an array of online advertising services in addition to even more “old media” like direct mail.  The people I work for really don’t care if my advertising sales come from print directories or new media.  I don’t care either.  In fact, I would rather sell more internet advertising.  It is popular, easier to sell, and renews nicely.   A lot of misperceptions support this trend.  I won’t complain, however…

…I have to tell you…

There are several sound business factors that favor people who still choose to advertise in phone directories.  Yes, directory usage continues to decline, but it does so very slowly. 

That is the first positive factor favoring print directory advertisers.  The perception that directories don’t get used have influenced some businesses to mistakenly pull from phone books.  This means there’s less competition competing for the leads that do come from phone books.  Ad content in phone directories has declined disproportionately to the usage of directories.  This bodes well for yellow page directory advertisers.

Second, the economy has been down (remember?) and too many business owners mistakenly see advertising as an expense.  (If it really is an expense, why do it all, in good times or bad?)  This has influenced poor decisions about advertising, again limiting the advertisers competing for leads from phone directories which benefits those who choose to stay in the game.

Even industries that are down still generate business.  In fact, in a down market you can argue that it is even more important to advertise.   There might fewer people seeking lawn care maintenance services, for example, but people still seek those services.  If you think of potential business as a pie, even if the pie is smaller, some businesses are getting more of it because they have less competition competing for it.

Which brings up another good reason to stick with directories.  Now is a time to build market share.  It is not a time for the timid.  Phone directories are a very cost-effective way to build market share.  As long as they generate leads, take advantage of it.

And costs generally are better from phone directories.  (But not all directories offer value equally.  More on that in a moment.)  Many people don’t understand how the internet works.  Social media is a big buzz word, but many businesses are not in a position to see a lot of organic growth from social media, especially for new lead generation.  Services like SEO and SEM can be very expensive.  $100 leads are not uncommon.  If you work with a credible advertising professional, phone directories can deliver leads for a fraction of that cost.

Some businesses inherently do very well in phone books.  Any business that caters to emergencies, for example, tend to do well.  You come home and find a very sick pet…do you log on the phone book and start searching or do you flip open a phone book?  The myth of speed and accuracy from the internet has yet to be completely answered. 

Or discretion…need an attorney?  Do you search on the office computer or even the home computer where searches might be tracked?  Examples abound.

Not all phone directories are created equally, however.  Like all industries, the advertising interest evolves and responds to market changes.  Shop a little.  Leads are leads, they’re like a commodity and some businesses deliver the same product at better prices and greater efficiencies.  The phone book you grew up with might not be the best deal.  Again, a good professional can help you sort this out.

Finally, a word about waste.  A single phone book delivered once a year is significantly less wasteful than the daily mail.  (Remember…I sell direct mail, too, so trying to be balanced.)  If you have the patience to do so, hold a month’s worth of junk mail and weigh it against your phone directory.  (Yes, you have one…go look.) 

Don’t pish posh directories.  Not yet.  Even the study funded by the “ban the phone book people” (coincidence?) admits that older folks make up most of phone directory usage and they ain’t quite dead yet…and they have money!

Enough advice.  Now scroll down and read something better.  Tell your friends!

Why It Gets Frustrating

http://www.yellowbook.com

Let me give you an example of why my work can be frustrating. 

Suppose a client has two advertising options.  I have tracking results for both options.  In one option an advertiser pays less for his ads, but he gets fewer leads.  That might seem to be ok for a business on a budget, right?  Perhaps the business isn’t willing to risk much at this point and they just want to ease into a program to see what results they will get. 

It might make sense for this business to start with a conservative advertising program.  Maybe.  First let’s look at another business considering the same two ad plans.

Let’s the second business has been advertising for years and they decide they need to reduce costs so they have decided it makes sense to reduce ad save money.  I have the same tracking and results to share.  It would seem to make sense that a smaller advertisement would result in savings, right?

Wrong.  Or I should say not necessarily.

You’re only going to save money with advertising cuts if you are losing it by having the advertising in the first place.  In that case you need to think long and hard about whether you shouldn’t just cut it all.  If you’re spending a furtine trying to selll bikini’s in Nome, you might have something other than poor advertising to blame…you have a poor advertising decision.

Or perhaps you’re spending more than you need to spend.  If you’re the only bikini dealer in Nome, you might not need a billboard on every street corner and an ad on every page in the newspaper.  If your advertising costs exceed your potential revenues, your wasting money.  If you spend a million dollars advertising in a half million dollar market, you’re going to be disappointed.  You have to look out for redundancy, too.  A million dollars in sales on a $500,000 budget isn’t as good as a million dollars in sales on a $250,000 budget.

So what do you?  You get a ad exec or rep you can trust…and maybe this is where I am losing the game!  Let me explain my example from the yellow pages phone directory advertising world.

I have two ad plans that we have tracked.  For the sale of simplicity let’s say that Plan A costs $100 and results in an average of 5 leads per month.  Plan B costs $400 a month but results in an average of 100 leads per month.  Which is going to “save” you money?

If you’re the new advertiser and you want to start slow, perhaps you’re willing to pay $20/lead and your business opportunities can justify that.  Let’s say your closing ration is very high on a product that has a profit margin high enough to get a return on your investment.  There are scenarios where you want to play these odds with an untested advertising product.  However…

Let’s say you’re the existing advertiser and you’re already the hypothetical $400/month getting 100 leads.  How does reducing your investment help you?  How does moving from $4/lead to $20/lead make any sense?  If you are not closing enough deals at the $4/lead rate to justify the $400/month plan, how does going down to the $100 plan improve your odds?

Buying down is a common mistake people make in yellow page directory advertising.  Leads are like commodities.  If you can get them at a lower cost, go for the lower cost.  Often that happens in a phone directory simply because you invest smarter.  If you need gas and you see on one corner a station offering gasoline for $2.00 a gallon and across the street another station offering the same gasoline for $2.50 a gallon…where are you going to go? 

This example is a simplified situation that exists in many larger phone directories that contain a lot of competition.  If you open a directory for a major US city, for example, you’ll see dozens of pages of ads for auto services, attorneys, home improvement contractors, dentists, etc.  In these situations the smaller ads often pay the most for their leads compared to bigger ads. 

It isn’t always the case that smaller ads are mistake, however.  And my example here — while being very close to an actual example — is unusual for how clear the cost-per-lead comparison breaks down, but these comparisons are typical.  However, if you’re a small business you might not be able to handle all the business you would need so you could pay for and profit from a larger ad plan.  So you need to be honest with yourself and your potential.  A good rep will help you sort out your opportunities and your costs.  Take your time and do it right.

Also take your time and do it right when comparing companies you might want to advertise with…especially yellow pages.  They are not all the same.  Lower cost doesn’t always mean best value.  On the other hand, the “incumbent” or the “utility” directory might not be the best value either.  Often they charge high rates based on reputation…everyone mistakenly thinks they are the “real” phone book and they charge accordingly.  Today this simply is not a sound way to make a value judgement.  Most consumers have no clue about the distinction between one book and another … and they don’t care.  They use the books with the most information.  More on that later.  But briefly now…you can do the same sort of comparison…reversed.  If one book charges $1000 for an ad and the other charges $500, don’t presume the $1000 is better.   If you get 50 leads for $500 and 75 for $1000, which is a better value?

Don’t be one of the many business owners making poor investment decisions when buying yellow pages advertising.

Buying Yellow Page Advertising: Breaking Bad Advice

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All right…I have had about enough.  Yellow page salesmen are one notch below used car salesmen and half a notch above crack dealers on the sales respectability scale.   That unfortunate misperception is one that can cost a business money.  I have sold millions of dollars of yellow pages advertising and the easiest sales to make are to ongoing customers.  They continue to place ads year after year for the simple reason that it works.  It works quite well, in fact, and business owners — especially new business owners — would do well if they gave this proven source of leads a little more respect.

If you have an experienced yellow pages rep, you have a valuable resource.  Use it.  Don’t worry…the experienced sales rep doesn’t have time to trick you into a sale.  They have a solid book of business and they are looking to build that book of business.  Bad sales become unhappy clients and don’t have much value to an experienced yellow pages rep.  So the the idea that a yellow pages salesman is out to mislead you is the first misconception to overcome.

I will talk more — again — about being prepared to advertise later.  You would be surprised how many businesses — new businesses in particular — who say they don’t have enough money to advertise.  If you don’t have enough money to advertise, you don’t have enough money to open your business.  Period.  Advertising is a key small business fundamental and everyone wants to be smart about their business investments, so choose advertising that is smart and effective. 

Advertising should be an asset, after all, and it should generate profits.  If it doesn’t do this you are only spending money to waste it.  And for some reason yellow pages has become a target of people who see waste in advertising.  We need to debunk this misperception.  It is a misperception that leads to bad advice.  Let’s hit the bad advice head on.

Bad Advice #1:  Start small and test your results.

The idea here is to place an advertisement in a yellow pages directory and track your results.  Be conservative, don’t risk more than you’re willing to lose.  Well, ok.  I’m not going to argue with tracking your results and I don’t have a real problem with letting your yellow page advertising evolve and grow.  There are a few things to keep in mind about tracking and growing, however.

First, if you’re going to track your advertising results, you better have a good way of tracking.  Advertising sales people know all too well that business people claim to know the source of all their leads and sales.  They will tell you “I ask everyone how they found me.”  The best way to test this very scientific survey is to ask yourself:  “When was the last time I was asked how I found a business?”  I sell advertising…I am always waiting and seeking that question.  I will even call businesses from time to time to see if I do get asked that question.  (It’s a bit of due diligence on my part.)  And I believe the last time anyone asked me how I found his business was two or three years ago, if that recent.  People don’t ask!  Am I right or am I wrong?  They don’t ask.  And if they do, how accurate is the answer?

Consider this:   Business owners will tell you their biggest source of leads is referrals (N.B.  This would be a problem if you’re a new business, right?), but in reality that is likely only partially true.  Many customers will tell a business they found them through a referral even if they haven’t.  Why?  Saying so is a way to connect with the business owner, to create and extend a pre-existing relationship.  Customers do this to nudge a business toward more attentive and personal service.  If a business owner thinks an existing client referred them, don’t you think that business owner is going to be less likely to screw you over?  At least a portion of “referrals” are people seeking better service or people just giving the answer they think the business wants to hear.  That’s it.

If you really want to track your advertising results, invest in a lead tracking line, a separate phone line that keeps a record of calls.  This is the only way.  In a phone book it works especially well.  People generally call from the directory…that’s why they are there.  A tracking line is a simple and clear picture of your results.  So, even IF you want to start small and measure your results, be sure you have an objective way to measure your results otherwise your effort is wasted.

As far as going small in order to put less of your budget at risk is concerned…what you really risk by following the “think small” advice is incorrectly assessing what a phone directory really can do for your business.  Not all advertising programs are created equal, and a cheap ad might underperform; it might not make the most of the opportunity you could have taken from the customers using the yellow pages directory.  This does not automatically mean that bigger ads are better ads.  Placement matters most. 

Here’s an important and common sense takeaway:  The ads that get seen the most produce the most.  It is that simple.  If you’re buying an advertising plan on price alone, your ads might not get noticed.

Often the ad that gets seen the most is the largest ad, not because it is large, but because it is seen.  (There are many other considerations about ad content, design, and placement, but for now I am arguing against the less-is-more suggestion.)  If you buy a small in-column ad in a directory that has several pages of display ads — i.e., a very competitive and successful directory– you might not even garner table scraps from the big guys.  Also keep in mind that if people are calling the ads they see first first, you might end up with a lot of lower quality leads, such as price shoppers, for example.   There is a strong correlation in the quality of leads — or lack of quality — as an advertisement appears further and further behind others in yellow pages directories. 

A job worth doing is worth doing well.  Don’t sell yourself short on a yellow pages trial.  Make sure you’re starting with an advertising plan that is worthy of your business.

Bad Advice 2:  Choose a small directory and test that market first.

Very bad advice.  In fact worse than the starting with a small advertising plan.  I am not necessarily opposed to choosing one directory as a test, but it is important to know that not all directories are created the same.  Literally.  In fact some business owners might believe yellow pages is a failing industry because they have chosen to advertise in weak directories.  (Usually because it is inexpensive.)  Among the mistakes you might make is choosing a community directory over a directory that competes with a metro directory.  The yellow page industry isn’t dying, but small directories are. 

Today phone directories are used primarily to locate businesses — less than 5% of all directory look ups are to residential white pages — and most business lookups are coming from people new to a market or people making a specialty or infrequent purchase, like a new roof or dealing with an emergency.  For these things people want options and they want them fast.  Phone books still have an advantage over  internet advertising for this kind of information, especially if you are looking for local businesses.  You’ll likely see more local roofing contractor options in a good phone book than you will on an internet search, for example…even today.  The internet is great for research, but buyers still shop and phone books attract buyers.  Although online phone directories like www.yellowbook.com are closing the gap fast.

Skip the small books.  Choose a book that has good content.  You want to see a lot of existing advertising in the directory you choose.  This might seem counter intuitive, but business begets business.  If you’re the only roofer advertising under the roofing contractor heading that might seem like a good thing, but how many consumers will want a book with only a smattering of ads scattered here and there?  You want to advertising in a book that people will use and for this content is king.  People want to see options.  Choose a phone directory with options.

Then go back to Bad Advice #1.  Don’t sell yourself short.  Make sure you are competitive within that directory.  Buy an advertising plan that will compete; one that will be seen and generate results.

Another somewhat related note:  Who do you think the directory publishers are advertising to on their radio and television campaigns?   The advertisements promote a strong consumer message, but the reality is those ads bolster the directory’s reputation with business owners.  The publisher is really advertising to their advertising market. 

For most people yellow page directories are like tissue paper.  Everyone might call the tissue Kleenex, but it really doesn’t matter to the consumer who made the “Kleenex.”  Leads are essentially a commodity and more than one directory can deliver that product well.  Keep your eyes open for quality.  Look for size, scope, and content.  Bigger is better in the directory world.

Bad Advice #3:  Nobody uses phone books anymore. 

I will sound flippant, but so what?   The idea that “nobody” uses phone directories is a lazy conclusion and a convenient one for someone looking to get out of tried and true old technology and move onto the glamorous world of internet advertising.  In reality the demise of yellow pages directories has been predicted for at least ten years now and yellow page directories still provide results.  In fact, if you buy smartly, you might find that yellow page directories are the most cost-effective advertising investment made by your business.  The bottom line is simple.  If you are getting a profitable return from yellow page directories, invest in it. 

Also keep in mind that you, the business owner, don’t need to use a yellow page directory to justify investing in yellow page advertising.  What matters is what the prospective new business is doing in your market.  Furthermore, yellow pages doesn’t have to be your biggest source of new business, it only needs to be a profitable one.  Yellow pages remains a key connection between buyers and sellers and likely will continue to be one into the foreseeable future.  People predicted the end of radio when television came along.  Radio is still here.  It is hard to say what form yellow pages will take in the future, if any at all, but until they stop becoming profitable, businesses are making money from yellow page advertising.  Don’t let the perception that the industry is dying prevent you from profiting from the medium while profits still exist.

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