LSA 2013: Solocal’s Transformation Story

Solocal Group CEO Jean-Pierre Remy offered directory publishers a vision for print to digital transformation built on a strong focus on building content, vertical segmentation and a relentless focus on execution. Remy was the keynote speaker at the Local Search Association annual meeting in Las Vegas.

Remy has been at the helm at Solocal (formerly PagesJaunes) since 2009, and her has worked aggressively to change the businesses, changing more than 70 percent of his management team in the process.

Solocal is widely admired for changing the business from a high-margin print-oriented business into one that is majority digital at comparable margins. In 2011, the company generated 58 percent of its group revenue from digital sources.In 2013 the figure is expected to be 65 percent and 75 percent by 2015. The company’s overall EBITDA margin is 44 percent, with online margins at around 40 percent, according to Remy.

Remy shared some insights that drive how they run the business.

1. There is a correlation between growth and online share

Having nearly 60 percent of its business in digital has stabilized the growth curve. Solocal is declining at about a 2 percent pace, and Remy said the company will return to growth within a few years. By contrast, most major U.S. directory publishers are declining  by more than 15 percent annually, with little near term expectations for improvement.

“We are four to five years ahead of the industry,” Remy said.

2. There is a correlation between profitability and digital reach

Remy said that PagesJaunes has 46 percent to 47 percent reach with its digital properties. This enables profitability because they do not have to buy traffic. Solocal’s traffic is largely free, coming from its sites, apps, and some from partnerships.

Solocal has placed considerable emphasis on verticalization, in both content and sales.

Two years ago it began segmenting the sales channel, with a growing percentage of reps focused on single vertical. The complexity of digital media makes specialization more important than it is with print, which is a comparably simpler sale.

“This puts us much closer to our clients,” Remy said. “The mission of sales people is to make client win. When you go online there are more opportunities to help clients. it also means you need to understand their business and speak their (not so in print) speak their language.”

Remy said Solocal must be number one or number two in the verticals it pursues, from both a consumer and an SMB standpoint.

“If you are number one, you can achieve 50 percent or more net margin,” Remy said. “if you are number three, you break even.”

The company has made the key decision not to outsource fulfillment for its site creation business because executing well on fulfillment is strategic for Solocal.

“Our fulfillment may be more expenses but it builds relationships with clients,” Remy said.

Remy estimates transformation will take two more years. The company launched an initiative called Digital 2015 in order to push the organization harder toward the finish line.

Remy was asked about how print is holding up in France. The number of consumer who accept delivery of the book is 72 percent across France. The figure is higher in rural areas (as much as 85 percent) and lower in large cities like Paris (as low as 55 percent).

“Everything we see is that print business audience continue to decline at about 5 percent to 10 percent year over year, which is about the same pace for the past 20 years,” Remy said.