Major Market Challenge: All Contenders Welcome

What’s fun about attending a DDC conference is that at some point a challenge is laid down calling for a radical change. Yesterday afternoon, Neal Polachek and Charles Laughlin outlined the challenges major metropolitan markets face around the world including:   

• The scope of the directory area is too large to meet the needs of advertisers 
• Shrinking base of advertisers who are increasingly paying more 
• Significant distribution issues with a high number of multi-unit housing developments that won’t allow or facilitate delivery of directories to residents 
• The shift from print to online 
• The demographic diversity emerging with multiple cultures and languages 
• Too many local media choices 
• Lacking the “cool” factor in the local media landscape 
• Sales turnover and sales skill issues 

With the ad base decline in major metropolitans, publishers are trying to figure out a formula that works in either stabilizing revenues or growing the ad base to take pressure off the dwindling number of large advertisers and the need for increased national ad spending. What became apparent, based on our research, was that publishers have not radically changed their approach to major metropolitans in a decade or more.

The reality is major metropolitan business districts have become less concentrated, the outlying suburban areas have grown on the shoulders of affordable housing and less traffic congestion, and shopping areas as well as service providers are now located within easy driving or walking distance of suburban communities and districts within the city so people do not need to travel far from their homes to shop or conduct business. 

All these changes in major metropolitan cities are affecting two of the key components to any healthy directory product’s sales effort — new customers and foreign advertisers (advertisers outside the metropolitan directory coverage area who advertise in the book).

With a decline in the number of businesses using telco landlines, there are fewer “new install” prospects sent on to the sales force forcing more time to be spent by the sales force sourcing out small and home-based (SOHO) businesses that might be prime directory prospects.

Foreign advertising is also dwindling as key categories such as service companies and contractors have moved to suburban areas and are reluctant to advertise in a directory that covers an entire sprawling metropolitan area that they cannot practically cover profitably leading to fewer foreign advertisers and a higher rate of churn. 

Understanding all this, the challenge was laid down by Polachek for a publisher to take a radical new approach to one of its major markets that might include an all pay-for-performance pricing model, breaking up the directory into more vertical or neighborhood directories, changing the value story specific to the metropolitan area, and providing more year-round sales coverage just to name a few. While most of the publishers in the room were eager to learn about potential solutions, few seemed willing to raise their hands to take on the challenge of “radical surgery” necessary to make a change — yet.