Guarantee at Center of New Dex Strategy
Following a discussion of its 2010 full-year results, Dex One’s leadership team outlined a new strategy today that it says will restore the company to positive revenue growth by the second half of 2012, with print stabilizing to single-digit declines.
One of the key elements will be the Dex Guaranteed Actions, a performance-based model tested beginning last year in Phoenix and recently launched in Seattle and Minneapolis, with a gradual rollout in other markets. The program essentially guarantees advertisers a predetermined number of business leads.
Dex leaders say the program succeeded in changing the sales conversation from price to performance, and is seen as a key element in the company’s efforts to stability print revenue declines from their current high double digits to mid-single digits within two years.
CEO Alfred Mockett and his team outlined a number of key objectives and supporting initiatives, among them:
* The company projects it will move from 10 percent digital to 30 percent digital revenues by 2012.
* DexOne is planning to convert its 2.2 million free business listings into paid. Mockett describes free listings as an “historical anachronism.” Converting to paid will generate revenues and also direct more leads to paid advertisers, Mockett said.
* The company is investing in its sales force, arming it with iPads and launching the Dex One Sales Academy to improve both initial and ongoing sales training.
* The company is investing in its product. It will soon kick off an advertising campaign aimed at consumers urging them to “Dex it” whenever they need a local business.
Just because you hire a bunch of people, send them to corporate boot camp, and give them an Ipad does not mean you actually have something your customers want.
Hire all the magicians you want, just don’t expect them to make your value problems disappear.
“Dex it” – Not going to happen. Google search is built in and most consumers do not care how they search, they just want to find the correct information. Dex is full of duplicates, bad addresses, and junk data.
For small/medium businesses, buying local advertising is similar to a individual investor buying stocks. There are no simple answers or guaranteed returns. Most make average returns and many people just buy mutual funds for the ease of buying. Companies that want to sell to small business must take the mutual funds approach by offering a mix of media and provide an average and reasonable ROI. The more sophisticated small businesses can always do better but they are the minority.
Appreciate the comments. I like the mutual funds analogy. Shifty, your skepticism is understandable, particularly around the “Dex It” strategy. However, if you look at the complete bundle, you can argue that there are some things in there advertisers want, need or at least could make good use of: Website, video, SEM and so on. is the multi-product bundle + guaranteed results approach enough to win? Impossible to say now, but I believe it gives the publishers their best chance.
Questions begging to be answered:
1. What % of free listings will translate to paid?
2. What is the average revenue for paid listings?
3. How do you guarantee leads? How do you control lead quality?
4. How much $ is being spent on ‘Dex it’ meme? How much direct navigation traffic will that bring?
Once these questions are fully answered then people might start to think DEX is not doomed…until then, its too little too late for the big saleforce model. 2010 showing a loss of 7+ billion… http://ir.dexone.com/releasedetail.cfm?ReleaseID=552286
Charles, help us understand your logic as to why Dex makes sense in these current times?
I do like the question \why Dex makes sense in these current times?\. My bigger question is just what does make sense in local advertising and search in these current times? There seems to be a paradox of choice for both local businesses and users searching for local businesses. Some people thinks Google is the answer for local search, if that is the case, sites like Yelp, Angieslist, and care.com should not exist. On the other hand, how many companies can sell advertising to small businesses at scale. There is a saying that local advertising is sold and not bought. Google and Facebook are mostly offering self service which many small businesses have neither the time nor inclination to do. At the same time, there is still no guaranteed or clear cut of superior performance by using Google or Facebook. Some people like to say yellowpages no longer works but at the same time what does really work for both small businesses and users.
All good questions and comments. I will say that the volume and quality of leads directory publishers deliver tends to be undervalued. Is the trend on publishers’ ability to drive these leads positive? Of course not. But for now publishers are a major supplier of local leads. Offering these leads with guaranteed results is problematic but a potentially powerful tool for publishers to reposition themselves with local advertisers. Dex’s strategy assumes a lot will go right, when much could go wrong. Still, remember that publishers are often counted as dead, while the “corpse” somehow keeps on breathing.
If you do the math using DEX as an example, their current revenue is around $2B and if you assumed that it will decline by 15% each year. In 4 years time, they will be a $1B company. If the annual 15% decline in revenue holds true, that means every yellowpages companies in the States will be half smaller. The big question is can the yellowpages companies stop or slow the decline.
Tony, Dex is saying the decline in print will slow to single digits and overall growth will come back in 2H 2012. Eniro has made a similar assertion about the return of overall growth, but it has the benefit of a strong balance of print to digital revenue. Dex and SuperMedia are playing catch up with regard to digital driving a 30%+ share of revenue, which is really the minimum level for a publisher to have a chance at restoring growth. So it’s no surprise that Dex has laid out an objective of getting to 30% online by 2012. Without that, growth relies not just on stabilizing print, but making it grow again. The former is difficult. The latter is probably close to impossible.
“Dex is saying the decline in print will slow to single digits”. What are the facts behind this statement? Many of Dex’s statements seem to be more wishful thinking. All the yellowpages must stablize print first because of the size of that number. Even a 10% decline for Print means hundreds of millions of dollars which will be very hard to make up with digital. I think the best and smartest yellowpages company is the Canadian Yellow pages group. They diversified their business early on and have a strong brand equity.
If print revenue continues to decline and digital revenue continues to grow it is inevitable that at some point in time the digital portion will reach 30% or more of revenue. So the percentage of revenue that comes from digital can be almost any number you would like if you have enough time to wait. In my opinion the interesting part of this forecast is reversing the decline in revenue by the the 2nd half of 2012.
Ed you have a very good point based on simple math of a shrinking print number will of course make the % of digital “grow”. At the end of the day, the only thing that matters is what is happening to total revenue regardless of print, digital or anything else.
Dex is saying it will get to 30% online while reducing the rate of decline in print to single digits. Of course, getting to 30% online simply by allowing print revenue to freefall is one way to get there, but it is not a path any company would make the cornerstone of an investor day presentation. Once at something akin to 70-30, 60-40 revenue split, it obviously becomes easier to grow total revenue. I still think a shift to multiproduct + performance guarantees is the best shot for publishers to restore overall growth. That is not the same as predicting success. So much relies on very challenging execution.
If you look at a true strategy that reaches all buyers don’t you really have to look at a print and digital solution? Come on guys…there are alot of people in the country that aren’t using the internet everyday to search for a local business. I mean really these blogs and posts are such faceless empty pits of comments that are driven to paint False truth. If you look at a complete source of reaching truly local potential ready to buy leads. Your telling me a hyper local print and digital solution isn’t better than your other options? First most of you have never ever bought advertising for a SMB. Try it and then come back and tell me a Dex or other major publishers offering isn’t if not the best one of the best options to reach ready to buy customers. 2nd- Tell me a media company that hasn’t experienced shrinking revenue and declines over the last couple years? Not to mention do some research these things are money machines and throw off alot of cash. Minus the witch hunts and dazzling internet only solution sales pitches these products spell more value than anything else you can find.
Charles, we’re past Q2 of 2012. How is Dex doing?