The French search and directory company Solocal Groupe generated 1.7 percent organic digital growth in 2013, a tepid performance driving largely by a brutal online display advertising market. Today’s 2013 earnings announcement revealed Solocal’s total group revenues fell by 5.8 percent, to 999 million euros. The company hopes to improve on that performance in 2014, if only slightly. Solocal executives are guiding for a revenue decline of between 3 percent and 6 percent this year.

Like it’s peer company Eniro, which announced its results last week, Solocal generates a large majority of its revenues from digital sources (63.3 percent). Print declined by 16.4 percent organically in 2013, which is in the range Solocal predicted. The company is banking on a stable predictable print decline combined with improved digital growth eventually to return the business to positive growth.

Solocal is still in the midst of a digital transformation project, which it calls Digital 2015, aimed at shaping the company’s products, processes and culture into a true digital first company. Solocal has argued that its focus on transformation and on cleaning up its balance sheet have had a short term impact on performance. The assumption is that longer-term the investment in transformation will offset any short term lag in performance.

Note: Later today we will post additional details from Solocal’s 2013 earnings call, including comments from CEO Jean-Pierre Remy.

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Canada’s Yellow Media has named Solocal executive Julien Billot as its new president & CEO. Longtime CEO Mark Tellier departed in August and was replaced temporarily by company chairman Robert McLellan. Billot is expected to take the helm at YPG on January 1.

Billot joined the French search and directory company Solocal (formerly PagesJaunes) in 2009 and served most recently as executive vice president and head of the media group. Before joining Solocal, the 45-year old Billot was CEO of French multimedia publisher Lagardere Active‘s digital and new media group.

Solocal executive Julien Billot has been named as the new
CEO of Canada’s Yellow Pages Group.

Tellier, who ran the Canadian directory publisher for more than a decade, was replaced when the board decided the company needed “fresh eyes,” as McLellan put it, to complete its transformation.

Yellow Media made meaningful strides under Tellier, consolidating the Canadian directories market and building the company’s digital base to 40 percent of total revenue. However, on its Q2 earnings call (Tellier’s last as CEO), company executives were unable to predict when growing digital revenues would offset accelerating print declines.

Solocal is often held up as the global directory company that has most successfully transformed itself from traditional to digital. Therefore recruiting a top Solocal executive to run YPG should come as no surprise.

The Montreal-based company’s next CEO was also expected to be a French speaker, to replace the francophone Tellier.

Julien Ampollini, currently CEO of Solocal Network, will reportedly succeed Billot as head of the media group.

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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.

The post LSA 2013: Solocal’s Transformation Story appeared first on BIA/Kelsey - Local Media Watch.

I am personally looking forward to Solocal CEO Jean-Pierre Remy’s presentation later this month at the Local Search Association’s annual conference in Las Vegas. Solocal, which recently changed its name from PagesJaunes, is the leading search and directory company in France. The company has developed a reputation for strong execution in building or integrating (often vertical) consumer facing products as well as in sales performance.

Remy has been at Solocal’s helm since 2009. He has led the company through a transformation that many in the global search and directory industry would like to emulate.

Remy’s talk is entitled, “The Success Story: From Traditional Media Company to Leading Digital Business.”

BIA/Kelsey has just published a new Insight report called “Sales Transformation: Building a Sustainable Model.” The report takes a look at best practices for selling digital solutions to small-business advertisers. Solocal is one of the companies profiled in the report.

The profile focused on how Solocal has moved from a largely print to a largely digital (almost 60 percent in 2012) business, while suffering only minimal margin erosion. Solocal is currently focused on building a out a vertical strategy involving building deep content in key categories (classifieds, hotels, restaurants, beauty, retail, home improvement), supported by a vertical sales approach.

Solocal’s bread and butter offering has been the Web Visibility Pack, a product that combines digital presence (online and mobile) with placement on Solocal’s media properties plus SEO. What has set Solocal apart is its ability to produce websites for its advertisers within several business days on average, compared with weeks at many of its peer companies.

Here is how the Insight report summarizes Solocal’s success: “Underlying Solocal’s success is an emphasis on simplicity, backed up by nearly flawless execution, supported by tightly integrated systems.”

Remy will speak on Monday, April 15, at 10:15 a.m. The LSA conference will take place April 13-16 at the Planet Hollywood Resort & Casino. Click here for more information on attending this event.

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