The Yellow Pages brand is both blessing and curse for those trying to morph legacy directory businesses into digital solutions providers for SMBs. Yellow Media CEO Julien Billot conceded as much in his keynote presentation at BIA/Kelsey’s recent SMB Digital Marketing conference in San Francisco. However Billot believes the smarter play is to invest in transforming the “Yellow” brand vs. trying to build a new brand from scratch.

Under his leadership, Yellow Media has increased its branding investment from C$6 million in 2013 to roughly C$25 million this year, with the aim of convincing Canadian consumers and businesses that Yellow Media is much more than a print publisher. The end game is more organic traffic to generate higher margin digital sales.

Billot is also driving change in the sales approach and business model, moving to a continuous contact sales model and a product approach based more on selling performance than selling media. The following video shows my Q&A with Billot following his presentation on Day 1 of the conference. Here are a few snippets of what he had to say:

On the Yellow Pages Brand

“Basically when you talk to customers and users, they say ‘Yellow Pages’ is the major reason why customers open the door today, and it is the major reason why they don’t sign with us. So it is a difficult choice…Letting go of the Yellow Pages brand means you lose your main argument to talk to small companies…But if you leave the brand in the situation it is today, it is a handicap and no more an asset.”

On Sales Transformation

“Today our best sales representatives meet with customers six to 10 times per year and spent two hours in each of these meetings. In the past, we would ask, ‘Do you want to be in print?’ and ‘Please sign.’ and it would be over for the year…The time when a sales reps owns the relationship by himself is finished. Now we are into multi-touchpoint relationships. Sales by somebody and upsell by somebody else, on the phone or physically or via self serve. We want to be sure we are having an ongoing conversation with our customers.”

On the Business Model

“We are switching from a placement based product to a leads based product. This is why investing in our media is so important. Because today we sell a leads-based product — SEM from Google. It is good. Customers want it. But it is bad in terms of margin. Longer term we will still sell Google. But we want to repackage into this bundle some of our own traffic to be able to generate more margin.”

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The Yellow Pages brand is both blessing and curse for those trying to morph legacy directory businesses into digital solutions providers for SMBs. Yellow Media CEO Julien Billot conceded as much in his keynote presentation at BIA/Kelsey’s recent SMB Digital Marketing conference in San Francisco. However Billot believes the smarter play is to invest in transforming the “Yellow” brand vs. trying to build a new brand from scratch.

Under his leadership, Yellow Media has increased its branding investment from C$6 million in 2013 to roughly C$25 million this year, with the aim of convincing Canadian consumers and businesses that Yellow Media is much more than a print publisher. The end game is more organic traffic to generate higher margin digital sales.

Billot is also driving change in the sales approach and business model, moving to a continuous contact sales model and a product approach based more on selling performance than selling media. The following video shows my Q&A with Billot following his presentation on Day 1 of the conference. Here are a few snippets of what he had to say:

On the Yellow Pages Brand

“Basically when you talk to customers and users, they say ‘Yellow Pages’ is the major reason why customers open the door today, and it is the major reason why they don’t sign with us. So it is a difficult choice…Letting go of the Yellow Pages brand means you lose your main argument to talk to small companies…But if you leave the brand in the situation it is today, it is a handicap and no more an asset.”

On Sales Transformation

“Today our best sales representatives meet with customers six to 10 times per year and spent two hours in each of these meetings. In the past, we would ask, ‘Do you want to be in print?’ and ‘Please sign.’ and it would be over for the year…The time when a sales reps owns the relationship by himself is finished. Now we are into multi-touchpoint relationships. Sales by somebody and upsell by somebody else, on the phone or physically or via self serve. We want to be sure we are having an ongoing conversation with our customers.”

On the Business Model

“We are switching from a placement based product to a leads based product. This is why investing in our media is so important. Because today we sell a leads-based product — SEM from Google. It is good. Customers want it. But it is bad in terms of margin. Longer term we will still sell Google. But we want to repackage into this bundle some of our own traffic to be able to generate more margin.”

The post Conference Video: Q&A with Yellow Media's Julien Billot appeared first on BIA/Kelsey - Local Media Watch.

For 2013, Canada’s Yellow Media reported solid digital revenue growth and deeper penetration of its signature multimedia bundle — Yellow Pages 360°. The company is on the verge of majority digital status, with 45 percent of revenue last year from online and mobile products and services. Digital revenue grew by 10.6 percent in 2013, to C$406 million, though when factoring out discontinued operations, the growth rate was 12.5 percent.

Today’s was the first earnings call for new CEO Julian Billot, who took over in January, replacing longtime CEO Marc Tellier.

The first phase of Yellow Media’s digital transformation involved several key elements. These include improving the company’s brand image (leading with mobile in its ad campaign for example), attracting more consumer traffic, expanding the product suite for SMBs to include digital services, improving sales effectiveness, investing in talent, and focusing on advertiser growth. While advertiser growth was less than it needed to be last year, the trend improved in Q4.

“In 2014, we will develop a more compelling and differentiated user experience by improving on the quality, completeness and relevance of the content we deliver to our properties and partners and by developing compelling sites and applications for local discovery,” Billot said on the call.

The second phase of transformation “will focus on long-term revenue growth,” Billot said.

Overall revenues fell by 12.3 percent in 2013, though some of the declines comes from discontinued Canpages print books. Factor these out and the decline was 10.7 percent. On its own print declined by 23.6 percent, a significant drop, but one Yellow Media leaders fully expected.

“It remains too early to forecast when print revenues will stabilize,” said CFO Ginette Maillé.

For the full year, Yellow Media generated total revenue of C$972 million, with EBITDA of C$416 million. The company’s EBITDA margin feel sharply in 2013, from 51.4 percent to 42.8 percent. To explain the compressing margins, the company cited revenue pressure, investments in future growth and a shift from higher to lower margin products.

Customer acquisition remains a key challenge. The company ended 2013 with 276,000 customers, down from 309,000 at the end of 2012. Most of the churn is among smaller advertisers, with larger accounts tending to reduce spend rather than churn off completely. Last year the company focused on retaining larger accounts with its Digital PowerPlay and SEM TouchPoint services, which offer a more highly customized approach to bigger spenders.

Yellow Media acquired 13,600 new customers in 2013. While this pace is insufficient to offset customer loss, there was an improvement in the rate of new customer acquisition in Q4.

Billot said the improvement in the penetration rate of the Yellow Pages 360° was key, since it ties directly to retention. In 2013, penetration grew from 16.5 percent of advertisers at the end of 2012 to 27.1 percent at the end of 2013.

“The more products our customers have, the lower the churn,” Billot said. “That is why Yellow Pages 360° penetration is so important.”

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Last week, outgoing Yellow Media CEO Marc Tellier presided over his final earnings call and ended the call with a recitation of his accomplishments during his 12 years at the company’s helm. Tellier leaves his post this week, with no successor yet named. On the call Tellier said only that a search committee was in place and there would be more news “shortly.”

Yellow Media’s first half results were mixed, with fairly strong digital growth (10 percent in Q2) still failing to offset an eroding print business (down 23 percent in Q2). As of the end of first half, Yellow Media generated 40 percent of its revenue from digital advertising and services. Total revenue for the first half was C$496.5 million, down 13.7 percent over 1H 2012. Some of the declines were the result of one-time items such as eliminating duplicate directories from the company’s Canpages acquisition.

On the call, Tellier acknowledged the company cannot predict when digital revenue will be enough to offset the print declines.

“Digital growth is currently unable to offset print revenue declines,” Tellier said. “Therefore the timing of a successful digital transformation remains uncertain.”

In addition to shifting more revenue to digital, the company is making progress is shifting its customer’s onto its 360 bundle, which combines print and digital products. At this time last year 11 percent of customers were on the 360 bundle. That had climbed to 21 percent by the end of 1H 2013.

Yellow Media’s once gaudy EBITDA margins are showing signs of strain, the result of print losses combined with a shift to lower margin digital products like websites and SEM. For the first half of 2013, the EBITDA margin was 44.9 percent, down from 50.4 percent in 1H 2012. The second quarter EBIDTA margin was 44.1 percent.

CFO Ginette Maille said margins could further erode, as more revenue shifts to digital and the company invests in its transformation. Over time, Maille said margins may improve because of cost savings from greater automation.

Last December, Tellier led Yellow Media through a financial restructuring that reduced the company’s debt by roughly C$1.5 billion, avoiding bankruptcy and putting the company in a better position to invest in its transformation. Yellow Media announced in March that Tellier would be leaving no later than August 15 as the board searched for his replacement. Yellow Media board chair Robert McLellan explained the decision to replace Tellier in an April interview. He said the board was looking for “fresh eyes” to tackle the company’s transformation challenge.

At the end of the call before taking questions, Tellier noted some of the achievements he is most proud of from his tenure at Yellow Media. These include:

* Creating a media company with a national footprint, largely through consolidating Canada’s directory industry.
* Developing a suite of “cutting edge” digital products and services.
* Building digital to 40 percent of total revenue.
* Engaging in strategic mergers and acquisitions that expanded the company’s digital capabilities.

There is no word yet on what the 44-year-old Tellier will do next. His separation package reportedly totals C$4.5 million.

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Yellow Media‘s longtime CEO Marc Tellier is stepping down and the company is seeking a replacement who can lead it through a full transformation to digital. Tellier has been at Yellow Media’s helm since October 2001. He has agreed to stay on during the search for his replacement to effect a smooth transition.

Yellow Media like most directory publishers faces a challenge of building a strong digital foundation to offset the inevitable decline in print revenue. In 2012, Yellow Media generated 38 percent of its revenue from digital, up from 29 percent the previous year. Print declines have really kicked in at YPG, which had been performing better than many of its peers with print. In 2012 print fell by 21.2 percent on an adjusted basis in 2012, and the declines are expected to continue at similar levels.

Under Tellier, YPG has been a very aggressive acquirer, purchasing both rival publishers and digital companies that filled in gaps as YPG was building its online and mobile capabilities. Some of the deals worked out better than others. Notably, YPG’s 2006 acquisition of Trader Media ended with a sale to the private equity firm Apax for less than the original purchase price. Other notable acquisitions include Canpages, once its largest directory rival, as well as Canada411.com and RedFlagDeals.

Tellier’s departure comes soon after the company successfully completed a crucial recapitalization, which converted a sizable portion of debt into shares. The recap reduced YPGs debt by roughly C$1.5 billion. His departures comes at a time of great change and transition throughout the directory industry. In the United States, two of the largest players, SuperMedia and Dex One, are merging, while Hibu, operator of directory units in the United States, Latin America, the UK and Spain, and the Italian publisher Seat PG are grappling with monumental debt loads.

Two of the stronger global companies, France’s Solocal and Sweden’s Eniro, have gradually transformed themselves into majority digital businesses that are less reliant on print revenue. Tellier’s successor will have one overarching task — accelerate the transformation of YPG.

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Here are some quick highlights from the two earnings calls.

Yellow Media

Canada’s Yellow Media generated total revenue of C$1.1 billion in 2012, down 16.6 percent from C$1.3 billion in 2011. Excluding sold assets and discontinued directories (leftover from its Canpages acquisition), the real decline was 11.9 percent. Print revenues dropped 24.6 percent to C$740 million. Online grew 6.1 percent to C$367 million. The adjusted growth rates for print and online were (21.2 percent) and 15.7 percent respectively.

Online now accounts for 38 percent of Yellow Media’s total revenue, up from 29 percent in 2011.

Mobile was a strong area for YPG in 2012, with the company claiming 25,000 mobile advertisers and nearly 50,000 mobile ad units.

New customer acquisition is one area of concern for Yellow Media. In 2012, the company acquired 17,000 new customers, compared with 23,000 new advertisers in 2011. YPG ended 2012 with 309,000 advertisers and an 86 percent retention rate.

Large advertisers account for much of YPG’s lost revenue. The company launched initiatives in 2012 to stem losses among its biggest customers, including the Digital Power Play (optimizes digital presence to maximize lead generation) and the High Priority Accounts initiative, which provides advertising solutions tailored to specific advertisers based on detailed customer profiles.

Finally, the company earned itself some breathing room on its debt with a recapitalization completed late last year. The recap reduced Yellow Media’s total debt as well as extended maturities.

Eniro

On today’s 2012 earnings call, Eniro CEO Johan Lindgren declared that the Swedish search and directory company has completed its print to digital transformation. That doesn’t mean Eniro lacks significant challenges, most notably insufficient digital growth.

“The transformation is done in the sense that we now see a stable long tail in print and voice. Print is down but it is a profitable business,” Lindgren said. “We will have print in our portfolio even for the longer term. But it is now at such a level that it can no longer jeopardize the total earnings of Eniro.”

Eniro had total revenues of SEK4 billion in 2012 (about $615 million) excluding its voice business. Eniro finished the year with 77 percent of its advertising revenues coming from digital sources.

Online growth was 6 percent for the year, but on a comparable basis, the rate was just 2 percent. Lindgren acknowledged that mobile, which grew 116 percent, helped bring digital revenue into the black. The company has set a target of at least 6 percent real growth in 2013.

“We need to grow both (online and mobile) to reach the 6 percent target,” Lindgren said.

Mobile ad revenue totaled 150 million SEK (US$23 million) in 2012, which represents about 7 percent of online directory revenue. Mobile is expected to double in 2013. Mobile also accounts for about 25 percent of Eniro’s online directory usage.

Update: The Australia directory publisher Sensis also announced its half year results this week. Sensis, which is a unit of the Australian telecom Testra, operates on a financial year ending June 30.  The results show an increasingly difficult environment for print in Australia.

For the six months ending December 31, Sensis generated A$479 million in revenue, which is a 12.6 percent decline over the previous 1H. Print revenue declined by 27.9 percent, partly due to the rescheduling of the Brisbane directory from 1H to 2H. Digital revenue was up 11 percent to A$201 million. Other revenue was down 12.6 percent to A$76 million.

Adjusting for schedule shifts, White Pages (print and online) was down 8 percent and Yellow (print and online) was down 22 percent.

Because Sensis books revenue at publication, its financial first half is less meaningful than the second half, when most of its biggest directories hit the street. Sensis generates two-thirds if its revenue and 80 percent of its EBITDA in the second half of the financial year.

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Yellow Media is cutting jobs in its Canpages print directories division but says it will keep its Canpages online business.

“From an online and mobile perspective, the Canpages brand will continue to exist,” said Yellow Pages Group Treasurer Anne-Sophie Roy. Roy gave no word on how many jobs would be lost or which Canpages city directories would be cut.

Yellow Media bought Vancouver-based Canpages in 2010 for $225 million. At that time, the Canpages website had 3.5 million uniques. Yellow Media’s strategy post-acquisition was to operate Canpages as a separate business, as Canpages also had its own print directories. Both companies had their own different scope and price points.

Shares in the Montreal-based company dipped more than 10 percent in morning trading on the Toronto Stock Exchange after rumors of the news broke out. Canpages publishes directories in Ontario, British Columbia, Quebec, Alberta, Yukon and the Northwest Territories. It also owns and operates Canpages.ca.

Increased digital offerings are springing up to offset the sting from print advertising revenues that dropped at 13 percent in Q3 2011. Also in Q3, Yellow Media logged a $2.9 billion writedown to the value of its business. The company stopped paying dividends last year to improve its financial position. Although it may be stripping jobs among the Canpages print division, Yellow Media advertised on Twitter and LinkedIn that it’s hiring for Mediative, its digital marketing agency. Some Canpages employees are receiving employment offers at Yellow Pages Group in areas where there is no duplication.

Last year Yellow Media sold Trader Corp., home of AutoTrader magazine, to London-based private equity firm Apax Partners for $745 million to help reduce its debt. Yellow Media will release its Q4 2011 results next week.

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Yellow Media, a leading print and online advertising company in Canada, has been taking some heat of late over its debt, particularly in the face of an accelerating decline in its core print directory business. This is the second recent departure of a key executive. Yellow Media CMO Stephane Marceau resigned in May, after less than two years on the job. Paupe had a much longer tenure than Marceau, having been with Yellow Media since 2003.

Over in Europe, European Directories has named a permanent CEO to replace interim chief Peter Briggs, who is with the turnaround firm Alvarez and Marsal. Toon Bouten, a former CEO of StoreNord and a past executive at Philips and Compaq, took over the helm at EDSA in August. Briggs will remain on the EDSA board.

Toon Bouten

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