Directory action

Directories have bucked the global slump in advertising revenues, yet advertising agencies rarely view them as a valuable resource. David Benady reports on how the sector is thriving and increasing their market reach

The meteoric rise of directories as an advertising medium over the past 20 years appears to have escaped the notice of one important section of the industry: advertising agencies.

Ad expenditure through directories in the UK has increased to just under &800m a year from less than &100m in 1980. Directories account for more than five per cent of total UK ad expenditure – putting them ahead of posters, consumer magazines, radio, Internet and cinema in share of media spending. While the advertising sector has suffered from the recent downturn, directories are thought to be holding up well.

With relatively low costs and straightforward production – there’s little room for “creative differences” or going over budget in a directory ad – gross profit margins for directory publishers stand at more than 50 per cent, according to industry trade body the Directory and Database Publishers Association (DPA).

Turning a blind eye

But according to Gary Zabel, managing director of Hollis Publishing – which generates more than &1m a year from its eight titles covering marketing related industries such as public relations, marketing services, sponsorship, corporate hospitality and also the music industry – ad agencies have failed to take note of these trends.

Zabel says that not a penny of Hollis’s ad revenue comes from advertising agencies as they would not even consider directory advertising. “Most advertisers feel that they need to be in the bible of their particular industry and the formula does work. Directories are fantastic sources of information, business prospects, contacts and networking. They represent a database that a company would probably have to build itself if the directory didn’t exist, and it would cost thousands of pounds to build and update as opposed to a few hundred pounds for a directory,” he says.

He concedes that business-to-business (B2B) directory publishers ought to do more to convince ad agencies of their benefits, though he says that the spend is not usually big enough to interest them. But he adds: “The first name on any media list should the trade directory.”

In Marketing Week, advertising guru Winston Fletcher recently launched a tirade against the idea that buyers and sellers could be connected through directory lists. “There are occasions when consumers are willing to plough through lists, but such occasions are relatively few and far between,” he contended (MW May 16). But the reverse appears to be the case, as the growth in directory advertising demonstrates. If anything, the fragmentation of media and the search for more specialised and direct methods of communication will bolster the directory sector against the more established forms of advertising.

In a league of their own

The strength of the sector is signalled by the proposed flotation of Yell, the former BT-owned business, which comprises Yellow Pages, Talking Pages, Business Pages and Yell.com. Following the poor receptions of recent flotations such as Punch Taverns and HMV, Yell is confident its offering will be well received. Yell could be valued at &3bn at flotation.

For an advertising medium to float in the midst of an advertising downturn indicates that directories are not quite like other media. While television ads and much advertising through magazines, radio and posters, have questionable effectiveness, requiring much expensive tracking, directories advertising is simple. Advertisers do not need to stimulate consumers to action, or persuade them that they need to buy a type of service. Consumers have already decided the product or service they want to buy – be it a plumber or builder or financial services adviser – before they pick up the directory.

Yell Group head of external relations Richard Duggleby says the success of the business is based on the fact that it is “recession resilient”, that it has weathered all the downturns of the past 20 years because of the variety of products and services on offer, covering some 2,500 categories. And with some 85 per cent of ads in Yell directories placed by small and medium sized companies (SMEs), Yellow Pages is confident that the advertisers have few other alternatives to promote themselves.

Yellow Pages competes with classified advertising in local press, but Duggleby says adveritising in Yellow Pages is indispensable for most SMEs. He claims that independent research shows that Yellow Pages is used on 1.2 billion occasions every year. Some 900 million of these result in a customer phoning one of the listed advertisers, and 500 million result in sales worth some &87bn. “That’s very impressive. Some 85 per cent of advertisers are satisfied with the responses that they get from the ads,” he says.

Meanwhile, Yell.com, the online version of Yellow Pages, receives over 1 million unique visits a month and expects to break even on investment in Yell.com by 2003/4. The advantage for advertisers is that it may cost just &100 to get a listing on the dot-com directory, and customers can look for services across the whole country, rather than just in the area of their Yellow Pages directory. Even though all the products are sold by a single salesforce, prices are not bundled, as there is a separate pricing structure for each medium, be it online or directory.

At rival Thomson Directories, a similar approach is taken, in the belief that bundling media together makes it difficult to sell and establish separate values for each one. Thomson Directories has a database of 2.3 million business listings and produce some 173 Thomson Local annual directories, as well as the online version Thomweb.co.uk, which was launched in 1998.

Gotta be in it to win it

But it is not just general consumers using directories to find numbers of plumbers and merchants that contribute to directories’ strong showing. Specialist B2B directories have also grown in stature over recent years and there are some which require at least an entry – if not a full ad – if a company is to stand any chance of winning custom.

Alan Philipp, managing partner of directories publisher AP Information Services, gives the example of the pensions funds directory published by his company for a small specialist market. “You have got to be in there or else you are dead,” he says.

As to the effectiveness of taking display ads in the directories, he explains: “If I happen to be in the market for a pensions fund administration service, there’s a small section in the book for this. I would not look at a company that did not have the basic information. Others may be cheaper, but if they don’t tell me enough about themselves, they are not in the market.” In the pension fund administration section there are some 30 companies listed, but only eight have opted for what Philipp calls an “impact” entry, one with profile information about the company. “I would concentrate on those as a user,” says Philipp.

Media consultant Harold Lind, who does work for the Advertising Association on directories, says that the September 11 attacks did not have a grave effect on directory advertising as it did on other media because the listings are compiled at the beginning of the year and ads sold then. So by autumn, most of the business has already been done. In fact, Lind says directories increased sales by about ten per cent last year – an increase in line with the growth in direct marketing.

“Nothing else approached this at all,” he says. He adds that through the Nineties, directories were increasing by between five and seven per cent a year. He believes last year’s strong performance was down to the success of the retail sector, and the subsequent knock on for retail directories.

But Lind believes there could still be even greater improvements in the way directories are run. “I still think there is a lot of slack in the business that more efficient running could improve. There was a great improvement in the Eighties when they started to organise themselves properly. But there are greater gains to be made.” He says many industry players expected people to come to them to advertise, but Thomson and Yell brought a new way of doing things, selling more sharply.

It seems unlikely the job of taking out an ad in an industry directory will become the work of ad agencies, as there is little room for them to add value to the process. Most specialist directories will give a listing to all top companies in their sector, but there is a great advantage in paying for a panel or display ad as they provide the extra information and profile directory users will be looking for. Using other formats, such as online directories and CD-Roms can be advantageous, though most users would be content to have a hard copy in their hands to thumb through.

There is no doubt that the effectiveness of directories is easily measured – just take out the ad and wait for the calls to come rolling in. And if they don’t, you needn’t advertise in that directory the next time round.

DPA Awards

The DPA Awards, organised by the Directory and Database Publishers Association, is now in its tenth year and took place on June 20.

This year the Awards, sponsored by Polestar and RR Donnelley had six awards – including Champion Directory 2002. Directories – in whatever medium – are judged on standards of completeness, editorial content, aims, ease of use and design, production and value for money. In total there were 77 entries this year.

Print Awards – New Edition

  • Jersey Telephone Directory published by Jersey Telecom

Highly Commended:

  • Freeman’s Guide to the Property Industry (published by Freeman Publishing)
  • Pentec (published by The Endat Group)

Print Awards – First Edition

  • Building Works (published by The Endat Group)

CD-ROM/DVD Awards

  • Business Search Pro (published by Thomson Directories)

Highly commended:

  • Municipal Year Book CD-ROM (published by Hemming Information Services)

Internet Awards

  • WARC (published by World Advertising Research Center)

Highly commended:

  • Jane’s Copcase (published by Jane’s Information Group)
  • SearchRed (published by Wilmington Business Information)

Marketing Awards

  • The Knowledge (produced by CMP Information)

Highly Commended:

  • Freeman’s Guide to the Property Industry (produced by Freeman Publishing)
  • Champion Directory 2002 Business Search Pro (published by Thomson Directories)

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