Does the answer lie in cyberspace?

After several years of incubation, online directories are set go mainstream in 2003. The main force behind this shift is the Government’s deregulation of directory enquiries. From December 10 last year, the former service – which BT, with its 192 service, had a virtual monopoly of – became the 118 service, and the market is now open to competitors. As a result, the Web is set to become a key part of the directories service as companies battle for customers and the line between the Yellow Pages-type business and 192-type residential enquiries blur.

BT’s new number, 118 500, will run in parallel with 192 until August 2003, after which 192 will no longer exist. As well as finding a phone number, customers can search classified listings and enhanced information services – with all calls being answered by an operator in person.

BT’s recent acquisition of Scoot.com has enabled it to offer customers access to sophisticated search engines and databases covering most businesses in the UK and will lead to the introduction of a new section – the classified “purple” pages in 2003.

Callers to BT can already benefit from enhanced information services such as Cinema Finder, where customers can locate a cinema anywhere in the UK, and Film Finder, which shows when films are playing at any given time. BT can also direct customers to a restaurant nearest to the cinema of their choice. Then there is TV Guide, which gives callers access to programme listings for terrestrial channels for the week ahead. BT plans to add more enhanced information services in the future, including lottery results, weather forecasts, sports results, share prices and travel and directional information.

BT is also developing a much-needed list of mobile phone numbers that will include a “personal information hub” from which customers can create their own address books and store individual information, such as bank account details, securely.

All of these new services can be accessed either by telephone or online through the bt.com/118500 website. From there customers can access new classified listings as well as residential and business directories.

BT Retail chief executive Pierre Danon says: “Oftel’s decision to open up the market to competition has enabled us to seize the opportunity to expand our traditional 192 service into a directory enquiries service for the 21st century.

“We plan to give our customers instant and easy access to a wealth of information. The combination of nearly 50 years’ experience in this field, the latest technology and well-trained people at our call centres will put BT at the heart of these new and exciting developments.”

BT Directories head of marketing Simon Lubin says younger people will initially be the main users of 118 500, because “they use information to arrange their social lives”. But those from older age groups and businesses should soon become key customers of the new directory enquiries service.

Web resistance

“We expect to experience a certain amount of resistance to online from a hardcore group of people who grew up with the print product and are attached to it,” Lubin explains. “But as the benefits and cost savings of online become apparent, people will make the switch.”

Charging for the new 118 500 service is still being debated. BT plans to change the traditional fixed-price charging system for its telephone accessed service to one where the cost is based on call time. BT expects the typical enquiry call to cost no more than before – about 40p. The bt.com site, however, continues to give free access to directory enquiries, but Lubin admits this is likely to change for more frequent users, “especially business users”. But he says this shouldn’t put people off using the service.

“It will be a challenge for us to turn this into a commercially viable reality. One lesson learned from the early dot-com era is that charging for valid services is a necessity, not an option.”

The bt.com site receives about 1.5 million enquiries a week, and Lubin says he is looking at partnerships, sponsorships and other alliances to increase its popularity. But BT has no room for complacency. Both established directory companies and newcomers are snapping at its heels, eager for a slice of what is potentially a huge new market.

Laurence O’Toole, director of business information and new media at Thomson Directories, is responsible for two websites – Thomweb.co.uk, launched in 1997, and Thomsonlocal.com, launched in April 2002. Thomweb, run in conjunction with internet search engine Infospace, is a generic portal, offering services such as people finder, news and so on. Thomsonlocal.com, which was developed in house, contains features and information relevant to the customer’s local area. O’Toole says: “We have just over 2.2 million business listings in our standard classified database, plus links to over 300,000 business websites in the UK, and it’s growing all the time.”

In January 2003, Thomson launched Webfinder.com, a website to complement a print directory of the same name, listing 5,000 “essential” websites, both business and general.

The online version of Webfinder.com will eventually list many more websites than its offline counterpart. It will charge Web advertisers on a pay-per-placement basis similar to the system used by Overture and Espotting.

“The objective for us is to get distribution across other websites,” says O’Toole. “We are already teaming up with Freeserve, Streetmap and Multimap.”

O’Toole is excited by the potential that the internet holds for directories. “Online is a tremendous growth opportunity for our business,” he says. “It represents just a small portion of our revenues today, but will help us increase our reach.

“The internet offers a company like ours a major opportunity to close the gap on the market leader [Yellow Pages],” he adds. Thomson’s 173 print directories get into the hands of only 80 per cent of the UK population, in 22 million homes and 2 million businesses.

No yellow-belly

But Yellow Pages has no intention of resting on its laurels and letting Thomson close the gap. It relaunched its Yell.com site at the end of October – the first major revamp since April 2000 – and claims to have increased usage steadily but quite dramatically over the past two years.

“We’ve spent a lot of time talking to users, making the site feel more local and adding search options,” says David Walmsley, head of product design at Yell. These enhancements include the addition of 17 “browse” categories and more localised versions of Film Finder and Property Finder.

The new browse function is designed to appeal to advertisers and users unfamiliar with the Yellow Pages book, which contains a massive 2,500 categories. Yell is also making more effort to wean its traditional smaller business advertisers off the print product (it boasts no fewer than 438,000 advertisers) and onto the Web – or at least to run the latter as a cheap addition to the former. Advertisers renewing their business with the Yellow Pages are being tempted to extend online by attractive price packages.

For example, for &£109 a year, a Yellow Pages advertiser gets a mention on the Yell.com website, including e-mail and SMS contact numbers. Walmsley is bullish about Yell.com’s ability to leverage its huge and loyal offline audience. He quotes figures showing that 30 per cent of Yellow Pages advertisers spend 75 per cent or more of their total marketing budget on Yell products.

Keeping customers on-side

The challenge, however, is to adapt Yell to the digital era without alienating its rather conservative customer base, which is accustomed to using the product in a certain way. “We mustn’t drift too far from the structured, comprehensive and logical format for which Yellow Pages is famous,” Walmsley concedes.

One innovation that would put the Yell brand in jeopardy is the pay-for-placement model favoured by Thomson, Overture and Espotting. “We’re about putting buyers in touch with sellers in an open environment and letting users make the choice,” says Walmsley.

But as with Thomson, Yell.com hopes to leverage the Web’s ability to be both local and global at the same time. As of August 2002, it has been possible to buy a locally targeted banner ad at the top of each Yell.com page, at a cost of &£25 a month. Previously, this slot was only available as a nationally targeted ad. Walmsley claims to be selling over 1,000 of the new ads each month.

The future of Yell.com looks bright. Established in 1996, its usage has quadrupled since 2000, with over 40 million page impressions a month. And with a recent move onto Sky Active, Yell is keen to expand its distribution through other digital channels. The directory has also been testing both WAP and SMS.

With all this innovation, could Yell.com ever replace the book? “I don’t see that happening,” says Walmsley. “Just look at the US, where internet penetration is huge but the Yellow Pages book, which we recently purchased, has also been experiencing strong growth.” The UK Yellow Pages goes out to a comprehensive 28 million households in 82 different editions.

“Although we are extremely excited by the potential of new media, we don’t think it’s about to take over the world tomorrow,” says Walmsley. “Technology is the easy bit. It’s the infrastructure, customer relationships and brand trust that count most. As big and important as the internet will be for Yell, we don’t see it ever outgrowing the book.”