A classified success

You may have noticed that some of the magazines you read have been thinner than usual over the past couple of years, owing to lack of advertising. The newspaper sector has had a tough time too, as have other media owners. But while the other print media around it sink, or just about manage to keep their heads above water, the directories sector soars like an albatross above rough economic seas.

The most recent data from the Advertising Statistics Yearbook, published by the World Advertising Research Center, shows that directory publishing surged ahead of other media and increased its share of advertising revenue in 2002.

It’s on paper

In a year when advertising expenditure in the press sectors fell by almost two per cent, directory advertising in the UK grew by 3.2 per cent, to &£990m. In contrast, advertising revenue for regional newspapers rose slightly, by 1.3 per cent, and consumer magazines fared worse with an increase of just 0.8 per cent. Meanwhile, national newspapers and business magazines came through 2002 battered and bruised, seeing advertising revenues drop by 6.4 per cent and 9.5 per cent respectively.

“In a difficult market, this was a robust performance from the directories sector, which now accounts for nearly 12 per cent of all press advertising – up from 11.3 per cent in 2001,” commented the Directory and Database Publishers Association (DPA) in its November 2003 newsletter. “Following an excellent 2001, when directory advertising revenues rose by more than ten per cent, the sector has shown that it can weather adverse conditions.”

What is more, further growth of six per cent was forecast for the sector in 2003 (DPA), continuing a steady course that has seen directory revenues rise from less than &£100m in 1980 to about &£1bn today.

Direct link

So what are the factors behind the directory sector’s continuing success in increasing advertising revenue. And how long can it continue?

In the first instance, advertisers are attracted by the very nature of the medium, which arguably lends itself to advertising more easily than any other. Directories provide a direct link between buyers and sellers – a strong proposition for advertisers.

“Directory advertising is point-of-purchase advertising – where the timing of the buying decision is crucial. Virtually all other media try to persuade or influence future buying decisions,” says Rod Kain, general manager at directory publisher Kompass. “Directories are not transient like other ‘stimulative’ advertising media, such as television, radio, newspapers or magazines. Directories will be retained as users recognise their value and refer to them frequently.”

Thomson Directories marketing and strategic development director Kendall Gordon agrees that people use directories when they are actively seeking to buy. “People are already in the frame of mind to purchase,” he says. “Consequently, for a directory advertiser, the chance of conversion to a sale is much higher – about eight out of ten people who use a directory have already made a decision to buy.”

Dual forces

However, directory owners have done more than simply maintain and communicate this strong integral advertising premise to advertisers. Two other major forces have been at work: careful research into the users’ market to identify the information required; and an increase in the accessibility of that information. The former maintains and boosts the relevance of the product, while the latter helps to widen the user market, drawing in more potential buyers for advertisers.

“Directories’ appeal to advertisers is inextricably linked with their appeal to users,” explains Gordon. “Advertisers see value in appearing in a directory that users use. People like to use a directory that has plenty of advertisers. A directory will only be perceived as useful if it is supported by both groups.

“As users’ information needs, buying habits, mobility and leisure interests continue to develop, directory providers must adapt. We regularly research the needs of advertisers and customers/users to monitor these changes and ensure that our directories will give people products that really help them find whatever they might be looking for.”

For instance, Thomson has just launched a new section in its printed and online directories called Localplus. In the print version, this will contain details of lifestyle items, such as theme parks, designer outlets and airports, which may not be present in the immediate area covered by the directory but are still used by the people living there.

Richard Duggleby is head of external relations at Yell, which publishes Yellow Pages and Business Pages, runs yell.com and the directory enquiries telephone service 118 24 7 in the UK. He says his company is always looking to enhance its directories, with the aim of increasing usage and effectiveness. “This in turn reinforces advertisers’ satisfaction with our directories’ ability to generate sales,” he adds.

Modern approach

“We keep them relevant and contemporary by regularly ‘spring cleaning’ classification headings, so that out-of-date ones that no longer attract much advertiser/user demand or no longer reflect contemporary trades or businesses are deleted. Similarly, new classifications are introduced where appropriate to reflect developments in modern life. For instance, last year we deleted the classifications ‘anchor makers’, ‘bellows’ and ‘sword makers’, but introduced ‘home staging’, ‘serviced apartments’ and ‘bars – mobile’.

“Following extensive research among users and advertisers, we also change existing directory areas, and if appropriate introduce new directories. This is done when it is clear from research that there have been changes in population concentrations or shopping habits within a directory area,” says Duggleby.

For advertisers, the emergence of new sections and features increases the number of advertising options available, along with the choice of premium positions, colour advertising and the chance to have their business listed online. Advertising on the internet has often been a hit-and-miss affair, but directories are an ideal place to take that first dip into online promotions. Unless consumers have a pre-specified Web address in mind, the whole process of using the internet involves searching for the right website.

Quick to evolve

The Net is essentially a huge online directory, and directory publishers have not been slow to pick up on this fact. Not only have they created online versions of their products, but they have also hooked up with internet search engines in order to help online users to find the products and services they want.

This online element has become so much a part of directory publishing over the past five years that an entry in the Web version of a directory is now often part of the overall advertising package.

“In the past, circulation was king,” explains Kain from Kompass. “Without a comprehensive circulation to all potential customers of the advertiser, there was a restriction on the opportunity to be there at the time a product or service was being sought.

“High circulations were prohibitive, on the grounds of cost, for all but a small number of directory publishers. Specialist titles, therefore, abounded. Electronic delivery, initially by CD and more recently through the internet, has created much more of an opportunity. Awareness and, subsequently, a satisfactory volume and quality of traffic, are now the key issues for online directories.”

No Net loss here

He continues “In the early days of the internet, ‘free’ information and general search engines, such as Alta-Vista and Google, were potential and sometimes real threats to directory publishers. But as the ‘value’ of these information sources for serious directory, product and service sourcing was recognised as being limited, so true directories have established themselves as valid online advertising sources.”

With this in mind, it is clear that directories have the potential to attract even more advertising as the online business and consumer communities grow ever larger. In those sectors with an already well-developed Web presence, the online directory is superseding the print version, whereas in the case of Yell and Thomson, both are developing together. Directory publishers are also looking to add value to their online versions beyond the simple search function, tailoring software tools and search engines to their target readerships.

“The proportion of our customers buying online directory advertising is growing,” says Thomson’s Gordon. “Already, about 25 per cent are advertising online with us, so this is clearly an exciting area. As the technology advances, new platforms will follow. Directory publishers that embrace these changes will continue to satisfy the needs of both users and advertisers.”

CASTING THEIR NETS

One of the key factors behind the directories sector’s ability to continually attract more advertisers has been its readiness to embrace technology. The internet, initially viewed by many directory publishers as a threat, is now the driving force behind the industry. It is almost as if, held back for years by the limitations of the printed page, directory publishers are revelling in their new-found creative freedom. And the good news for publishers is that the online medium has yet to reach its full potential – the offer to advertisers improves as internet usage grows.

However, directory providers aren’t simply prepared to sit back and let growth in the online community increase revenues. Many companies are trying to drive this growth through innovation, by doing more than simply creating online versions of their offline products.

Take, for instance, BRAD the UK directory of media that carries advertising. As well as rolling out BRAD Online, a basic Web version of its directory, the publisher has created BRAD Net and BRAD Intelligence, which have delivered measurable benefits and helped to guide the company safely through stormy economic seas. Subscribing to BRAD Net allows users to carry out more sophisticated Web searches across media categories than would be available with a simple BRAD Online subscription, while BRAD Intelligence includes media and advertising news and access to the latest statistics, as well as the option of mapping circulation and other key figures graphically – essentially providing a strategic media planning tool.

Harnessing technology

“Although we launched BRAD Intelligence last June, the idea has been around for about ten years,” explains BRAD publishing director Mark Parker. “It was a case of getting the technology in place to realise the vision and then developing it appropriately.

“We are constantly talking to our customers to establish their needs, then we use technology to satisfy them – it’s far better to be market-led than to be a slave to technology. We find that each agency has its own method of planning media schedules, in many cases using special software, and so we have produced a tool that helps to streamline this complex process.

“Since the launch of BRAD Net, we have seen an increase in user volume, and these people are staying online for longer – 45 minutes on average, which is far better than the usual Web visit. What’s more, although advertising volumes are low, we have found that there has been an increase in ad renewals since we developed our online resource.”

BRAD’s advertisers now have the benefit of knowing that their ad appears both in print and online. A standard directory entry includes a listing in all versions of BRAD, from print to BRAD Intelligence, adding value to the advertising. Individual companies are then approached about bespoke packages, with a view to expanding their advertising across the most appropriate medium – banner ads on certain sections of BRAD Net, for instance.

However, Parker is keen to point out the balance that must be struck between the needs of subscribers and advertisers: “We cannot let advertising detract from the user experience, so we don’t allow pop-ups online.”

Parker believes media owners will be increasing their budgets this year and looks forward to improvements in advertising volumes by the autumn. He also points out that those owners will want extra value for their money and says BRAD’s raft of products is well-placed to deliver this.

Online innovations are not restricted to the user side of the market. Thomson Directories has used technology to develop a wider choice for its advertisers. Traditional print directory advertising includes a basic entry with options for enhancement, and various ad sizes. On the Web, these ad forms often manifest themselves as banners and annoying pop-ups, which, as Parker has pointed out, can hinder rather than help an online directory.

Thomson has taken directory advertising on the internet a stage further by developing online search tool-cum-directory, WebFinder.com, which helps companies to promote their websites on internet search engines that use the Thomson business database. This gives companies the opportunity to appear in the search results of Thomson’s partners, which include Freeserve, Ask Jeeves, Tiscali, Streetmap, Blueyonder and WebFinder itself.

More than this, WebFinder provides companies with an option to bid for high positions under certain keyword categories. The real innovation, however, is that, apart from a nominal annual administration fee, companies only pay when a user clicks on their entry. The cost is determined by how much a company has bid for its position in the list.

Tailor-made

“Companies that take our full WebFinder service are assigned an account manager, who will help them to set up their account and suggest appropriate keywords for their products and services,” explains Thomson Directories marketing and strategic development director Kendall Gordon. “We also write titles and descriptions for them for each of these keywords. And clients receive professional advice on the bid management process.”

The amounts bid are completely open to market forces. Companies have to pay more in sectors that have a well-developed Web presence, benefit from a high value per unit of business sold or exist in a highly competitive market.

“The beauty of this service,” says Gordon, “is that companies only pay for the interest they receive. They can also gauge the effectiveness of their advertising, because the system is fully measurable, offering the ability to track results by keyword to see how well they are working.”

Gordon is convinced that, in an era of increasing internet usage, WebFinder satisfies the demand from businesses to be seen in the right place in the right way.

This ability to use the latest online technology to meet the needs of customers should ensure that the directory sector remains an attractive advertising proposition for some time to come.