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(Barry Chin/Globe Staff) |
About big numbers
Dozens of phone directory firms wrestle for a piece of an industry that's worth $16b -- and growing
The fat yellow phone books thudding onto doorsteps this month may seem like a relic of a pre-Internet age, but even in a WiFi world the fusty household icon is a hotly competitive industry.
The amber pages themselves may look unchanged to consumers, but Verizon Yellow Pages, Yellow Book USA, and dozens of small independent phone books are vying for dominance in a $16 billion industry, turning the low-tech phone book into a strategic battleground.
Directories have been piling up on porches over the past few weeks, and Verizon Yellow Pages has launched a massive ad campaign aimed at 18- to 25-year-olds, using Chinese food take-out boxes, a local Super Bowl ad, and singer-songwriter Jewel to increase brand awareness. The crowning publicity stunt occurs tomorrow, when Jewel rides a chartered Green Line train -- temporarily dubbed the "yellow line" -- into Boston, and later performs a free concert at South Station.
"Some people would say there's no sizzle" in phone books, said Stephanie Hobbs , vice president of communications for the industry trade organization Yellow Pages Association. "But believe me, when you can make the kind of money advertisers can make off their ad, when you see large venture capital companies lining up to buy them, I would say that's the definition of a thriving industry."
The competition may seem inexplicable to people who view the foot-high stack of phone books on their porch as anything but cutting-edge. But the numbers show a growing industry.
The yellow pages industry grew from $13.7 billion in 2000 to $16 billion in 2005, and is projected to continue growing at 3 percent a year, to $17.5 billion in 2008, according to research firm Simba Information.
Much of the growth is coming online, from websites like Yellowpages.com, SuperPages.com, and Yellowbook.com that are linked to print phone books. Publishers also sell their listings to search engines like Google and Yahoo.
But even the print edition is projected to grow. While the large established print books owned or spun off by telecom companies are staying flat or slightly shrinking, local independent books are growing at double-digit rates, according to David Goddard, a senior analyst and editor of the Yellow Pages Group at Simba Information.
Phone books are proliferating, even as industries that also provide print and online content -- such as newspapers -- are seeing their revenues decline.
After the Telecom Act of 1996, telephone companies were required to sell their listings at a reasonable price, which opened the market to competitors. Companies like Yellow Book USA arrived in Massachusetts seven years ago offering "overscoped" regional books that cover large swaths of the state. Meanwhile, companies like LocalTel "underscope" the traditional book, with directories that cover just a few towns and which have seen explosive growth.
"Each directory has a sweet spot for different customers," said Steve Galligan , chief executive of LocalTel Yellow Pages in Waltham. "The bigger books are losing out to the Internet in a big way, and the advantage we have, and why we're seeing such strong growth, is if you go to Google and you want to find a plumbing contractor, you'll find them from Long Beach, Calif., to Bangor, Maine."
This year, Verizon Yellow Pages has been "re-scoped" and is taking on a more local flavor, with three editions focusing on different areas of Boston -- Boston-City Edition, Boston-Brookline Edition and Boston-Cambridge Edition -- with slightly shrunken dimensions, in place of a single big book.
"We're not just your grandmother's yellow pages anymore," said Suzanne Franks, area director of marketing for Idearc Media Corp., the publisher of the Verizon Yellow Pages, which the company spun off last summer. Yellow pages users "skew young and educated and very affluent."
The competition has meant good things for the companies. LocalTel, which publishes 150 books in Massachusetts and New Hampshire, was bought by venture capital firm Riverside Co. last summer and posts double-digit growth each year, Galligan said. Since the yellow pages were spun off by Verizon to Idearc Media Corp., the share price has risen from $26.50 to more than $33 a share today.
Ironically, a growing number of households that receive phone books don't even have a landline. Ten percent of Boston households have cut the cord and gone wireless, according to a study by consumer research firm Telephia.
But few businesses would choose to opt out of the ad encyclopedia that every household receives. Unlike television, print, or radio ads, when people reach for the phone book, they're usually ready to buy things. "If you're standing ankle-deep in water, you're going to grab the directory you keep in the drawer and call the plumber," Goddard said.
Carolyn Y. Johnson can be reached at cjohnson@globe.com. ![]()
