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Yellow's mission to become 'the biggest digital agency for SMEs'

It wasn’t long ago that a listing in the Yellow Pages was such an imperative form of advertising that businesses would adjust their names just to get an alphabetical advantage over their competitors. So pervasive was this strategy that a 1992 Chicago Tribune article includes such curiosities as ‘A AAA Aability Secretarial Service’ and the grammatically questionable ‘A Attorney for DMV matters’.

Businesses, particularly those of the small to medium size, saw the Yellow Pages as a conduit to customers they were hoping to reach. It was a concept captured for decades in the three-finger logo, which served to represent the customer’s search across the listings on the page.

However, as customers’ fingers have steadily migrated from the page to the mouse and the smartphone, the suspended appendages in the logo have contributed to a look that’s out of touch with what the company does today.

Beyond the directory listings that continue to appear in the annual print edition of the Yellow Pages, the company today provides a full suite of digital services to clients who want to increase—or even introduce—their digital footprint. And the company has fully embraced this shift by making the bold decision to jettison the walking fingers and opt for a new look that accurately captures the changing business. 

   

Darren Linton, who was confirmed as the new Yellow chief executive last week, says that 40 percent of the $95 million revenue Yellow made in 2017 financial year came from digital services—a number that's promising when viewed in the context of traditional media companies and their struggle to generate digital revenue. And this steady march into digital has given him an optimistic vision of what the business could become in the future.

Darren Linton.

“We want to be the biggest digital agency for SMEs in New Zealand,” he says.

It might be ambitious, but this statement touches on an interesting commercial opportunity in the New Zealand market.

The Enterprise Study conducted by KPMG in 2016 shows 97 percent of the 470,000 listed businesses enterprises in New Zealand employ fewer than 20 staff. These lean ships, keeping the economy afloat, often don’t have a digital agency on the books, largely because of the expense involved.

Linton believes that Yellow has an important role in filling this gap and giving smaller businesses access to digital services that are both effective and affordable.

Linton says the in-house digital team at Yellow has developed what is essentially a menu of different digital services that a client could purchase from the company. This includes a website, brand storytelling, digital video and digital advertising services, all sold through a simplified pricing model.

“The idea is that the client might start with a simple web product, but then as you go forward there are also bolt-ons that businesses can buy as they grow and change,” Linton says.

Whether it’s an online booking widget or e-commerce capabilities, Linton says the aim is to give clients access to the services they need as their businesses grow. He says it’s about giving these businesses access to services that would normally seem out of reach.  

“We’ve had to be smart about how we make these products affordable and scalable enough to help thousands and thousands of small businesses,” he says.

“We’ve done a lot of interviews with small businesses to find out exactly what they need.”

Yellow is, of course, not the first organisation to consider working with these smaller businesses. The reality is that SMEs often don’t invest in advertising services because they simply don’t have the budget to do it effectively. For every business success story, there are hundreds that fall over. In working with these smaller businesses, there’s always a risk that the revenue source might dry up in the future.

One way Yellow is protecting itself from this risk is by casting a wider net, rather than focusing on a select few businesses, which may or may not exist in the future. 

“We have over 20,000 paying digital customers now,” he says.

“It’s true that small businesses don’t have a lot of money to spend, but they have to put aside money into digital marketing or they’ll be left behind. The only question is what is the minimum they can afford to spend? And because we’ve managed so many businesses through this, we’ve got a huge database of knowledge about what would be right for different businesses.”

Linton see a huge advantage in the customers Yellow has accrued through its print product of the years. The pages in the publication almost serve as an encyclopaedia of small- to medium-sized businesses in the country, and each listing provides the opportunity of digital upsell.

To ensure the upsell is worth the investment, Yellow has had to transform its workforce with the introduction of talent that wouldn’t have had a desk at the company only a few short years ago.

“Over the last few years, the size of the total workforce has decreased, but the number of people in a digital role has significantly increased,” Linton says.  “I would say that over have the staff are focused on digital, while everyone else touches digital in at least some way.”

There’s always a fair amount of scepticism when it comes to attempts by large traditional organisations to shift their businesses to digital, but Linton seems undeterred, pointing to the example of Netflix, a business built on sending DVDs to customers’ physical addresses (what's more surprising is the number of customers who continue to use the service in this way).

Linton aims to have digital account for 50 percent of Yellow’s revenue within the next 12 months—a strategy, he says, the shareholders have bought into.

“Our shareholders are prepared to invest in digital and they will spend over $2 million dollars this year investing in digital products as well as the people necessary to make it happen,” he says.

“I genuinely believe that we have opportunity here to turn an iconic New Zealand brand into a sustainable digital business.” 

This story first appeared at StopPress.

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