The Praized Blog

A few weeks ago, with the release of the latest revenue numbers from the Newspaper Association of America, we were treated with very Chicken Little-esque headlines including “Decline Of US Newspapers Accelerating“, “NAA Reveals Biggest Ad Revenue Plunge in More Than 50 Years “ and ”NAA to newspapers: advertise this“. 

Highlights of these articles included:

• “Total print advertising revenue in 2007 plunged 9.4% to $42 billion compared to 2006″
• “Signs that online growth rate is beginning to slow as well. Internet ad revenue in 2007 grew 18.8% to $3.2 billion compared to 2006.”
• “But an even more important reason why paper ads are declining is that their cost-to-value ratio is way out of whack with what advertisers can get elsewhere, particularly the Internet.”

One reader in Techcrunch (a former journalist) had an especially enlightening comment:

Across the board, three dynamics are pretty consistently hammering nails into the dailies’ collective coffin faster than might be occur otherwise:

* Despite talk about fundamental disruption in the business, there’s still an attitude that this is a storm to be ridden out rather than a complete sea change. Even when the folks at the top (owners, publishers) get it, there are many, many layers of upper and middle managers who don’t — and who are afraid of losing head count because that somehow diminishes their authority.

* Sales has been given increasing control of the organization. Mind you, sales are crucial — but it’s hard to find a group of folks less strategic than salespeople on commission.

* Too many lifers. When you get into key operational areas (marketing, product development, news management) you find a lot of people who’ve been in the daily news business their whole careers, which isn’t necessarily bad, but nor is it a hotbed of innovation. What’s more shocking is the number of people you run across who’ve been at the same paper for 15, 20 or 25 years.

Chris Anderson, Wired’s Editor-in-Chief, had a different take on things, one that I definitely agree with:

The truth is that the newspaper business is still a huge industry and will be around in one form or another for the rest of my life. That is not to dismiss the declines, but only to note that there’s still a lot of money there and what is required is strategic change, not giving up the ghost.

Growth industries are different from sunset industries, but in many cases the second category is larger (one example: the Yellow Pages is still a $16 billion business).  Managing companies on the way up takes a different set of skills than milking them for cash on the way down (and often different people, witness the buyout guys), but fortunes are just as often made the second way.

What people forget is that industries peak at the top. Which is to say, at the very time that the first and second derivative people are writing off a business, those who can stand back and see the value still left in it can make a mint. Laugh at newspapers if you will, but I’ll bet some private equity firm out there is looking at the chart above and licking their chops.

With all this doom and gloom, I was pleasantly surprised when the Canadian Newspaper Association released their numbers last week.  Highlights from the Financial post and The Windsor Star:

• “Revenue at Canadian newspapers fell about one per cent last year”
• “The healthier financial picture in Canada reflects newspapers that are doing a better job maintaining their readership numbers”
• “a 30 per cent rise in online advertising revenue offsetting a two per cent drop on the print side.”
• “The ongoing challenge for newspaper companies (…) is to figure out how to use print content in digital form across various platforms such as home computers or mobile devices.”
• “The narrative about newspapers in the U.S. has been consistently negative in recent years, and that negativity has unduly influenced perceptions of the health of the newspaper industry in Canada”

What it means: as I don’t know the intricacies of both regions in the newspaper industry, it’s very difficult for me to comment on the why of those major differences.  But it’s something we also see in the directory industry, where Canada (or by proxy Yellow Pages Group) usually experiences better financial results than its US peers.  From a newspaper usage perspective, I do have one recent ”focus group of one” anecdote though.  Ever since I got my HTC Touch with a cheap unlimited data plan from Bell Mobility, I find myself reaching for the phone much more often than the printed newspaper when I have a few minutes during the day.  Radio-Canada (the French CBC) has become my default source for mobile news as they refresh their feed very often, have tons of original content and have a mobile-specific version.  If I (a self-proclaimed newspaper junkie) am reaching for the phone instead of the paper, it’s a sure sign that mobile will be next opportunity/challenge facing the newspaper industry and I think it will be the same in the directory business.

Just received the press release announcing the new interactive ad revenue forecast by The Kelsey Group. Highlights:

Global (2007-2012):

• Ad revenues (currently at $600B) to grow at a compound annual growth rate (CAGR) of 2.7 percent and reach US$707 billion in 2012.
• Interactive ad revenues will increase from US$45 billion in 2007 to US$147 billion in 2012 (a 23.4 percent CAGR).
• Directional advertising, which comprises local search, print Yellow Pages and Internet Yellow Pages (IYP), will go from US$33.3 billion in 2007 to US$41.4 billion in 2012 (4.5 percent CAGR)
• Local search revenues will grow from US$2.1 billion to US$6.6 billion (25.5 percent CAGR).
• Print Yellow Pages revenues will decline from US$27.5 billion to US$25.6 billion (-1.4 percent CAGR).
• IYP revenues will grow from US$3.7 billion to US$9.2 billion (20.1 percent CAGR).

US (2007-2012)

• Interactive advertising revenues: from US$22.5 billion to US$62.4 billion (22.6 percent CAGR)
• Directional advertising revenues: from US$16.4 billion to US$18.8 billion (2.8 percent CAGR)

Canada (2007-2012)

• Interactive revenues: from US$1.3 billion to US$3.3 billion (21.3 percent CAGR).
• Directional revenues: from US$1.4 billion to US$1.9 billion (5.8 percent CAGR).
• “Canada is one of the markets in which The Kelsey Group expects growth in the print Yellow Pages segment, forecasting a 1.8 percent CAGR for print directories in Canada during the forecast period.”

According to Charles Laughlin from the Kelsey Group, they expect “printed directory revenues to decline in most global markets over the forecast period, though print will remain the most important source of leads for small businesses. For directory publishers to succeed, they will need to invest time, energy and resources in both channels to minimize the decline in print and maximize the opportunity online.”

Reporting on the same press release, MediaPost added that “ the forecast does not include mobile ad platforms.”

Update: Techcrunch chimes in.

Yesterday morning, I had the opportunity to moderate a social media panel at the Infopresse conference on social networking. Sitting on my panel was Guillaume Bouchard from NVI, a Montreal-based SEO/SMO firm. He explained to the crowd of more than 280 people how, by using social media tools, he manages to generate brand awareness and increase the online street cred of Canpages, a Canadian directory company competing against Yellow Pages Group in Canada.

It starts with the creation of original and quirky content in the Canpages blog. His team then seeds that content in the various social news sites like Digg and Reddit. Working with a large network of friends and contacts, he’s able to catch the eye of online influencers who might (or might not) promote that piece of original content.

His best success so far with Canpages has been this blog post about “Weird Canadian Restaurants”. It was submitted to Digg and generated 676 diggs and 101 comments. It was promoted to the first page of the site and generated good traffic (he did not disclose how much) for the Canpages blog. It was also favorited by people in StumbleUpon, another social tool that has the reputation of driving a lot of traffic. The post was well enough crafted to be picked up by Dan Mitchell from the New York Times, which generated some more traffic to the Canpages blog.

What it means: a great use (and a great understanding) of social media tools and sites to build a new directory brand and make it more exciting for “cool kids”. This is also a great strategy to build new incoming links to your domain, thereby increasing your page rank in Google. You’ve got to wonder though if there are long-lasting positive effects from both a brand equity and online directory site usage but I don’t think it hurts given the runner-up position they occupy in the market.

It looks like Canoe411, the new online directory from MediaPages (Quebecor Media’s directory company) has soft-launched. Powered by Local Matters’ Destination Search Platform, it includes data from InfoCanada.

MediaPages has announced that, in 2008, they will “begin publishing urban directories, co-branded with Vidéotron (Quebecor Media’s cableco), in the Greater Montreal and Greater Quebec City areas. These directories complete an array of regional directories currently published by MediaPages in communities across Canada, co-branded with local and community newspapers owned by Sun Media and Quebecor Media.” You can see an example of their print book here.

Canoe.ca, Quebecor’s portal, has yet to replace 411.ca with the new site.

Update (02/11/2008): it looks like the site is gone.

According to this eMarketer article, “Nearly two-thirds of small businesses surveyed by Western Wats in an AT&T-commissioned study said they advertised in a printed yellow pages directory.“

I might be wrong as I’m not as familiar with the US market, but that number seems high based on my Canadian directory business experience. Up here, Yellow Pages Group has 395,000 customers (2006 annual report) which gives them, depending on who you talk to, between 20% and 40% penetration of the Canadian SME market. The US market is much more competitive though (some cities have 5+ competitive printed directories) and that might be why more SMEs are claiming they advertise in printed business directories.

(from The Australian)

With internet blogging on the cusp of becoming a commercial medium, a local publisher is attempting to create Australia’s first significant independent blogging network. Allure Media, which next week will launch its fourth blog since April, also has the licence to launch local versions of the Gawker Media portfolio of high-profile US blogs such as tech blog Gizmodo and celebrity gossip blog Defamer.

It is backed by the $40 million internet investment fund Netus, which is led by former Microsoft executive Daniel Petre, while News Limited (publisher of The Australian) has majority ownership. Netus operates separately from News, but the investment reflects thinking within traditional media companies that blogging is beginning to become mainstream, with some blogs attracting significant audiences and even advertising revenue.

Netus executive director Craig Blair said Allure, which started in January, would launch eight to 10 blogs in the next six months. It launched a local version of technology-in-action blog Lifehacker last week, and next week will unveil gaming blog Kotaku. (…) “For advertisers, this is a really good way of getting niche audiences. We’ll expect a business like Allure Media to break even within 12 months.”

According to Tim Hughes, former Netus executive, blogger and commercial director of HotelClub.com, advertising revenue on blogs would comprise less than 1 per cent of the $335 million online display market. “It will grow,” he said. “Great content with great readership equals the ability to monetise.” (…)

The highest profile independent local blogger making money is Melbourne-based Darren Rowse, who runs Problogger (a blog about how to make money from blogs) and a number of digital photography blogs that attract related advertising. Mr Rowse is also a co-founder of b5media with two other local bloggers. B5media, which is based in Canada after it secured $2 million in venture capital funding two years ago, has a sales team that sells advertising on nearly 250 blogs globally, organised into about 15 channels. “We contract bloggers around the world to write for us and we revenue-share with them,” MrRowse said. (…)

What it means: a couple of interesting insights. We see more and more of these blogging networks being built with the objective of reaching critical mass from a visitor, content and revenue point of view. I think it’s one of the best strategies right now to build a serious media business out of blogs. Those networks are usually managed like vertical magazines. Second, I like the fact that News Limited, a traditional print media publisher, is getting in that game via their investment fund. Smart. Third, I did not know Gawker Media licensed their brand in the world. That’s a great new revenue source!

As I mentioned yesterday, I attended FacebookCamp in Toronto on Tuesday night. It was well attended (over 400 people) and the room was about 50% tech-oriented and 50% business-oriented. Roy Pereira, one of the organizers seen below on the right (the other host is Andrew Cherwenka), told the crowd the objective was to encourage more Toronto-based developers and companies to use the Facebook application platform and further Toronto’s global presence in technology.

We then jumped straight into action with a very informative presentation by Meagan Marks from Facebook. Called “Best Practices around Product Design and Viral Marketing”, it offered multiple data points about the size of Facebook in Canada and some tips & tricks on how to leverage the site. The Facebook team asked that we do not videotape the presentation which made me thing their live presentations are walled gardens as well…

Data highlights:

• Worldwide: 33M active users (people coming to the site at least once a month), 150,000 new users are added each day.
• 90,000 application developers, 1700 applications with more 100 users.
• #6 network in Canada with 11.3M unique visitors in June 2007 according to Comscore (close to 50% reach). Facebook claims they also have 8.5 billion page views per month.
• They have 3.3M active users. 68% are daily users and 61% are out of college,
• 75% of active users have an application installed.
• 10% of all application developers are based in Canada and Toronto is one of the top 10 largest developer communities

Marketing highlights:

• Facebook is all about identity, information and social context. It’s about connections between people, it’s powered by valuable social connections, and enhanced by network effects.
• How do you get high growth, high users applications? By having deep integration in all channels: the newsfeed, the product directory, the profile page but there are other places where you can hook your app.
• Profile integration: there are many places where you can embed your app including in the left navigation, under the user picture, in the upper right or in the middle of the page.
• The best way to leverage the profile box is to show recent interactions, recently added content, social relevancy (who), the temporal aspect (what happened today and yesterday). The content is all about expression, not consumption.
• News feed optimization (NFO): increase the relevancy of what’s pushed through the newsfeed ( for example, what the user did and the relationship with their friends) and utilize call-to-action buttons.
• Additional integration points: the message, the profile actions, the wall, and the share button
• An interesting marketing idea was to find other developers who have built complimentary apps to cross-promote your own app.

She also mentioned that Facebook was already seeing new business opportunities emerging from developers. Among them, she mentioned virtual currencies (ex: munny in Fluff friends), Ad networks, APIs on top API (for example, the Super Wall API).

She suggested app developers use the following metrics to measure success:

1. Vitality metrics: installed base, outgoing impressions, conversion rate
2. Engagement metrics: repeat sessions, canvas page views. She showed the following formula: installed users x impressions/installed users x acquisitions/impressions = new users acquired (see the following picture here from the Global Nerdy site)

Joey deVilla has an amazing summary of that session as well on GlobalNerdy.com, with even more details.

I’m finally back from my vacation and caught up with my e-mails. Tonight, I’ll be attending the first ever Facebookcamp in Toronto (also called Facebook Developer Garage in Facebook).

Toronto was for the longest time the city with the most Facebook users but was recently overthrown by London. “Canadians account for more than 10 per cent of the site’s total population and according to web measurement firm ComScore, in June 2007, 11.4 million Canadians logged onto Facebook, compared with only 343,000 in the same period last year.”

Initiated by my friend Colin Smilie, who recently left Trader Media Canada to start his own business, the event has now grown into humongous proportion with 383 confirmed guests signing up by word-of-mouth in the last few weeks. The un-conference is at MaRS Discovery District. BTW, my friend Sylvain Carle is organizing a Facebookcamp Montreal this Fall.

What it means: yet another proof of the strength of social media. By starting the event, Colin managed to get the attention of the Facebook people (who will be presenting tonight and are sponsoring the conference) and signed up almost 400 people, a large crowd by any measure. If you’re attending and you’d like to connect with me, shoot me an e-mail ( seb AT praized.com).

Wow! One of my friends, serial entrepreneur Albert Lai, is on the cover of a national magazine. That’s so cool! Congratulations Albert!

1) My friends at the Kelsey Group just released their 2007 Global Yellow Pages report. It’s always excellent information and worth the purchase.

Highlights:

• In 2006, worldwide, Yellow Pages generated estimated revenues of US$30.5 billion and estimated earnings before interest, taxes, depreciation and amortization (EBITDA) of US$13.6 billion,
• By applying a conservative multiple of 10 times EBITDA, the entire global Yellow Pages industry would have a market valuation of US$136 billion.
• The global Yellow Pages industry employed just over 74,000 people in 2006, more than 41,000 of whom worked in sales or sales management, up from 36,000 in 2004.
• Print Yellow Pages will stay level globally over the next five years.
• By 2011, almost 30 percent of global Yellow Pages revenues will be online, compared with 12.4 percent in 2006.
• Yellow Pages share of the total global advertising pie stands at 7.1 percent.

2) My friends at illumiCell just signed a distribution deal with Idearc that allows the Texas publisher to place its Superpages.com advertisers’ content on an instant messenging local search service provided by illumiCell. Under this agreement, Superpages.com’s performance-based advertisers will be featured over AOL’s Instant Messenger (AIM) network. The illumiCell local search service will launch on AIM in the United States in the third quarter of 2007. illumiCell already has a partnership with Yellow Pages Group in Canada.