While being interviewed at the recent BIA/Kelsey Conference, I asserted that “the consumer is at the center of the value creation universe.” This shouldn’t be controversial. But it is.
To understand why this is so requires that we think back to the genesis of the YP marketplace. The yellow pages companies were spun off from large phone companies. Dex. Supermedia. And more. They were, back in the day, the first form of consumer search. And the model was simple. A yellow pages company gave consumers a book. Free. And the book was valuable. It was really the only effective way to find many of the things you might be looking for: plumbers, dentists, restaurants, party stores, and more.Consumers used the book. And the book drove consumer attention to particular merchants – those who had placed ads. And often, the merchants who placed bigger ads got more consumer attention and more consumer-driven revenue.
That was the state of the YP world in the early 90s, when the Internet and the Web began to enter the consumer’s consciousness. And in just ten years, the yellow pages industry was in a fight it never anticipated, a fight it was ill-prepared for, a fight it lost. As Internet search engines took the stage – beginning with Yahoo, Lycos, and Alta Vista and culminating with Google – yellow pages companies began to see that the book was no longer a consumer’s first choice for information about where to find a plumber or a dentist. Numerous failed attempts to take the YP brand to consumers left the industry with a clear view: “we no longer own the consumer, and we probably will never own the consumer again.”
The result has been evident. The industry rapidly turned its attention extracting value from merchants. After all, isn’t that really what the business was all about? (Hint: no.) And what did the industry really own that still had value besides a sales force and a long-standing relationship with the local merchant? But as the consumer slipped from center stage to the sidelines, value has begun to drain from the industry like water from a leaky bucket.
Today, many players in the IYP industry believe they have a shot at recapturing that lost value. They look at Groupon and suppose that they too can deliver deals. They look at SEO and point out that they too can drive traffic. They look at the proliferation of promotional tools available to local merchants from Foursquare to Facebook, and they argue that they too are positioned to be the trusted advisor to the local merchant.
But all of these notions miss the point. Consumer attention, engagement and spending (transactions) drives the value that the YP industry wants to deliver to local merchants. The consumer is the kingmaker. And any player in this space that ignores the kingmaker will eventually fail.
