Yellow is the new black

Yellow Pages have put up a beta of their new website:

www.yellow.co.nz

As previously noted they seem to have dropped the “pages” part of their name.

As far as I can tell, apart from a bit of lipstick, the site is the same old site we all don’t love:

It’s still just an online version of the printed directory. Most listings contain only a phone number and an address, not even a description of the business. You actually get more information from the hard-copy where at least they allow graphics etc (although you can view the ad from the printed directory by clicking on the ‘view ad’ link).

There is so much more useful information that businesses could include in their online listing. Imagine, for example, if they allowed restaurants to list their menu.

They don’t cater for browse dominant users. To view the category hierarchy I need to click a link and then I end up in a horrible control which lists every leaf category alphabetically.

Their category hierarchy continues to be a complete dogs breakfast. There are too many leaf categories and consequently the structure is too deep and too fragmented. The structure is also unbalanced. ‘Business Services’ is a top-level category – covering everything from ‘Accountants’ to ‘Security Guards’. ‘Funeral Arrangements’ is also a top-level category, although it has only seven sub-categories which hare all leaf categories.

I can’t list a new ad online. Hello?

The search is still way more complex than it needs to be. Google allows me to find any page on the whole internet using a single text box. That should be the benchmark. Really, who is going to search for businesses “within 100 kms”?

They’ve added “My Address Book” functionality, but don’t allow me to add comments. I’m completely disconnected from all of the other people searching on the site. Where is the “other people searching for this found these listings useful” functionality?

Oh well. Maybe in the next version?

1x Yellow Pages = 3.2x Trade Me

The big business news this week is the sale of Telecom’s Yellow Pages directories business for $2.24 billion.

That’s a big number!

Some simple maths: 1x Yellow Pages = 3.2x Trade Me.

The buyers are a consortium of CCMP Capital (a private equity firm) and the investment arm of the Ontario Teachers Pension Plan.

The multiples involved are not outrageous. According to ValueCruncher their earnings last year were $250m and are expected to be $300m this year. So the sale price is just under 9x current earnings and 6.4x projected earnings. The equivalent numbers for Trade Me at the time of the sale to Fairfax were 27x current earnings and 15.5x projected earnings.

People have been critical of the sale. According to Telecom they are getting out now because they believe the future of directories is online. I think that’s right. The question is whether that’s online with Yellow Pages or with Google. In either case it doesn’t say much for Telecom’s confidence in their own ability to convert online opportunities (Ferrit? YahooXtra?)

I think Yellow Pages itself is now in a strong position. It’s their game to lose. They have a very strong brand which is very well known and well trusted. And they have an existing billing relationship with more-or-less every business in the country, all of whom expect to pay to appear in the directory (and presumably see some return which is in proportion to that cost?)

They also have a website which is rubbish. They could easily make it 10x better. Applying some of the improvements recently made to the White Pages site would be a good start.

If they get this right it will be pretty difficult for anybody (even a Google) to displace them. And it will allow the teachers of Ontario to be that much more comfortable in their retirement.

It will be interesting to watch and see what happens.

What do you think?