Going by the book

Two years ago, Brooke Cloninger wondered how to improve the visibility of her business in the Spokane Dex phone book. Her yellow pages ad was tucked away in the middle of the section for dentists, but it was crowded out by larger and splashier ads purchased by dozens of other area dentists.

So starting in 2006 and then again last year, Cloninger took a front-and-center approach to being seen. Every phone book produced by Dex and distributed last fall in Spokane County features her smiling face and her dental office details in a colorful ad that doubles as a refrigerator magnet, glued to the top of the phone directory.

It took more than $40,000 to land that prime piece of phone book real estate.

But she said the Dex ad works effectively. She intends to buy the same magnet ad next year.

With multiple phone books competing for attention, book publishers have the dual challenge of winning more advertising from business owners, while persuading customers to keep using their book, or else switch to theirs from another publisher’s directory.

And while roughly 10 percent of all business lookups now occur online, the trend in the yellow pages industry is still upbeat, according to officials with the companies that publish books in Spokane and North Idaho.

While the industry is changing, all say they believe advertisers and consumers continue to prefer the option of grabbing a book and turning pages when finding a phone number or address.

Cloninger is not alone in spending significant advertising dollars to place an ad prominently in the phone book. Jodee Piersol spent roughly $37,000 this past year to add his company’s name and information in stenciled letters along the “heel,” or the bottom edge of the Dex book.

That ad is also effective for his firm, ABC Insurance, said Piersol. “We track all calls coming to our office,” he said. “The response from the Dex ad is much better” than responses from the two other Spokane phone directories, the Yellow Book and the Black Book, co-owned by North Idaho hotelier and developer Duane Hagadone.

The Dex directory, now owned by R.H. Donnelley, was once the property of U.S. West (later Qwest). In the late 1990s the phone book was sold to another company, which eventually sold it to North Carolina-based Donnelley.

It’s been around much longer than either the Yellow Book, which took over three years ago from the book published by Transwestern, or the Black Book, headquartered in Coeur d’Alene. The Hagadone book, though published in North Idaho for 20 years, entered the Spokane market three years ago, said Black Book President Jim Hail.

In North Idaho, the competition is fiercer yet; five books are tossed onto doorsteps each year. In addition to the same three companies serving Spokane, residents in North Idaho also get books from Verizon and from The Local Pages, a Utah-based publisher.

The yellow pages industry traditionally has boasted hefty profit margins, said Ken Clark, a publisher of YP Talk, a nationwide directory newsletter. It used to be common for publishers, whether in small or large cities, to enjoy double-digit annual growth in sales, he noted.

But that industry is going through transition, and not all the change is being driven by the Internet, he said. There’s also reader uncertainty over too many choices facing them, said Clark.

“It’s not uncommon for people to get seven books in some markets. In Atlanta, some people get 12,” he noted.

“Plus, the publishers are doing a bad job of explaining how those books are different, leaving people who get them wondering why they get that many,” he said.

Clark said the double-digit revenue growth among directories in the 1980s and ‘90s has slowed to a flat or minimal gain for larger publishers such as Dex, AT&T and Verizon (which uses the name Idearc for its directories). Smaller independent firms are doing better, he noted, because they tend to focus on smaller or rural areas and don’t face the intense competition seen in larger metro areas.

Yellow Book is an unusual type of large publisher, noted Clark. It’s doing well in some markets but not as well in others, he said. Markets it just entered, such as Spokane and North Idaho, are probably growing.

Steve Topping, vice president of sales for Yellow Book’s Northwest books, said annual growth for Yellow Book in Spokane is “steady” and in keeping with the company’s expectations of double-digit growth.

The Web clearly has an impact on local searches, but that effect is minimal for now, added Clark. Industry estimates say about 10 percent of all U.S. business searches occur online. The problem of too many books, however, is something the marketplace will need to solve, he added.

“This is certainly an industry going through transition,” said Clark. “There will have to be some washing out of (the companies in it),” he said.

Industry analysts say phone book publishers are working harder than ever to win two distinct arenas of competition — for loyal users and for happy advertisers.

The industry says the end goal is turning out a book with “top of shelf” status — meaning it’s the directory of choice in a household or business. Cloninger, for instance, said she throws out all but the Dex directory at her dental office. “At home I’m a packrat and keep all three. But I only use one,” she added.

To gain loyalty, publishers continue testing different formats, adding more maps, including coupons and even trying gimmicks to attract users. Hail, who is co-owner of the Black Book with Hagadone, said he spent about $30,000 adding a lilac scent to the cover of the first Spokane County Black Book it introduced in May 2005. The company also used an apple scent for a phone book serving Wenatchee.

With advertisers, the goal always comes down to what the Yellow Book’s Topping calls “the most leads for less” – helping businesses attract users and shoppers with successful ads.

Like any other business, the competition continues to watch each others’ prices, adjusting rates to build new customers. In general, Yellow Book and Hagadone price their display ads in the phonebooks at 25 percent to 50 percent below the rates set by Dex in the Spokane and North Idaho markets.

Nationwide, the average amount of money spent by U.S. business owners on yellow pages advertising is $3,500, according to the Yellow Pages Association, a trade group. Dex and Yellow Book declined to offer local numbers for a comparison. Hail, of the Black Book, said the average for yellow page ad money spent in Spokane and Coeur d’Alene runs about $2,500 a year per business.

Hail said phone book publishers learn how to accommodate each advertiser, offering a variety of options to suit circumstances. Some may want a strong mix of print and online ads; others might want to offer coupons or other inducements.

Most business owners tend not to overspend by buying ads in all three area directories. Both Piersol and Cloninger place ads in the Dex and Yellow Book directories, but not in the Black Book.

Clark agreed that a commitment to advertisers — especially to the smaller “mom and pop” firms — is key to being a successful publisher.

“If they don’t work closely, the users and the advertisers will quickly move away. You can be sure that that kind of movement is what will continue throughout the industry. The users now have far more choices and they will decide how it all shakes out.”