10th August 2012
Yell has been renamed 'Hibu'. Meanwhile, the Office of Fair Trading has concluded that the Yellow Pages directory no longer has a monopoly on 'classified directory advertising'.
Connecting and thriving with Hibu
Yell first announced it wanted to be called 'Hibu' in May. That Yell's shareholders have voted in favour of the name change was expected. The name Yell was associated with the Yellow Pages directory, and the market for unsolicited phone books has been crushed in recent years by the rise of the world wide web, and in particular Google. Only five years ago shares in Yell traded at 550p; today its shares are worth a meagre 1.24p.
The name change is part of the company's ambition to become a local eMarketplace leader
. The name Hibu, which the company wants us to write in lower-case, should become synonymous with helping communities thrive
. Via Hibu markets
people will have comprehensive, convenient access to local goods and services
, and local businesses will be offered marketing and commerce solutions
. The first 'Hibu market' was launched in May this year; people and businesses in Oxford can already make "connections" via market.hibu.co.uk/oxford.
The Yellow Pages won't be renamed 'Hibu Pages'; the new name only applies to the company's digital offerings.
Cap on Yellow Pages advertising rates may be abolished
The need for Hibu to get a foothold in the digital market is illustrated in a report about the current market position of the Yellow Pages directory, published today by the Office of Fair Trading. Since 1996 the Competition Commission - then known as the Monopolies and Mergers Commission - has tried to increase competition in the market for 'classified directory advertising' by placing a cap on the Yellow Pages' advertising rates. In 2006, further restrictions were imposed to prevent the Yellow Pages would expand into the market for local and specialist ('themed') directories.
The 115-page report concludes that such measures are no longer needed. Although the market for printed directories is as uncompetitive as it always was - the Yellow Pages still has an estimated market share of 76% - there is a new competitor: Google. The search giant may not print paper directories, but the rise of the world wide web and Google's dominance in the online search market (estimated to be 91% in the UK) means that the Yellow Pages can no longer charge uncompetitive prices. The Office of Fair Trading estimates that advertising rates are already 6% below the cap imposed by the Competition Commission.
Switching advertising expenditure
The compositional shift
from advertising in printed directories to online advertising is indeed striking. In 2006, £1,9 billion was spent on classified advertising in directories, compared with £547 million spent on online classified advertising. For this year, it is estimated £744 million will be spent on advertising in directories while online classifieds will for the first time generate more than £1 billion.
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|---|---|
| Yell | £619m | £600m | £565m | £504m | £409m | £313m |
| Thomson | £98m | £89m | £73m | £53m | £39m | N/A |
| Source: Office of Fair Trading | ||||||
The Yellow Pages has seen its revenue from directory advertising decrease from £619 million in 2006 to £313 million in 2011. Thomson Local's revenue has been affected even more; its share of the market has fallen from £98 million in 2006 to £39 million in 2010. Surprisingly, there are no figure available for the BT Phone Book.
Although businesses are switching advertising expenditure in great numbers, many advertisers don't know how cost effective different types of advertising are. The report suggests this is partly because it is difficult to determine the effectiveness of advertising in paper directories. Small businesses that advertise in the Yellow Pages often do so purely because it demonstrates that the business is legitimate, successful and competes in the relevant market alongside much larger businesses.
However, the report also concludes that businesses are ultimately price sensitive when making advertising decisions
. Asked what current advertisers would do should the Yellow Pages increase its prices by 10% nearly three-quarters said they would either reduce spending or stop advertising in the directory altogether.
The Office of Fair Trading has issued a consultation on its findings and welcomes responses from "all interested parties". After 21 September 2012 it will make a recommendation to the Competition Commission about whether or not the Yellow Pages should still be subject to restrictions. The Competition Commission has the final say.