After the news got whispered around The Kelsey Group Interactive Local Media 2004 conference all day Wednesday, the SBC and BellSouth decided to announce the formation of a joint venture and the JV’s acquisition of YellowPages.com on Thurs. cvs. Fri. Terms weren’t disclosed, but the whisper numbers put the price at somewhere around $105MM.
Reaction to the acquisition was mixed, at best.
Why? Those familiar with the company told me that YellowPages.com’s technology platform is… “under developed” (my phrasing for much more colorful descriptions.) Further, while you and I would probably be thrilled to have 50MM monthly searches, it’s a drop in the bucket compared to the traffic that Yahoo & Google have.
The one strength that everyone pointed to was the unaided recall of the YellowPages.com domain name (some particularly snarky folks went so far as to call this the first $100MM+ URL buy, dwarfing Idealab’s Business.com buy).
How much of that is really recall, is, at least in my mind, questionable (in all fairness, I have not seen the company’s research). Frankly, most any site whose name is what the site offers, and is familiar culturally, should have great “recall”. For example, if I polled 1000 people, I’d bet that even though many had never gone to News.com, the URL would have strong recall, because, well, it’s pretty obvious what’s going on at the site (compared to say, Clusty.com) and it’s a familiar word/concept/object culturally…
On a different front…
Despite dodging my question on the topic, I suspect that once the SEC blesses the JV/acquisition (and the newly formed org gets its operational feet under it), we’ll see other RBOCs/CLECs invited to participate as licensees or equity partners. This would be the right move in my opinion; much like the newspaper industry should be doing, the YP industry must work together to build a destination site with a (inter-) national footprint and a critical mass of users and advertisers.
– This venture will fail if SBC and BellSouth are too hands on with the new JV. Simply stated, a different culture, focused on technology innovation (in service of business results, of course) must be adopted if the JV has any hope of keeping up with the rapid pace of change happening in the search (and broader internet) industry.
– This venture will fail if the JV focuses solely on branding as a means of getting YellowPages.com into the minds of consumers (searchers). The JV must be bankrolled to arbitrage the search results on Yahoo and Google to acquire leads on behalf of the YP’s advertisers (in a self funding model).
– As mentioned above, the JV will fail if additional partners are not added; a comprehensive universe of listings (across whatever is local to any user in most any reasonable use case, including nationals traveling abroad) is mandatory to be competitive from an end user perspective (and of course, is synergistic from an ad sales perspective).
On the whole, I’m delighted to see the YP industry moving (even if it took a year to do the deal…) into the future; this should be yet another wake-up call for Newspapers. But, for all the reasons pointed out above, this is very much a baby step… With Google throwing off $1.4B+/yr and cheap stock for acquisitions (let alone what MSFT and YHOO are spending), the YP players had better be prepared to move more quickly, and open their wallets wider.
Hmm… Perhaps they could combine forces with the Newspaper industry (ala CitySearch and Topix)? Yeah yeah, crazy talk.