Yell to Focus on ‘Local Search’

I’ve never used Yell myself, but it sounds like an interesting solution for localized searches …

Yellow Pages publisher to restructure global operation as it looks to avoid potential breach of banking covenants

Yell is to restructure its global operation and focus on owning “local search” to try to defend its business from rivals including Google and Groupon, as the embattled directories company looks to avoid a potential breach of banking covenants.

The Yellow Pages publisher on Tuesday saw its shares slump by more than 10% to less than 9p, the lowest the company has hit since listing on the stock exchange in July 2003, after it reported a continued slide in its business performance.

The Yell chief executive, Michael Pocock, a former Cisco senior executive who joined on 1 January, outlined the key tenets of a new strategy the company will officially unveil in June. Pocock lamented the fact that Yell had not moved more decisively sooner to build its online presence.

“Is it too late? No way,” he said. “There is a lot of opportunity for us to keep the position we have enjoyed for years in print. We have to become relevant in digital media. We are moving, we just have to have a more robust, well thought through strategic plan.”

Pocock said Google, which dominates the online classified ads market, doesn’t have “half of what we have” in the local search market.

“Look at Groupon, Google, Yahoo … none of them have outside sales forces,” he said, highlighting a key relationship Yell has with local advertisers over its rivals.

He also said the increasingly diversified business that Google operated at times put it in competition with some clients, whereas Yell is “kind of like Switzerland”.

Revenue from digital media accounts make up 25% of Yell’s total revenues, which continue to tumble as the print advertising business falls at close to 20% per quarter.

Pocock said the company would look to “broaden our customer base and broaden our offering”, doing more with apps and the internet as well as focusing on consumers.

He added that Yell, which operates seven brands in markets around the world, would be restructured to operate as a group.

“Historically Yell has run as three or four separate islands, so to speak, the business demanded that at the time but we [now] have the wrong model for the digital world,” he said. “We will move toward a group focus instead of a regional focus and a byproduct is a tremendous cost saving over the next couple of years.”

Pocock said the company would look to operate at a group level in areas such as IT, procurement, branding and product development. He added that the “bulk” of the savings would be made without cutting jobs.

The Yell finance director, Tony Bates, a former EMI executive who also joined only recently, admitted that without the introduction of the new strategy the company would come perilously close to breaching its financial covenants.

“It will get to a point in 2012 where we will get very close to the limits,” he said. “Some scenarios could see us get close this year, others in 2013. But that is only on a ‘business as usual’ basis whereas there are a number of levers we can and will be using.”

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