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(Sylvain Dumais)
(Sylvain Dumais)

ROB Magazine

How did Yellow Media's stock go from $17 to 17 cents? Add to ...

While his online competitors may be giants such as Google, Tellier claims he has a secret weapon: trust. Yellow Media’s bread and butter is still small business owners, many of whom are at a loss when it comes to arcane aspects of online advertising such as bidding on Google keywords. While many advertisers are realizing that Yellow’s books may no longer be the best place for their ads, that doesn’t mean they’ve soured on the company entirely. This is where its sales force comes in—a network of representatives that have established relationships with customers, something Google lacks. “Businesses would prefer to have a single point of contact to demystify this digital universe,” Tellier says. “We think the market dynamic is in our favour.”

Rose Samson is the kind of customer Tellier is banking on. She is one of the owners of Hair Solutions beauty salon in St. John’s; she’s been a Yellow Pages customer for about 35 years. This year, she cut down on her print spending slightly. But when it came to building an online presence, she turned to the company she knew.

“We compiled the information and they put it together,” Samson says. “We’re a small business, and getting Yellow Pages to do it for us was very helpful. Word of mouth is the best advertising money can buy, and it’s free. But aside from that, we’ve been going with the Yellow Pages.” This year, she’ll still be spending $800 to $1,000 per month in advertising—between print and digital—with Yellow.

But converting existing clients to digital ones won’t be enough to keep Yellow Media afloat. It needs new customers, who may be harder to persuade.

In June, a Yellow Pages sales rep walked into Pizzeria Bellechasse, an unassuming joint that is one of the last holdouts of Montreal’s 99-cent slice. In the 20 years since Tony Lucadamo’s father opened the place, the business had never had an ad in the Yellow Pages. And now the rep did not even bother trying to sell Lucadamo a print ad. Instead, he offered to build a website. “They go, ‘This is what it is now, people don’t use the books, they’re online, on their phone,’” Lucadamo recounts as he kneads dough.

Working 10-hour days behind the counter, not to mention management duties, Lucadamo couldn’t also manage a Web presence. He decided to pay Yellow to do it for him—$150 per month. For that price, the package included photos, videos and a virtual menu.

But when Lucadamo logged on to see what he’d paid for, he found only a basic page displaying his place’s name, address and phone number. When he tried to fix the problem, he could not reach his rep. Instead, he sat on hold and was routed to what sounded like an overseas call centre. The customer service process was so frustrating that he cancelled his account in late August. He had gone from being a new-style Yellow Media customer to a fed-up former customer in less than three months.

Lucadamo is now planning to have his nephew build a new site for him—the young man offered after overhearing our conversation while enjoying some of the house poutine. The pizzeria will save its marketing budget for other uses. “It’s a lot of word of mouth, the pizza’s good, it’s a small neighbourhood,” Lucadamo says, turning to greet a customer by name and inquire about his bronchitis.

Not everyone has a Web-savvy nephew. Most freelance Web designers charge a onetime fee, typically a couple thousand dollars, for getting a site up and running. Yellow Media’s monthly fee for keeping a website online can quickly add up to much more. Former Yellow Pages customer Michael Gregg, who owns an IT consultancy in Edmonton called Catalyst Network Solutions, objects to the pricing scheme. “They’re going to own your website, and you’re going to pay them for it—that is just holding you over a barrel,” he says. “They’re going to build your corporate presence for you, but that’s a huge trap to get into. How do I get my website off Yellow Pages? You can’t. There’s no export policy. What a rip-off.”

Before he cancelled his account with Yellow Pages in late 2009, Gregg was paying up to $18,000 per year for a quarter-page ad in the book. But he says his customers rarely found him that way. As for digital, that amounted to letting Yellow Pages resell him Google Adwords.

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