R.H. Donnelley – An Open Letter to the CEO – Yellow Pages End Game

An open letter to Mr. David Swanson

“It’s business as usual at R.H. Donnelley today and it will be (in the future.)” David Swanson, CEO

No it’s not David and you should have listened to us over the past few years. Your statements do not sit well with me. “I wish it would have turned out differently,” “No one could have put this into their economic modeling,” and “We just could not have anticipated the severity of the economic downturn.” Of course you wish it would have turned out differently, you’re bankrupt. But it’s the “no one could have put this into their economic model” and especially the, “we just could not have anticipated the severity of the economic downturn” that really gets to me.

We have been telling you for years that Local Online Marketing was the way of the future and the Yellow Pages would go the way of the dodo. You refused to listen.

But the coup-de-grass has to be your most recent epiphany; “Our growth-through-acquisition strategy never anticipated the cataclysmic collapse of the U.S. economy and the local advertising market.”

Stop right there.

First, ‘cataclysmic’ is how you would describe the housing market over the past few years. Cataclysmic is not how you describe the advertising and marketing industry in which we work. You and I know that was a veiled attempt to draw the focus away from the last part of your admission, “?the local advertising market.”

Just say it. You didn’t believe those online gossipers posting blogs about the inevitable rise of Local Online Marketing and the ensuing downfall of the Yellow Pages because you ran a multi-billion dollar company and basically, well, you know better than the rest of us.

But I think something must have happened around 2006. After purchasing Dex Media for $9.5B you realized you needed some cash to pay the bills because now you had 3 fledgling publishing directories on your hands (including Sprint and SBC Communications) and maybe everything you read about online marketing was starting to sink in.

But what in the name of gross-profit-margin ever made you think you could charge a small business owner approx $2,000 a month to provide local print and online marketing for what a company like Softline Solutions can do for $149? You used the YP name, the YP brand loyalty and some rather shady customer retention policies (long-term contracts intertwined with outlandish cancellation policies) to charge a king’s ransom for these services. Then when you couldn’t deliver $2,000 worth of results your clients left, they found people like me and you ended up in bankruptcy.

Recent Merchant Circle Post On Tom’s experience with YP

Tom had canceled his $127,000 annual Yellow Pages advertising spend. Apparently, Tom cancels every year. The sales manager begs, pleads, threatens and cajoles Tom into renewing for yet another year.

The annual dance was on again as the directory is preparing to go to press. Tom is threatening to bail, but he will probably renew.

Tom is afraid to lose the seniority position at the front of the section, but he knows that his ads are not as effective as they once were.

Sparking his outrage, his first position double-truck ad has been pushed back by a page of leader ads. It’s been obscured by a tab, and the price has gone up consistently while usage drops.

His fear of loss is much stronger than his anticipated return on investment.

In this sense, the Yellow Pages model of “substantial penalty for early withdrawal” is amazingly powerful in keeping dissatisfied customers from leaving.

Small business owners: one of the country’s top 3 Yellow Pages distributors is going out of business. This should convince to take the power of local online marketing seriously.

I’ve waited a long time to publish these comments without having the YP police pinging from the sidelines. I wish it didn’t have to come to this because I feel terrible for those honest working employees of R.H. Donnelley who were just trying to do their job and make a living. But I feel even worse for the countless small business owners who have been paying you a fortune for Yellow Pages ads and services all of these years when we could have provided them a far better return for about $5 a day.

Mr. Swanson it’s time for you to go away.

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