Golden Oldie
Relevance comes up often in a conversation with Dennis Payne, the CEO of AT&T's Yellow Pages operation, the world's largest. Yes, the concept of printed ad directories might seem, in an increasingly digital world, as yellowed as the paper they're printed on. But Payne makes a case that his on-the-ground division is in sync with an increasingly online world, at least more than the chicken he's eating at a sushi restaurant.
It's chicken teriyaki at Drunken Fish, near the St. Louis Gateway Arch and, of course, a Yellow Pages advertiser. But it doesn't appear yet on YellowPages.com, and that's the opportunity for his division, which analysts estimate will have about $6 billion in annual sales after last year's merger with BellSouth. Payne says he has the shoe leather to harness the overwhelming majority of U.S. businesses that are just now getting online. Unlike the Google and Yahoo! giants in Web advertising, his Yellow Pages unit has long relationships with locally operated businesses. "And we've got an army of 5,000 salespeople on the street."
One more thing-big profits. Operating margins of 40 percent are not unusual for Yellow Pages, and unlike other print outlets, overall sales aren't shrinking yet, so the old-school business has time to get schooled on the Web. Payne's group also sells local listings to Yahoo! and AOL. It's selling audio ads and developing them for video, as well as for wireless phones. The idea is to be wherever consumers look when they're ready to buy something-which has been the key to Yellow Pages' success. Whether in print, online, or wireless, Payne says, "if we're in all of them, we don't care."
This story appears in the April 30, 2007 print edition of U.S. News & World Report.