Yellow puts up a decent fight on road to digital future

It wasn't that long ago that Yellow was effectively the Google of the world – the place consumers went to find the contact details of businesses in their vicinity.

So coveted was a prominent spot in the Yellow Pages that businesses would jostle for advantage in the alphabetical listing system to ensure that they placed higher than their competitors. As the Chicago Tribune pointed out in a 1992 article, this delivered such grammatical oddities as 'A AAA Aability Secretarial Service' and 'A Attorney for DMV matters'.

But those days are behind us. The arrival of the actual Google rocked Yellow's business model, leaving the organisation with little option but to adapt to digital or die.

The latest financial result from the company seems to indicate that Yellow has made some headway in terms of adapting, with the company reducing its net loss from $15.2m last year to $3.3m in the 2018 figures. This contributed to a reduction of overall debt from $50.6m last year to $37.2m.

This steady progress allowed the business to return $19.5m in cash to shareholders this financial year.

Also promising is that 43 per cent of Yellow's revenue now comes from digital rather than the print side of the business. This is up from 39 per cent last year, and well on track toward achieving CEO Darren Linton's objective of having digital account for half of the company's earnings.

However, it wasn't all good news. Overall revenue at the business dropped from $98.4m last year to $80m – providing a stark reminder that there's still work to be done. And Linton acknowledges that this may not be an easy ride.

"We envisage overall revenue will continue to decline in the short to medium term off the back of ongoing pressures on the legacy print side of the business, however, we believe it will stabilise in the longer term," he said.

The slide in revenue has been offset with a reduction in operating expenses, which dropped from $81.7m last year to 67.3m this year.

This partly comes down to a contraction in the size of the company.

Linton told the Herald, the staff number currently sits at around 185, which is around 35 fewer than were at the business last year – although, Yellow has around 15 vacant roles at the moment.

"We have to continue to right-size our business, not just in terms of people but also competencies and diversity [of skills]," Linton told the Herald.

Linton has long said his objective is to be the biggest digital marketing agency for small- to medium-sized businesses (SMEs) in the country – and this means Yellow has had to introduce a range of different skill sets in order to ensure it can deliver what clients need.

"We want to be a one-stop shop where you can come whether you want something very simple or very complex," says Linton.

In addition to its print catalogue, Yellow now provides a suite of digital services spanning websites, online advertising and promotional strategy.

Linton's focus on the SME market comes down to the fact that the vast majority of businesses in the New Zealand marketplace fall into this category, and many lack a clear digital footprint. So, much as Yellow previously gave businesses a place to be seen in print, it's working on doing the same in digital.

The idea is to offer a suite of customisable products that customers can tap into when they want without the headache of having to manage it by themselves.

"The end game is to create a more productive local SME community," he says.

Further to this objective, Linton says that Yellow will also be investing $7m in new technology, including an acquisition in 2019, over the next three years.

And while it's unlikely that Yellow will ever return to its position of the Google of New Zealand, the company seems confident of carving out a slice of the ever-changing digital world.