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The Kelsey Report® White Paper

Moving Yellow Pages Prices Closer to Value
Carlotta Mast , 7/18/2002

EXECUTIVE SUMMARY:

During a 1999 interview, then Coca-Cola CEO Douglas Ivester said the company was experimenting with vending-machine technology that would allow the beverage behemoth to change the price of its drinks in accordance with the weather. Since hot temperatures increase the value of a cold Coke, "it is fair that (the product) should be more expensive" when the mercury rises, Ivester said.

Coca-Cola never went forward with the technology, perhaps in part because of the consumer outrage unleashed by Ivester's remarks. Still, the notion of dynamically tying product price to the value delivered at different times or to different customer segments is one that in theory makes good business sense. It is also an idea that many industries have embraced over the last decade.

The Kelsey Group (TKG) would argue that the concept can and should be extended to Yellow Pages advertising. After all, the value delivered by directory advertising differs substantially for different types of businesses in different locations. By aligning price with value, publishers can assure that they provide roughly the same positive return on investment (ROI) to all businesses.

Today, a growing number of publishers throughout the world are moving toward, or at least considering, a more value-based pricing system. BellSouth Advertising & Publishing Corp. is in the process of rolling out a five-tier, value-based pricing system for all of its markets. Verizon Information Systems says it will launch a similar pricing structure this year. In Europe, Italy's SEAT Pagine Gialle has been using value-based pricing for more than two years.

As these companies know, by differentiating prices according to the value delivered to individual advertiser segments (or even specific customers), Yellow Pages publishers can grow their revenues while expanding their customer base to include more businesses that have traditionally not invested in directory advertising.

Of course, the road to implementing such a dynamic, value-based pricing scheme is not an easy one. In fact, it is riddled with potential pitfalls and challenges.

This White Paper seeks to address the myriad issues that surround the notion of aligning Yellow Pages prices more closely with value. We also offer insights into actions publishers can take today to begin successfully adapting their pricing structures to grow revenue and advertiser penetration.

Copyright � 2005 The Kelsey Group. All Rights Reserved.
This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result in termination of the client relationship, fines and other civil or criminal penalties under Federal law. The Kelsey Group disclaims all warranties regarding the accuracy of the information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.

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Copyright© 2006 The Kelsey Group. All Rights Reserved.