With the growing use of iPhones, BlackBerrys and other mobile devices to find businesses and services, Yellow Pages Income Fund is looking for more growth in the local search market.
CEO Marc Tellier said Internet-based advertising is going to become less nationally focused and that’s where Yellow Pages wants to have a jump on its biggest partner and competitor, search engine giant Google.
“I think we’re going to see a trend in the Internet, broadly speaking, or digital media, to go more local,” Tellier said in an interview after a conference call to discuss third-quarter results that involved a loss and a writedown.
Tellier argues that Google “doesn’t have feet on the street” to ask customers if they want video advertising, what kind of services they need, or what key words they’d like to find their business online.
“If you’re looking for a dive shop in Sudbury, Ont., Google is not going to know about it.”
Yellow Pages, Canada’s largest directories business, has had an agreement with Google to resell Google Adwords ads since 2007.
Tellier said Yellow Pages is well on track to have 20% of its revenues in 2010 come from digital applications.
Yellow Page’s loss for the three months ended Sept. 30 was $168.8 million, or 33 cents per unit, compared with a profit of $146.1 million or 28 cents per unit in the third quarter of 2008.
The Montreal-based fund also had a $315-million charge related to the writedown of its Trader classified-ad publications business, which the fund bought in 2006 for $760 million.
Yellow Pages assured investors Wednesday that it will maintain cash distributions at the current rate until it converts into a corporation, despite challenging economic times and a loss in the third quarter.
Chief financial officer Christian Paupe blamed the loss on an accounting adjustment and said it had no effect on liquidity.
“Given the accounting loss, we felt it was appropriate to affirm our cash distributions leading to conversion,” Paupe told a conference call with analysts to discuss the financial results.
The fund’s Vertical Media segment, which includes the published directories and websites produced by Trader for specialized markets, saw revenue fall by 25% from a year earlier to $61.5 million.
Despite the weak economy which hurt advertising, Tellier said Yellow Pages will introduce new search engine products that are expected to provide revenue in 2010.
“As we’re seeing so many more smart devices and so on, that local search is a growth market.”
