KEY POINTS:
Yellow Pages Group has put its fingers in a new revenue pie: the magazine market.
The phone directory business, sold by Telecom to a private equity consortium in March for $2.24 billion, has launched Yellow frontdoor, a 122-page glossy magazine targeted at do-it-yourself home renovators. The company says the move into lifestyle publishing is about expanding its significance to customers rather than an assault on the magazine market.
"Are we going to become a core competitor to any of the magazine businesses in New Zealand? That's not really the intention," said YPG marketing director Blair Glubb.
"At a simplistic level we think of our business as being about 'find, compare, connect, book and buy' and what we're effectively recognising is that users are actually looking for broader, richer, deeper content in a way they want to consume it."
The first issue of frontdoor consists of about 70 or 80 per cent independent editorial content, overseen by a contract editor, and 20 to 30 per cent advertising.
The publication presented a "highly targeted advertising opportunity" for businesses in the growing DIY market which was worth $3.6 billion a year, Glubb said.
The magazine was aimed at the Auckland market and 40,000 copies would be handed out at the Auckland Home Show this month with a further 74,000 copies being mailed by NZ Post to people identified as moving house.
Since its sale to a consortium consisting of CCMP Capital and Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan, much of YPG's marketing effort has gone towards promoting its revamped yellow. co.nz directory website which the company launched in June.
But Glubb said print-based products would remain the business's staple medium for some time yet.
Sales from advertising in its print directories currently make up about 95 per cent of group revenue, and he expected that figure to still be up at around 85 per cent in four years' time.
He said yellow pages businesses overseas had had success in magazine formats, and there was scope to produce editions for other markets.
But the wisdom of the new venture was questioned by advertising industry media buyer Michael Carney, a strategist with agency G2. "I'm not sure that getting into print is a good move for Yellow Pages. It's extending them beyond their core competency," Carney said.
The market for home improvement titles was already crowded, he said, and YPG would be better off focusing on growing its business online.
Internationally, online directory businesses were growing at six times the rate of their print equivalents, Carney said. "That's where they should be directing their energies."
Glubb said while the overall print advertising market may have been shrinking, usage of YPG's printed products had increased by 16 per cent over the past year. He said frontdoor was an example of how the company would continue to look for "vertical opportunities".
Last year it bought the Retirement Guide print directory and online specialist directory New Zealand Tourism Online.
Yellow Pages Group
* Prints and distributes more than six million directories a year .
* Runs the 018 directory service and yellow.co.nz website.
* Publishes the Retirement Guide and owns the New Zealand Tourism Online website.
* Launched Yellow frontdoor magazine yesterday.
* Plans to launch a mobile phone web and text directory service.
