Matchpoint.com had some interesting thoughts on the Yellow Pages industry. Like the Kelsey Groups March 13 report, they believe that the Yellow Pages are, essentially, all about leads since small businesses consider it such a dominant component of their local advertising efforts.

According to YPA usage data, print usage was stable at 13.4 billion and IYP usage had increased to 3.8 billion in 2007. Just as online has shifted from a focus purely on clicks to a broader definition of value based on calls and leads, the Yellow Pages industry should follow this lead in marketing the medium. The value of a Yellow Pages ad to a local small-business owner is not the movement in the usage number but in the number of consistent leads its advertising program delivers.

According to Kelsey, the Yellow Pages continue to have a strong story to tell. Recent research by the YPA reveals significant local display ROI for some of its higher usage headings, which has remained relatively stable in most cases over the past three years.

If the industry continues to enhance the value of the leads it generates on behalf of its advertisers and focuses on ways to demonstrate the value of what the Yellow Pages medium delivers to consumers, it will continue to be a valuable and relevant medium for local advertisers, wrote Michael Taylor of the Kelsey Group. At the end of the day, all a small-business advertiser wants is a consistent source of quality leads from its advertising investment, and all consumers want is a medium that provides a comprehensive database of local content to make buying decisions easier. It’s all about influencing leads to come to the medium and delivering quality leads to help SMB businesses remain successful.

The only problem, Matchpoint.com says, is that Yellow Page dominance has not translated on-line so easily. This is causing Internet Yellow Page (IYP) players to face some tough issues as they try to compete with Google on-line. One of these issues is pricing models. The monthly or annual listing fee model that Yellow Page players employ offline has limited scale in the online world. This has led IYP players to add cost-per-click (CPC) pricing for online listings. The problem is that CPC pricing is not nearly as universally accepted among local businesses as it is for the on-line businesses that dominate the Google and Yahoo search marketplaces.

The allergic reaction that local businesses have towards CPC pricing stems from the fact that most local businesses are not on-line. What do you do with a click when you don’t have a web page/site to bring people to?, Peter of Matchpoint.com wrote. Perhaps more problematic is the fact that the 40% of local businesses that do have a web page often lack the skills, time, or resources needed to effectively convert clicks into offline business. This makes advertising in CPC marketplaces costly and very risky for local businesses.

This is directly related to another big issue that IYP players face competing against Google for ad distribution on other web sites. This issue is rooted in the fact that Yellow Page publishers have not yet been able to convert the majority of their advertisers to online performance based pricing due to the reasons previously mentioned.