Speaking Sensis

Hi.

It’s been a while since my last update. You might be forgiven for thinking I went into hibernation after the Saints lost the Grand Final back in October. But the truth is we’ve been head down putting the finishing touches on a Yellow Pages® transformation that has been more than two years in the making.

Today, I’m really proud to announce the results of that transformation to you. I’m particularly excited to say that today’s announcement isn’t just a wish list of future actions. The more than a dozen new services and countless improvements I’m announcing are all ready to roll. So is the total re-invention of our go to market strategy and stark re-focus on the needs of our customers we’re also announcing.

And I think this evolution of our strategy ticks all the boxes for our customers and shareholders. It:
• Puts SMEs in the drivers seat by taking the complexity out of building sophisticated multi-platform marketing strategies
• Makes marketing more accountable than it’s ever been
• Puts Sensis in a competitive position no-one else can match
• Helps to drive and monetise the continual growth of digital media
• Creates new revenue streams from existing customers and adjacent markets

THE DIGITAL DILEMMA

This strategy has been developed to specifically meet the needs of Australia’s SME sector.

As we all know, the Internet has created a new world of opportunity for advertisers. You only have to look at the rapid growth of search, local search, social media, video and group buying sites to know that.

But digital media has created some serious challenges as well – particularly for SMEs. What sort of marketing is right for me? How do I manage a vast range of marketing from a long list of vendors? How can I measure the impact in a clean clear way?

These challenges – which we call ‘the digital dilemma’ – are seriously holding back the SME sector’s ability to leverage digital media. For example, 55% of businesses who have the Internet say they have a lack of expertise or knowledge, and 62% say they don’t measure advertising ROI, with over half of them saying it’s either too time consuming, too hard or they don’t know how [1].

Clearly, these businesses need help to get the most out of today’s advertising environment. They need a 360 degree service that will let them reach out wherever they need to be and tailor campaigns that reach their customers no matter where they search. And that’s where Yellow Pages® steps in.

YELLOW PAGES®: MARKETING MADE EASY

Today, we’re taking the next step in our digital journey with an exciting new 360 degree local search program from Yellow Pages®. Its  designed to help SMEs find more customers more easily in this rapidly changing marketing environment.

As our posters say… its Yellow Pages®, but not as you know it.

The strategy focuses on three key areas of service – Presence, Performance and Empowerment.

Presence involves a rapid expansion of our network to drive digital usage growth (Yellow Pages® digital usage grew by 50% over the last year) and the advertiser ROI that usage generates.

Presence begins with strengthening our Yellow Pages® Online site. We have significant deepened the content base of our business profile pages. This includes the ability to publish more of your business information, enhanced new Purely Mobile Business and Platinum advertiser products and a new video production facility. Your profile page can now also include social media feeds. For the first time, you can update your Yellow Pages® profile page real time, simply by updating your social media pages.

On top of this, we’re announcing an eye-catching new series of services that are designed to extend the reach of your Yellow Pages network even further. These include:

Yellow Pages® iPad: A ground-breaking new iPad app that combines online, print and map-based business search all in one application.

SPA Network: SPA stands for Sensis Priority Advertiser. For the first time, Yellow Pages customers can gain priority on Whereis®, Citysearch®, Voice and a range of other Sensis services which, combined, drive over 10m visits a month. We’re also expanding the reach SPA can offer with new voice products, such as IQ, the 1234 iPhone app and Sock Assist, as well as the exciting new CitySearch® iPhone app.

API: Our agreements with Google and Bing have delivered incredible value to advertisers by channeling even more leads to them. Our new applications program interface will expand on this by making it easy for developers to create new sites and apps using Yellow Pages® content.

SEO and SEM: Speaking of search engines, we’re also ramping up our SEM and SEO programs to drive even more traffic through search engines to our Yellow Pages advertisers.

Beyond this, we’re releasing a new series of products for companies focused on marketing their web sites. Today, less than 10% use search marketing. Our new ClickManager and Yellow Pages® Digital Plus services will help these businesses optimise their digital profiles.

For those businesses that want a web site, we can now offer the new SiteSmart web site creation and management service. And through our recent acquisition of Quotify we can now offer quotation services to businesses all around Australia. Already, Quotify serves buyers and sellers in 12 different product categories across its 40 sites.

Finally, we’ve also launched a new group buying site Yellow Pages® Offers. This site will give SMEs in a growing number of regions the ability to offer special deals to potential buyers.

Performance talks about the way we’re going to wrap all of these products up into a single, detailed ROI report that helps businesses makes sense of their marketing investment. Customers will be able to see how their advertising is performing… not just counting clicks, but tracking real sales leads all the way to their business. To facilitate this, we are expanding our successful metered ad program from 7,000 ads to half a million!

EMPOWERMENT

Empowerment involves the total re-invention of our go to market strategy. Customers will benefit from:

• A simplified product ladder that reduces our product range from seven to just two;

• A wide range of simple options made accessible through value bundles that help marketers personalise their marketing to meet their needs.

• A stronger focus on customer satisfaction which includes the establishment of a Customer Satisfaction Council and a focus on easy order management and a single bill.

• New sales and customer tools to make life easier, including the iPad based PrepSmart prepping tool for our people, enhanced collateral, and online Advertiser and Customer Service centres

• And all of these initiatives will be backed by a total re-alignment of our business to meet customer needs. We’ve developed a greater understanding of our customers through deeper segmentation and research and we’ve aligned everything from sales to marketing to collateral to service to the needs of our customer base.

RIGHT TIME, RIGHT PLACE

So that’s our strategy, Marketing Made Easy, in a nutshell and it’s ready to roll. I must say that the enhanced customer value and differentiation this strategy offers, together with the exceptional commitment our people have shown, has made this one of the most satisfying programs I’ve ever worked on.

But I don’t want you to think this announcement is an ‘overnight sensation’. In fact, it is the culmination more than two years of work and planning. It began with the roll-out of our iGen system, which has made many of the initiatives we are announcing – such as pricing, bundling and improved product development – possible. And there have been a range of other initiatives, such as our growing focus on industry partnerships and the progressive rollout of our mobile services, that have laid the foundations on which today’s new program is built.

That’s what I mean by ‘right time’. The time is right to now take this step.

But what about ‘right place’? By that I simply mean that there is no-one in a better position to bring a totally holistic, 360 degree advertising service like this to market than Sensis. Sensis is already Australia’s largest locally owned online advertising company and we have more business customers than just about any other local media company. Furthermore, we have the capabilities, such as multi-platform publishing, sales relationships, brands and content to bring this incredibly diverse, but simple, marketing program to life.

And, of course, we also have the print directories which you might note haven’t been mentioned so far. Our print directories continue to deliver millions of real leads to Australian businesses every day. As such, they remain a powerful source of advertiser ROI and competitive differentiation for Sensis. We’ll be working to maintain that position into the future.

CONCLUSION

So, that’s it. A comprehensive and exciting new commitment to our customers. Powerful, but simple, new ways to help Australia’s SMEs make the most of today’s changing marketing world. A bold new long term growth strategy for shareholders.

That’s what we mean by Marketing Made Easy.

See you next time.

[1] Sensis eBusiness Report, August 2010

Well, it’s that time of the year again. Every August, Telstra reports its annual financial results for the financial year to June (FY10). And that, of course, means Sensis reports as well. So I’m pleased to use this opportunity to give you a brief rundown of our FY10 performance.

First, I’m pleased to say that Sensis has delivered growth (adjusted) in what has been a very challenging year.

On an adjusted basis, Sensis’ EBITDA (earnings before interest, taxation, depreciation and amortisation) grew by 2.4% to $1.21 billion. This was based on revenue of $2.19 billion (up 1.0%) and expenses pre depreciation and amortisation of $982m (down 0.6%).

I should explain what we mean by ‘adjusted’. During the year, a number of extraordinary items impacted our financial position. These were the transfer of Trading Post to Telstra, the sale of Universal Publishers, the acquisition two businesses in China and the impact of the falling Australian dollar on our China revenue. All of these items have a ‘one off’ impact on our FY10 results. To get to an ‘apples with apples’ comparison between this year and last year, we need to adjust for the impact of these one-off items.

Digging a bit deeper, I found four things really encouraging about our FY10 performance.

A solid performance in a tough year for SMEs and the advertising industry
The first is that Sensis was able to grow in a very tough year. We were operating in markets that were heavily affected by the global financial crisis – both in Australia and China.

Throughout the 2009 calendar year the Australian main media market experienced what may have been the largest decline in its history. The overall market (including online) declined by 8% for the year, while print media specifically declined by 13%(1). In contrast, our Yellow Pages® and White Pages® print revenue declined by 5.1%: a strong result considering that almost all this revenue was earned during the 2009 calendar year.

At the same time, Australia’s SMEs (who make up the bulk of our customer base) registered some of the lowest confidence levels in the history of the Sensis Business Index during this period. And, while confidence has partially recovered, it is still very patchy.

SME perceptions of the economy fell from +50% (i.e. more SMEs with a positive perception) in late 2007 to -72% in early 2009, when the Yellow Pages® FY10 metro canvass was being sold. Perceptions rose in late 2009 (Yellow Pages® non metro canvass), before falling again in May this year: from +24% to -1% in just one quarter(2).

Yellow Pages® remains the growth engine for Australian SMEs… now and into the future
The second notable element of this year’s result was the continued strength of Yellow Pages®.

Yellow Pages® sole focus is on driving sales leads to hundreds of thousands of Australian businesses, most of which are small to medium enterprises. And while this core purpose hasn’t changed, the way we deliver leads has evolved enormously.

These days, Yellow Pages® is much more than print. It’s evolved into a multi-platform lead generation network. Yellow Pages® advertisers can now be searched for through Yellow Pages print, online, online, mobile, iPad and T-Hub. That’s over 14m visits by potential buyers a week(3), with about 70% of searches resulting in the buyer contacting a business.

Those same advertisers can also be searched for through our Whereis® and voice services, like 1234. That’s another 2.3m visits a week(4). And third party sites through which Yellow Pages® can be searched (like Google Maps and Bing Maps) receive many more potential visits every week.

It’s the diversity of this network that gives Yellow Pages® advertisers the edge over their competitors. Through just one company, our business customers can be searched for in print, online, voice and mobile: in directories, general and local search engines and mapping sites.

And there’s a lot more to come, so stay tuned.

Digital is leading the way forward. Our digital innovations are kicking goals.
It’s also been a great year for innovation, particularly in digital media. In fact, digital now accounts for 20% of our Australian revenue, which makes digital a major player for Sensis and the key growth engine moving forward.

The undoubted highlight has been the performance of our mobile services. Sensis’ total mobile usage grew by 80% to 3 million visits per month (15% of total digital usage)(5). Within that, we saw some fantastic growth from our new innovations. The White Pages® Mobile site grew from nothing to 410,000 monthly visits in less than a year, while our Yellow Pages® and White Pages® iPhone apps grew from nothing to almost 600,000 monthly visits in even less time. Even now, months after their launch, the Yellow Pages® and White Pages® iPhone apps are the fifth and seventh most popular free Lifestyle apps in Apple’s AppStore(6). Meanwhile, our more established mobile sites maintained strong growth, with Whereis® Mobile up 43% to 950,000 monthly visits and Yellow Pages® Mobile (not including iPhone app usage) up 56% to 560,000 monthly visits.

We’ve also been able to make very significant improvements to our online sites. We’ve made substantial upgrades to almost all our sites, designed to improve your ability to search our advertiser base and the quality of content you receive. We’ve also added social media sharing capabilities to White Pages® Online, Yellow Pages® Online and Citysearch®. We’ve also added new content to the Whereis® digital mapping database, including national upgrades to road geometry, point of interest features, 3D landmarks, junction views. This is all designed to make using satellite navigation a better experience for users of Whereis® powered systems.

And we’ve backed these many user experience improvements up with new digital advertising bundles, which make it easier for advertisers to profile themselves across our networks in the way they want to. These bundles, such as Purely Mobile Business and Digital Content Maximiser have performed exceptionally well, with uptake of both running well above target.

A big thank you
Finally, perhaps the most encouraging element of this year’s results has been the support of people – the customers and employees that are crucial to Sensis.

To begin with, thank you to all our customers – both users of our products and advertisers – for your unwavering support this year. It was pleasing to see that, despite the many challenges FY10 has delivered, our customers have remained very positive about the services we offer. In fact, today, many advertisers are asking us to do more for them, like providing new value-added marketing services to their businesses. To me, these requests are a real vote of confidence, and I can confirm we’re definitely going to respond to them. We have recognised a number of opportunities to improve the service we provide to our customers and we’ll be relentless in pursuing them. We’re listening, and keen to respond.

As I said before, stay tuned.

Of course, our FY10 performance would not have been possible without the people who are Sensis. It takes a difficult year like this to test any business and I want to really thank and congratulate our people for their commitment, not just to Sensis but to the needs of our customers, over FY10.

Until next time,

Bruce Akhurst

1: CEASA Main Media Report, December 2009
2: Sensis Business Index, May 2010 and earlier
3: All data represents average weekly visits, June quarter 2010. Print data from TMP, Universal Measurement Programme. Digital (online and mobile) data from Omniture SiteCatalyst.
4: Digital (online and mobile) data from Omniture SiteCatalyst. Voice data from Sensis internal call data.
5: Omniture SiteCatalyst, average monthly visits for June quarter 2010 vs June quarter 2009
6: Apple AppStore: Top free apps in the Lifestyle category. Average of daily results for the period 2 August 2010 to 6 August 2010

Hi again. Well, Winter is here with some great rain for our gardens and dams. There’s a lot of exciting things happening at Sensis. And, to top it all off, St Kilda’s nudging the top of the AFL ladder. Could life get any better? In this update, I wanted to share with you some comments on our two speed economy, an exciting couple of months on the innovation front and a few beautiful sets of numbers.

Australia’s two-speed economy
We seem to have hit an uncertain cross-road in the Australian economy. There are signs of a solid return to growth and businesses in many sectors are performing well.

At the same time, however, confidence has dipped among Australia’s small to medium enterprises (SMEs). While SME confidence grew strongly from its historic lows during the GFC, the June Sensis® Business Index reported a significant quarterly drop in confidence. Confidence is still above the lows of last year, but it is concerning that it has fallen so far: especially when you consider that the chief concern among SMEs is ‘lack of work/sales’.

As we all know, the Federal Election is not likely to be far away. Given the importance of Australia’s SME sector and the millions of people it employs, I sincerely hope that the policies of all political parties will reflect a real focus on support for the SME sector.

A busy time for Yellow Pages®…
On a more positive note, we’re currently finalising the distribution of our Yellow Pages® print Regional and Living Local directories to households and businesses around Australia. As I mentioned in the last report, I’m proud to say that we have taken responsibility for the carbon footprint of all Yellow Pages® and White Pages® print and online directories from 1 February 2010. We will offset the carbon emissions through Government accredited providers and projects in Australia.

At the same time, the 2010 Yellow Pages® metropolitan campaign is now well and truly underway. This is one of Australia’s largest customer engagement operations with more than 1,000 consultants developing solutions that help hundreds of thousands of Australian businesses connect with the well over six million potential customers who use our print directories every month¹. That’ real muscle for Australia’s SMEs.

Of course, Yellow Pages®’ value extends far beyond the print directory these days, with millions more searches of Yellow Pages® advertising being conducted in online, mobile and voice every month.

… and a busy time in the labs as well
And we’re committed to building on that value. The evidence of this lies in the ‘run’ of digital innovations we’ve delivered recently. All these new releases further improve the quality and ease of use of our services for buyers and sellers. With so much to report, it’s hard to know where to start, so let’s just jump in.

Early June saw the launch of Yellow Pages®, White Pages® and Whereis® sites specifically designed for the Apple iPad. It was great to be able to launch these tailored sites (complete with gestural interactions like panning and zooming with a swipe or pinch of your fingers) in time for the iPad launch.

We’ve also released upgrades to our Yellow Pages®, White Pages® and Whereis® Mobile sites. All three incorporated auto suggest features to make searching easier for users as well as gestural mapping for high end Android and iPhone supported phones. On top of this, we added a more seamless click to call feature for the White Pages® and Yellow Pages® sites. In the case of White Pages® Mobile, this dropped the call wait time from around seven seconds to practically zero. And we also incorporated a range of new features for Yellow Pages® advertisers, including text descriptors, business logo and image gallery capabilities.

More recently, we launched a new social networking feature to White Pages® Online. ‘Save and Share’ lets you save interesting White Pages® listings or share them on Twitter or Facebook. Save and Share is already proving popular, with thousands of shares and a large number of resultant click backs from social networks to White Pages® Online. That, of course, means more potential leads for White Pages® advertisers.

Another exciting online announcement was the launch of an upgraded Bing search engine, which can now include Yellow Pages® listings (in the form of a ‘5-pack’) as part of its search results. This means Yellow Pages® advertisers can now be searched for on both Bing and Bing Maps.

We’ve loaded Citysearch® restaurant listings into Whereis.com. This has the joint benefit of improving the richness of the Whereis® experience, while helping to drive more potential customers to Citysearch® advertisers.

And we’ve launched online behavioural targeting for MediaSmart advertisers®. This gives advertisers the ability to deliver more relevant advertising to people using the MediaSmart® online network, which includes Sensis and Telstra sites and an extensive roster of third party sites.

Finally, we’re seeing great advertiser uptake of our bundled advertising products. Over the last year or so, we’ve released a strong range of new multi-product, multi-channel advertiser bundles such as the Yellow Pages® print and digital bundles and the priority advertiser bundle that spans 1234, Citysearch® and Whereis®. These bundles combine different advertising products into a single package, making it easier for advertisers to broaden their reach and create advertising solutions that meet their specific needs.

A beautiful set of numbers
Recently, there have been some great votes of confidence for what we’re doing at Sensis.

I mentioned in a previous update that Sensis looked like receiving great results on the 2010 Corporate Responsibility Index. The CRI, if you’re unfamiliar with it, is run by the St James Ethics Centre and is used by many major Australian businesses to benchmark their sustainability performance. Well, the results are now in. Our first year entrant score of 79.44% (bronze) last year has grown substantially to 92.51% (gold) this year. This result includes platinum scores (a new rating for benchmark performance) in three of the total six areas: sustainability strategy; integration; and assurance and disclosure. This achievement is a real source of pride and is the result of a strong commitment to sustainability from everyone in the business.

Meanwhile, we continue to see fantastic growth in mobile usage. In June, Whereis® Mobile officially became our first mobile site to hit a million visits in a month². Our other mobile sites – like Yellow Pages® and White Pages® – are also doing well. In fact, the whole portfolio is now being visited more than 3 million times a month², which represents high double digit growth over last June and potentially a huge amount of new ROI for our advertisers.

And on a totally different topic, we’ve been working with Mission Australia on the ‘1234 Project’. For every person who clicks ‘like’ on the 1234 Project Facebook home page, Mission Australia will give a pair of socks to a person in need. Our initial target was 12,340 socks and, in less than a month, we’ve already reached it!

The Human Yellow Pages®
Finally, if you think this update is a long read, spare a thought for Tansel Ali. To prepare for the upcoming World Memory Championships, Tansel, who is our own Australian Memory Champion, has turned himself into something of a human Yellow Pages®. Tansel is attempting to memorise every display advertisement (business card size or larger) in the Sydney Yellow Pages® so that he can recite any business name or number. For the record, that’s 2,306 pages, more than 16,000 numbers and a hell of a lot of reading!

That’s an incredible feat Tansel. All the best for the Championships in China later this year.

Best wishes,

Bruce Akhurst

1: Roy Morgan Single Source Australia, April 2009 to March 2010. Base: Australians 14+
2: Omniture SiteCatalyst. June 2010

Sensis was the “book-ends” to the Australian newspaper’s Business section on Monday, with a feature interview with Sensis CEO Bruce Akhurst (read it here) on the front page and a piece with Chief Operating Officer Gerry Sutton (read it here) in the Media section on the back page.

Both pieces touched on the opportunities digital media was providing Sensis and its Yellow Pages® business, with the focus squarely on the iPad as the latest digital device to take the media industry by storm. As discussed by Bruce and Gerry, the exciting prospect for the iPad is the value Sensis can help deliver to end users and ultimately our small and medium sized business customers.

Add to that the impressive strides Sensis has made with its presence in other digital channels such as online, the iPhone, Android devices and Telstra’s T-Hub, and you can see how technology is opening new worlds and chapters for Yellow Pages® and its users and advertisers.

Hi again, and thanks for taking the time to find out more about how Sensis is bringing buyers and sellers together. In today’s update you can read about a tasty new way to demonstrate the value of Yellow® Pages; kicking off the 2010 metro canvass; more new innovations to make life easier for buyers and sellers; the phenomenal growth of mobile; and some more great news about our commitment to sustainability.


8,500 guys and girls and a pizza place
In April, Sensis ran a ground-breaking campaign that really brought the value of Yellow Pages® to life. The campaign worked a bit like this. Team up with well-known Melbourne pizza chef, Tony Fazio. Open a restaurant offering free pizza for two weeks. Don’t tell anyone the address or phone number. Instead tell them to “look it up the way you would any other business”. Then sit back and watch the dough fly.

And fly it did. Over the campaign’s two weeks, over 8,500 calls were made to Hidden Pizza, with over 70% of the callers saying they found Hidden Pizza through the print, online and mobile Yellow Pages®. That’s a lot of pizza… and a great testament to the ability of Yellow Pages® to bring buyers to your door.

Yellow Pages® Metro Canvass is up and running
Our people are now out and about talking to businesses as part of the 2010 Yellow Pages® metropolitan canvass. This must be one of the largest customer engagement programs in Australia, with consultants all over Australia contacting more than half a million businesses over the next few months.

This year, we’ve got some great new products for our customers. These include a Brisbane version of the popular Yellow Pages® In the Car book, Yellow Pages® Online Gold Plus, which is a new advertising solution for businesses without a web site, and enhanced accountability through our metered ad program.

But, perhaps the most exciting new step is a range of bundles that make it even easier for our customers to advertise right across our network. As I’ve talked about before, Yellow Pages® has evolved from a print directory to a diverse and sophisticated advertising network spanning print, online, voice and mobile. These bundles make it easier for businesses to profile themselves to potential buyers right across the network.

From the labs
Of course, we’ve been busy delivering for buyers – the people who use our products – as well.

Firstly, we’ve launched more new features to make our digital services easier to use.

Recently, we reconfigured the Yellow Pages® Online search experience. To begin with, we’ve dropped the ‘business name’ and ‘business type’ radio buttons in favour of a more intuitive search. Now, you can search for a business name, like ‘Sensis’ without having to click a ‘business name’ search button. Instead Yellow Pages® Online will drop down suggested listings relating to Sensis for you to choose from. We’ve also re-built the business profile pages to give buyers easier access to more content. The results of this have been pretty immediate, with a significant reduction in nil result searches and a big rise in interaction: most notably in the number of business profile readers clicking on email links and image galleries.

We’ve also added a series of new features to the White Pages® Online site. White Pages® is all about finding people and businesses you already know, so it’s a fair bet that you’ll be wanting to find your White Pages® contacts over and over again. Recently, we made this easier with the ability to save your contacts to a new ‘My List’ feature on White Pages® Online. We also launched send to mobile, which lets you send your listing from White Pages® Online straight to your mobile to save in your contacts.  In May, we’ll be taking this a step further by launching a new ‘save and share’ feature. With save and share, you’ll be able to save your White Pages® contacts to your pages on Facebook and a wide range of other social networks.

Secondly, we’ve made our services easier to access with new additions to our network.

As you may know, Telstra recently released the home phone of the future, the T-Hub. This is great for buyers and sellers using our services because White Pages®, Yellow Pages® and 1234 (with Whereis® coming soon) are all easily accessible right where your phone is. Just one touch of the console and you’re searching. And when you find the result in Yellow Pages®, you don’t even have to dial… just click to call.

The Yellow Pages® enhanced location search on Whereis.com I mentioned last time is also delivering results. Yellow Pages advertisers are now being profiled on Whereis.com more than 8 million times a month: a number that’s been boosted by about 2 million since we launched the enhanced location feature . This is fantastic for both buyers and sellers. It means Whereis is playing a growing role in bringing buyers and sellers together, while improving the ROI we can offer Yellow Pages® advertisers.

Finally, we’ve also been busy in the mobile space.

We launched a new CitySearch® Mobile site, with an improved look and feel, expanded TV and Movies content, a new ‘Bars’ vertical and improved mapping functionality. And we also launched new Yellow Pages® and White Pages® apps for Android devices to complement the incredibly successful launch of our iPhone apps.

Mobile coming up trumps
On that note, mobile has been an incredible success story for the buyers and sellers who rely on our services. As I’ve mentioned before, mobile usage is growing at a rate of knots. Average monthly Yellow Pages® Mobile visits for the March quarter have doubled YoY yet again. When you look across our entire network, mobile now accounts for over 13% of our total digital (online and mobile) usage.

And smart phone apps are playing an enormous role in this exciting growth. iPhone apps account for something like half of our total Yellow Pages® Mobile and White Pages® Mobile usage and these two apps still sit in the lifestyle category Top 10 in Apple’s App Store … months after they were launched.

More great news on the sustainability front
As I mentioned last month, I’m really proud of the positive contribution being made by our sustainability initiatives; such as our directory recycling program and the decision to offset our carbon emissions through Greenhouse Friendly™ accredited providers and projects in Australia.

Now, we’ve taken this a step further with the release of a new book: Small Business, Big Opportunity: Sustainable Growth. This free book, which is a complement to our highly successful advertising guide, provides practical information on how businesses can reduce their impact on the environment and save money as well.

Small Business, Big Opportunity: Sustainable Growth has been written by Jon Dee, who is the Founder and Managing Director of the not-for-profit action group, Do Something, and the NSW Australian of the Year 2010. If you’d like to order a copy, just check out the Small Business section on our corporate web site.

And finally, in more good news on the sustainability front, I’m pleased to say that our efforts to support a more sustainable future are being acknowledged. Last year we joined the global Corporate Responsibility Index program for the first time. This program is run in Australia by the St James Ethics Centre and we were incredibly proud to achieve a ‘Bronze’ rating and Best New Entry Award in our first year. Since then, we’ve put a lot more work into our sustainability commitments and, as a result, I’m told we have lifted our result even higher this year. More on that next time, when the results are out.

Until then, all the best,

Networks, platforms and technology were the focus of comments from Sensis CEO Bruce Akhurst at a recent panel discussion held as part of the recent 2010 Yellow Pages Association Conference in Las Vegas.

‘Transformers’ was the theme for the conference, which was attended by Sensis CEO, Bruce Akhurst and COO Gerry Sutton. Autobots and Decepticons weren’t central to discussions, however, which instead focussed on industry changes, including technology and social media.

Bruce sat on a four CEO-strong panel around the topic ‘Being Built to Last’. The panel was moderated by BIA/Kelsey’s Charles Laughlin and featured Kimberli Lewis of Mediatel, Scott Pomeroy of Berry and Matt Stover of Local Matters, as well as Bruce.

The panel spoke about the importance of the right networks moving forward.

Bruce also spoke of his belief in continual training of the traditional sales force and their adaptability, and changing a fear of failure to achieve a sustainable future.

Bruce also responded to a question around the transformation of core product to a multi-product environment:

“Our central function is to find buyers for our customers – where are they? And they’re looking in all sorts of different places. Usage for our print product continues pretty much to be what it’s been for the last five or six years, so we’re not believers in ‘the end of print’. We are believers in other platforms and other technologies being relevant to find buyers – so it’s putting all that together in a way that works best for the customer.”

You can watch part of the panel discussion (where dress code seems to have been ‘black’) on this video link.

Hi. I hope you all had a great Christmas break. It seems like such a long time ago now, but I really appreciated the chance to get away and recharge the batteries with my family. Of course, we’re all well and truly back in full swing now and, as always, there’s a lot happening.

December half year financial results
On 11 February, Sensis’ financials for the six months to December (1H10) were reported as part of Telstra’s results announcement. You may have already seen the headlines. When adjusted for the transfer of Trading Post to Telstra Media, the sale of Universal Publishers and the rising Australian dollar, earnings before interest, taxation, depreciation and amortisation (EBITDA) was up 4.8% on flat (-0.1%) revenue.

This has been a challenging time for the advertising market. Our print directories revenue, for example, was earned at a time when the main media market (including online) declined by 8.5% and print advertising (including newspapers, magazines etc) declined by 12.5%ⁱ.

Sensis has delivered a good result in this uniquely challenged market. Underlying these results are two achievements I believe are worth highlighting. They say a lot about the progress Sensis has made in recent times:

• the growth of digital media and the evolution of our revenue mix; and
• the support we continue to receive from customers: the buyers and sellers who rely on our services.

Changing revenue mix: In recent years, we’ve broadened our horizons by expanding into both digital media and new markets, like China. In 1H07, 18% of revenue came from digital media. In 1H10 (just three years later) digital revenue has doubled to more than $300m and is now more than 30% of total revenue.

This is exciting progress. Our focus on diversity has dramatically improved the services we offer our customers and the underlying strength of our business for investors. As a result, Sensis today is the largest Australian-owned digital advertising business: a position further strengthened by our exciting investments in China, which now has the largest online audience in the worldⁱⁱ.

Continued strong support from our customers: A particularly pleasing aspect of this result is the enduring vote of confidence from our customers. Advertiser numbers remained largely intact despite the downturn. At the same time, advertiser satisfaction remained high. Advertisers gave the performance of our White Pages® and Yellow Pages® sales consultants a rating of more than 90% positiveⁱⁱⁱ, which is a tremendous ‘thumbs up’ for the work they’re doing. Finally, on the usage front, we continue to meet the needs of millions of potential buyers. The potential audience reach for Yellow Pages® advertisers grew to 11.5m unique users a month^iv, mobile usage grew by about 70%^v and MediaSmart online usage grew by 7.4%^vi.

Driving customer value with a commitment to innovation
Critical to achieving all of these objectives is our commitment to continually improve the quality of our services for both buyers and sellers. In just two months since my last update, we’ve been able to:

• launch Yellow Pages® enhanced business search in Whereis.com. Now, when you search on Whereis® for the address of a Yellow Pages® advertiser, you’ll see the business details of the advertiser pop up. A simpler experience for buyers and more potential returns for advertisers. In just one month, this new service has resulted in almost half a million new views of Yellow Pages® advertiser listings; and,
• launch the Yellow Pages® In the Car Book in a number of new markets following successful trials in Melbourne and Sydney. We’ve already seen ‘In the Car’ usage double year-on-year and there should be more growth to come as the books are distributed in these new markets;
• begin trials of a new ‘midi’ Yellow Pages® Book in Sydney. This smaller sized book is designed to be easier and more appealing for apartment owners living in high density areas;
• re-launch www.yellowadvertising.com.au – the Yellow Pages® advertiser site. This site gives advertisers ready access to the information they need to make the best advertising decision for them.

We’ve also seen positive activity in Location & Navigation. The Whereis® Navigator GPS service for mobile phones is growing rapidly and had a record month for subscriptions in December. There are also some early signs of a potential turnaround in the sat nav sector after a difficult 18 months or so.

And in MediaSmart, we’re working on phase 2 of our online targeting capability. When launched, advertisers will have the ability to target not just on the basis of user demographics but also online browsing behaviour (using purchase life cycle, life events and interest triggers across specific site categories, such as auto or small business). We’re also working to extend these capabilities to mobile. Ultimately, this will provide digital advertisers with the ability to deliver highly targeted cross platform advertising.

Behind the scenes, we’ve also switched Yellow Pages® over to the new iGen system. This is our largest ever technology innovation program and, after a few nervous weeks, the transition is now starting to show meaningful progress.

Its common knowledge major systems redevelopment projects are often difficult but, I must say, that’s pretty cold comfort when you’re going through one. While the program has been mostly successful, we are disappointed the upgrade didn’t go exactly to plan and we’re very conscious of the impact it has had in areas such as customer care levels.

Nevertheless, I’m pleased to say the biggest system challenges seem to be behind us and iGen is now stable and operating effectively. We have dedicated teams working through the backlog of change requests and service orders to bring us back to our usually high standards of customer service. And I’m also pleased to see our latest regional books – the first produced using iGen – are now being distributed.

Moving forward, we can look forward to delivering real customer benefits from iGen. These improvements will impact areas such as customer care, speed to market, search capabilities, product integration and content management – among many other capabilities.

Print and online directories certified carbon neutral
Recently, in a world’s first for a major directories company, we announced our print and online directories have been certified carbon neutral through the Australian Government’s Greenhouse Friendly™ program. We have committed to offset the carbon emissions of our directories through Greenhouse Friendly™ accredited providers and projects. At the same time, we have committed to reducing our operational greenhouse gas footprint by 5% year on year to 2012.

We also recently celebrated ten years of directory kerb-side recycling. This program has been an immense success. Recycling rates are up from 4% in 1999 to 96% recycled or re-used today. As a result, more than 175m directories have been recycled since 2000.
I’m incredibly proud of these achievements. Together, these two initiatives demonstrate not only our commitment to sustainability but our success in turning that commitment into positive action.

Federal Court copyright decision
Recently, a single judge (Justice Gordon) of the Federal Court found there was no copyright in the compilation of factual information in our White Pages® and Yellow Pages® print directories. ‘Factual information’ in this case refers to the names, numbers and addresses contained in the directories but, importantly, does not affect copyright in display ads. Not only is this outcome disappointing for Sensis and Telstra, it has far reaching implications for any business that invests in the development of compilations, such as customer lists, postcodes, TV guides, anthologies, racing information, and marketing lists.

We have been granted leave to appeal the Federal Court’s decision and are likely to do so. In the meantime, there is a critical assurance I want to make – particularly to our customers: our success as a business is not solely reliant on copyright protection.

For more than a decade now, Sensis has been operating in a competitive market in both print and online. In print, competitors have been copying our data for years in certain markets. And, in online, we’ve been operating in the same market as some of the world’s largest online businesses for the same period of time.

Despite this competition and the negative comments you occasionally read in the media, our business and, most importantly, the value we offer both buyers and sellers are stronger than ever.

It’s business as usual as far as we’re concerned. Continuing to build the returns for our customers, investors and the community is what matters.

All the best,

Bruce Akhurst

ⁱ CEASA, Main Media Report. June 2009. Note: 1H10 print directories results backdated six months to align sales cycles with the rest of the media market.
ⁱⁱ Clickz.com Web Worldwide http://www.clickz.com/stats/web_worldwide
ⁱⁱⁱ TNS, Sensis KPI Report, December 2009. Average monthly satisfaction score – July 2009 to December 2009
^iv Roy Morgan, Single Source Australia. September quarter 2009. Base: Australians14+
^v Omniture, December quarter 2009 compared to 2008
^vi Roy Morgan, Single Source Australia. September quarter 2009. Base: Australians14+