Speaking Sensis

Sensis CEO Bruce Akhurst addresses Australia Isreal Chamber of Commerce. Picture: Dean Schmideg.

Bruce Akhurst spoke this week at the Australia Israel Chamber of Commerce luncheon. His speech to approximately 350 guests looked at the future for marketing and media, with Bruce conveying two key messages: Firstly, we’re on the verge of a ‘big bang’ in digital advertising. The next digital decade will make the last one look like sleepy hollow. And secondly, this decade could revolutionise the value of marketing and media to businesses, consumers and society in general. But this will only happen if we re-think the role of marketing: evolving it from targeting markets to helping people.  Positive feedback was received from event organisers and delegates regarding Bruce’s speech. For a look at ABC’s Lateline Business coverage, click here.

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.

Is traditional media bowing before the online juggernaut? Don’t you believe it.

Well, trounce me with a tablet and tell me I’m a technophobe.

In contrast with the armies of ‘gurus’ claiming an increasingly irrelevant traditional media is on its knees begging for sweet mercy from the digerati, out come the following two reports.

In February, The Nielsen Company’s Australian Internet and Technology Report 2009 – 2010  found that “the continued increase in time spent online amongst Internet users has, overall, not been at the expense of other media.”

Nielsen found that, while, time spent online grew by over an hour in 2009, consumption of traditional media (like TV, radio and newspapers) actually grew as well.

Go figure!

In fact, Nielsen’s results over several years suggest that, while Internet users tend to spend less (but still substantial) time consuming traditional media than non Internet users, the actual time they spend with traditional media has remained pretty well flat for quite a few years now.

In other words, while time spent online has risen massively, time spent offline hasn’t fallen in response.

Then in March, way over the other side of the world, KPMG UK reported a similar kind of trend.

Their Media and Entertainment Barometer for March found that while time spent online grew by 74 minutes in the six months to March, traditional media consumption ALSO grew by 33 minutes.

So what?

I can’t help thinking there’s a really simple, but really important, message in this data.

That traditional and digital together is far more powerful than digital alone.

Digital media is a massive part of our lives today and will play an even bigger role in the future.

But it won’t be alone, because people want choice. They want a paper in their hands and on their mobiles. They want TV in their lounge and on their iPad.

And the more choice people get, the more media they consume.

In short, the future is everywhere, not just online.

Maybe we should put an end to these phoney media wars and start realising we’re all in this together.

Because, clearly, that’s what consumers (and advertisers) want.

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+

AT AIMIA’s 7th Future of Digital Advertising last week, Mark Shaw GM of Sensis’ MediaSmart took to the stage and delivered a blow – stating the internet was peaking too early and those working in digital media were too obsessed with beating traditional mediums to become the number one in terms of advertising spend. Mark said rather than fighting to take the top spot in advertising revenue terms, the online industry should instead work more closely with its rivals and in turn help to grow the entire online ad market.

Read more here: http://www.bandt.com.au/news/B0/0C066DB0.asp

Stay tuned, as we will be publishing more information about Mark’’s speech in the coming days.