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AT&T Acquires YP.com for $3.85 Million

Yellow Pages Dot ComAT&T has acquired YP.com for $3.85 Million. I distinctly recall back when AT&T previously bought YellowPages.com in for $100 million in 2004. Does this make sense?!?

Back in 2004, I laughed and laughed and laughed, and I told coworkers that it was a huge waste of money, because, I said, “they won’t be able to buy themselves into the top position for searches for ‘Yellow Pages’”. SuperPages.com long held that distinction under my SEO direction, and I knew that purchasing the term in a domain name alone would not depose all the work we’d done to rank tops for it. As time passed, however, yellowpages.com has indeed deposed the Superpages forerunner.

Still, the domain name didn’t accomplish this alone. There were a mixture of factors involved. AT&T used a considerable war chest of new capital to gain marketshare in the YP space. I believe they likely undercut other players and made major traffic deals with partners in order to gain greater traffic — so, some of their position was purchased. Also, the AT&T company has much greater prestige and far more customers than the previous owners of the “yellowpages.com” domain name, and they could leverage their print phone book covers to further promote the URL. This meant that far more people were inclined to link to them, and the domain name itself, embedded in all those inlinks, gave AT&T a defacto advantage in the PageRank game.

Further, Google itself shifted ranking factors slightly between now and 2004, placing a bit greater weight upon keyword terms within domain names.

And, after I left the Superpages, a number of my recommendations for ongoing SEO were neglected to some degree by the people overseeing such work. This resulted in Superpages getting deposed from its longtime slot as first position for “yellow pages”, and Yellowpages.com has been occupying that position for a while since.

Just for the sake of egos and prestige value, it might appear on the surface that AT&T’s investment in the yellowpages.com domain name was justified in order for them to achieve top ranking. But, this is the world of business, and considering the direction in which society and commerce has been shifting, their purchase of that old domain name and the more recent purchase of YP.com appear to be at a hyper-inflated cost that is way out of whack with any good business rationale.

First, I know for a fact that they never have gotten sufficient value from that original $100 million dollar domain name. Knowing exactly how much traffic goes to the top position for “yellow pages”, I know that it’s never paid for itself, and it’s unlikely to do so. (Okay, so I know that they also got a number of other business assets along with the domain in that original $100 mill price-tag, but even considering that, this domain was a very bad buy.)

I’ve written previously about the decline in user searches for “yellow pages”, and that decline is continuing:

Erosion of Yellow Pages Searches In Google
(Google Trends graph shows ongoing erosion of user searches for “yellow pages”)

Fewer and fewer users are typing “yellow pages” into Google, as this graph demonstrates. It would’ve taken “yellowpages.com” a good many years to repay for itself even when the traffic for “yellow pages” keyword searches was good, but with this declining trend in those searches very apparent, this is no longer a realistic longterm investment, and it will turn more rapidly into a major capital loss.

Considering this ongoing, downward trend, the monetary worth and traffic-bearing value of both “yellowpages.com” and “yp.com” are declining. Many feel that the overall concept of “yellow pages” could be fast disappearing as well, and that will leave these as very dated-feeling trademarks only a short ways down the road. I’d say there are a very good number of young consumers today who don’t even know what “yellow pages” is! So, even the brand name value of these appears very short-lived.

I’m doubting that even the short term, ostensible existing traffic of YP.com is worth this $3.85 million price tag.

If I were an AT&T stockholder, I think I’d be mad enough about this to demand an accounting. With a number of major yellow pages companies experiencing significant business problems currently, this purchase is just incomprehensible. But, since AT&T’s yellow pages business unit is still attached to their telephone company, perhaps they have the luxury of wasteful spending on this piece.

16 comments for AT&T Acquires YP.com for $3.85 Million »

  1. MyAvatars 0.2

    Interesting commentary, Chris. What’s your take on the higher rankings directories often get for product or service based searches? For example, if I search for restaurants in my city, instead of getting links to restaurant websites, I get a link to restaurants.com. Is that all a result of optimization – or do consumers really prefer that way? Is it realistic that an individual restaurant could build an inbound link profile to match that of restaurants.com, even if it were well optimized, to beat it out on natural search rankings?

    Comment by Blake Hodges — 1/15/2009 @ 3:19 pm


  2. MyAvatars 0.2

    I think you are very mistaken and it clearly shows your out of touch with reality and how much these companies spend to gain market share. The per click fee that these guys pays adds up quickly.

    Comment by I Disagree — 1/15/2009 @ 3:34 pm


  3. MyAvatars 0.2

    Blake,
    There’s a few factors at play, naturally.

    Sure – for the past few years, directories mostly beat out small individual listings in the SERPs. As you note, national directories will have a lot more inbound links than small businesses can hope to achieve. Many of these directories are also optimizing, too.

    But, Google’s sophistication has been increasing as well, and with it their ability to finesse the types of sites returned for types of keyword searches is improving as well.

    A case in point would be a search for “hotels” for a particular city, such as chicago hotels. For this type of popular search, you see a few directory sorts of sites, but more specific hotels sites and hotel chains serving that area are returned.

    I think this demonstrates the impact of Google’s usability testing. If users primarily want specific small business sites returned, that’s what Google will gravitate towards providing. However, some percentage of the users submitting a search like “chicago hotels” actually want site pages where they could easily compare hotels, or obtain reviews about them.

    The evolutionary trend from inbound links having major impact to rankings, towards inbound links having lesser ranking value. As personalization of search results increases, I think we’ll see less and less impact of inbound links.

    Comment by Chris — 1/16/2009 @ 1:43 am


  4. MyAvatars 0.2

    Hi there, “I Disagree” – I’m not out of touch at all. Remember, I worked at one of the top yellow pages companies, and I know precisely how much traffic can be attained by the “yellow pages” keyword phrase as well as how much money can come in per click.

    As I stated, it simply doesn’t add up to profit on that cost — very, very bad ROI.

    BTW – you might try being just a smidgeon braver by uncloaking yourself and fessing up to who you are when you post comments — tends to make them much more credible.

    And, I can see what company you work for when you’re posting these comments from your employer’s network. :-)

    Comment by Chris — 1/16/2009 @ 1:56 am


  5. MyAvatars 0.2

    Interesting point on the impact personalization will have on natural search rankings. I assume you mean that if enough users keep booting the top ranked directory listings, Google will gravitate towards giving local business sites the benefit of the doubt on the initial search results. Will the results of their tests be public?

    Comment by Blake Hodges — 1/21/2009 @ 10:27 am


  6. MyAvatars 0.2

    Hi Chris, I like you article on the Google Trends report reflecting the Yellow Pages search decreasing. However, I do disagree that it was a bad investment for at&t to buy Yellowpages.com and YP.com. You hit the nail on the head when you said it’s “Business” and at the end of the day that’s what the fortune 10 company is looking at. I believe that more people are going directly to Yellowapges.com via their web browser, via organic searches on the search engines, via their partnerships with MSN, AOL, Mapquest and via the smartphones, I-Phones etc..

    at&t’s reports show steady growth of visitors year over year, even with the Google trends reflecting less searches. So wouldnt you agree that at&t isn’t as worried about people using google to search Yellow Pages as much as they are concerned with overall growth of the site?

    Comment by Jeff — 1/28/2009 @ 6:42 pm


  7. MyAvatars 0.2

    Interesting point. Let’s see how they go maybe they’ll prove you wrong.

    Comment by BloggerPal — 1/30/2009 @ 10:06 pm


  8. MyAvatars 0.2

    I would think that this site would be worth a little more than that but given the current circumstances. I think for them to make their money back will require a significant amount of work on this website.

    Comment by Nick Stamoulis — 2/13/2009 @ 1:58 pm


  9. MyAvatars 0.2

    Jeff,
    you seem to know more than the average Joe (or Chris) J/K
    What the company is doing with Yellowpages.com is incredible. We are growing leaps and bounds everyday. Jeff I thought reading your article was entertaining. The truth is that At&t knows what they are doing and buying Yellowpages.com and YP.com WAS NOT A BAD INVESTMENT. R.H.Donnelley buying DEX was a bad investmentin my opinion. What has there stock gone to since buying dex? .20 from $78??? Thats a bad investment. I get to see the #’s from At&t. It wasn’t a bad investment.

    Comment by Yellowpages.com Employee — 2/16/2009 @ 12:41 am


  10. MyAvatars 0.2

    Yellowpages.com Employee: what, exactly has been done with your site that’s “incredible”?!?

    It’s not very innovative at all, and while you are undoubtedly seeing growth (most of the yellow pages companies’ internet sides of the house are), the business model of completely framing yourself around the theme of “yellow pages” seems very limited/short-term, considering how the younger generation is losing grasp of what a yellow pages is.

    Citing RHD’s purchase of Dex in comparison with AT&T yellow pages is not really fair — while yellow pages appeared to be a solid/eternal business model, it made sense. Right now, if AT&T spun off their yellow pages arm as Verizon did, you could easily end up facing the same situation.

    I guess we’re supposed to just believe you, even though you don’t share the numbers you claim to have access to? Are you a sales rep?

    I stand by what I said:

    1st, the purchase of yellowpages.com was way overpriced, considering that the keyword value of “yellow pages” seems to be steadily declining. Establishing a new brandname would’ve been far cheaper, and would’ve resulted in virtually the same level of traffic.

    2nd, buying YP.com is like compounding the first error. Since fewer people are going to “yellow pages”, it’s a safe bet that even fewer are going to know what the “YP” acronym stands for. Since they just absorbed that domain without maintaining it’s unique design/content, it’s SEO value and associated traffic value are declining as we speak.

    What value there was in YP.com is being wasted. With the backing of AT&T, Yellowpages.com can get away with this inefficiency. But, at some point all this will come back around in the long run to cause problems.

    Comment by Chris — 2/17/2009 @ 10:29 am


  11. MyAvatars 0.2

    Chris,
    The name has already paid for its self. Att was using Anywho.com and was struggling with selling agaist Verizon which at the time was the #1 online yellow pages.

    And how is comparing Rhd buying Dex not the same?

    1. When Att bought Yellowpages.com and YP.com they added a sale force that they needed. Yellow Page companies like Att and Rhd have a sale force that is focused on the print book and don’t sell internet product as much as a sale force that just focus on internet. When Att bought yellowpages.com and YP.com they could change the mentality and sales force as needed because they weren’t Union. They molded it as they saw fit. They weren’t able to do that with the sale force they had with Att.

    2. Yellowpages.com is climbing the comscore charts. We power more internet directories than any other yp company. Here’s a list of a couple you might now of.
    Yellowpages.com
    Yahoo local
    Yahoo Yellowpages
    MSN Yellowpages
    MSN Live Search
    411.com
    addresses.com
    AOL Yellowpages
    areaguide.net
    AnyWho
    Mapquest Yellowpages

    also don’t for get about our
    Mobile search (which every ATT Phone will have YP.com icon for mobile search)
    U-verse

    The book is a dying breed and Yellowpages.com will take over what the book use to be.

    Do a search for Insurance in your area on google and see how many local business you find on the first page. I promise you will find more directiories than Insurance companies. I did a search in LA and found 3 different orgaic listing that would be in our network. Yahoo local, Yellowpages.com, Superpages.com (which our customers now show up on superpages.com)

    As far as the “Younger Generation” goes, the high user of Yellowpages.com is from 18-24.

    Comment by Yellowpages.com Employee — 2/17/2009 @ 5:39 pm


  12. MyAvatars 0.2

    Chris,

    Didn’t your former company (Idearc/Superpages.com) pay $225 million for Switchboard.com just 17 months ago? Just wondering what your thoughts are about that transaction & why it did not make it into your blog piece when it was more than twice AT&T’s investment for Yellowpages.com.

    Comment by Just Wondering? — 2/17/2009 @ 10:07 pm


  13. MyAvatars 0.2

    Hi, Just Wondering -

    There’s no big conspiracy — I was specifically writing in this piece about the AT&T acquisition of YP.com. There’s lots of companies that I didn’t mention in this post, because they were not the company I was writing about.

    However, I could point out that there are a number of key differences between that deal and this one which I’ve criticized, starting with the key issue I was particularly focusing upon: the domain name. Domain name of Switchboard isn’t dependent upon a concept that’s rapidly losing traction. Also, a number of assets were included in the Switchboard deal, including use of other domain names like Infospace.com. And, unlike the way YP.com has now been just redirected to YellowPages.com, the unique look and differentiated content on Switchboard have been maintained instead of turned into a clone, so the asset won’t devalue immediately.

    Comment by Chris — 2/18/2009 @ 10:15 pm


  14. MyAvatars 0.2

    Yellowpages.com Employee – RHD’s purchase of Dex wasn’t the same because they weren’t buying a domain that’s based on a rapidly devaluing concept online: “yellow pages”.

    Also, RHD bought Dex in 2005 back when it wasn’t as clear that print YP might face erosion from online, nor that it might be very hard to service high debt today.

    It doesn’t really make good logic for you to simultaneously argue that the AT&T/Yellowpages.com and RHD/Dex deals are parallel and that the AT&T deal is great but the RHD deal was bad. It really smacks of hubris.

    Yellowpages.com may be climbing the comScore charts, but a number of the directories listed were former Superpages.com partners, so one can easily conjecture that Yellowpages.com may have offered to pay more for their traffic than their previous partner did. Once again, these would be business deals which are underwritten by the AT&T purse.

    Sometimes companies may expend capital at a loss in the short term to undercut competition to gain more market share, but it may not be a good longterm strategy in terms of profit.

    Comment by Chris — 2/18/2009 @ 10:55 pm


  15. MyAvatars 0.2

    Any thoughts on yellowpages.travel, which i think is owned by at&t’s yellowpages.com?

    Comment by Steve — 3/11/2009 @ 10:06 pm


  16. MyAvatars 0.2

    It’s not owned by ATT.

    Comment by Yellowpages.com Employee — 4/10/2009 @ 7:31 pm


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