Under the hood: Yellow targets a tech turnaround

Directory business Yellow, which went spectacularly broke three years ago and is now owned by its bankers, has posted a profit as it invests in digital.
Written by Rob O'Neill, Contributor

After failing just three years ago, New Zealand directory business Yellow yesterday posted its first profit since its NZ$1 billion bank debt was restructured as equity.

It also lifted the lid on some of its digital investments for ZDNet.com

Yellow announced a trading profit before impairments of NZ$56 million ($15 million after impairments) off total sales of $180 million for the year ended 30 June 2013.

With sales still falling, down nearly $30 million from $209.7 million the previous year, boosting digital revenues from the $46 million recorded in 2013 is vital.

In that cause, Yellow took its online platforms back in-house late in the financial year and boosted its technology staff from 15 to 90. It is now running up to 10 separate projects to improve the functionality of its platform and to deliver new marketing services.

The most obvious result is a relaunched, device-responsive yellow.co.nz, rolled out in in November.

Bringing the platform in-house allowed Yellow to do two things: fix and improve the website’s existing capabilities, such as search; and add new features. It also allowed the company to do this quickly, spokeswoman Katherine Cornish told ZDNet.

Software rollouts are now happening at least once a week.

New features include ratings and reviews. Cornish said 10,000 reviews have been posted in the last two to three months.

After just three weeks of allowing users to upload photographs, over 1,000 have been posted, Cornish said.

Yellow is not planning to slow down. It is eyeing new functionality such as enabling customers to get quotes from advertisers online. It also plans to allow customers to recommend and share.

Cornish said social media sharing is already in place, but in future reviewers may be able to have status and search could be allowed by review.

CEO Chris Armistead said there has never been a more challenging time to transform a business from print to digital. He described incremental growth in digital as “very pleasing”.

However, given the timing of the tech investment effort, any real payoff from Yellow’s technology investment will seen in 2014.

And the barriers to entry into the business are lower than ever.

Yellow is seeing competition coming from NZ Post-owned Localist, which has also built a new digital platform with analytics built in to allow advertisers to compare their online performance with their peers.

Gopher, a privately-owned and self-funded startup is also growing fast and has expanded overseas into Australia and Indonesia.

Newspaper company Fairfax Media has outlined a strategy to target the online marketing services market, but has not yet joined the other three as a Google Adwords Premier SME partners in New Zealand.

Yellow is getting its ship in order in other ways. Most of the net operating cash surplus has been allocated to debt repayment.

While doing that it was also able to invest in what Armistead described as a “world-leading technology platform” that is “one of its kind” in the directories business..

 “We have a strong business and robust financial management that allowed us to deliver a profit, make debt repayments and crucially continue to reinvest in our digital evolution.”

New mobile apps for Yellow and White page were also launched, he said, with total downloads of  more than 200,000.

The year-end also saw a major restructuring. In June, the business was split into four units: print, digital, product development and strategy and innovation, with 35 job losses.

Update: Yellow Page Holdings has appointed Brett Chenoweth, recently CEO of trans-Tasman news media company APN News and Media, as its new chairman, replacing Andrew Day.

Chenoweth has significant experience leading media companies as they transform to digital, Yellow said.

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