Using publicly available telephone industry reports, I’ve constructed a U.S. Yellow Pages (telephone directory) advertising expenditure series extending from 1920 to 2007. Directory advertising (meaning printed Yellow Pages telephone directory advertising[1]) is an early example of a communications business generating additional revenue from data it collects. The directory advertising data also offers a view into local print advertising development, including across the Great Depression of the early 1930s. Moreover, the traditional directory advertising business appears to be rapidly imploding. The directory advertising expenditure series traces the revenue path to this business debacle.
Some thoughts based on the data:
- Directory advertising expenditure was $14.3 billion in 2007. The value of a print telephone directory today might be about zero. That’s a huge shift in business value from new communications technology.
- Directory advertising’s share of all-media total advertising expenditure peaked at 7.2% in 1991, and then fell to 5.1% in 2007. Paralleling this fall, local (all-media) advertising as a share of total advertising fell from about 42% in the early 1990s to 34% in 2007. Directory advertising is predominately local. A more competitive communications industry seems to have favored national advertising relative to local advertising.
- Directory advertising expenditure has grown rapidly relative to local telephone service revenue. In the mid-1920s, directory advertising expenditure was about 2.5% of local telephone service revenue. By the early 1990s, directory advertising expenditure was about 22% of local service revenue. Even when the scope of telephone service wasn’t increasing much, directory advertising expenditure grew rapidly relative to local telephone service revenue. Directory advertising worked well as a data business in a world of print.
- During the Great Depression, directory advertising fared well relative to other forms of advertising. From 1930 to 1933, directory advertising expenditure dropped 22%. Across these same years, all-media advertising expenditure dropped 46%. Directory advertising is local, informative advertising closely related to a person’s search for a purchase opportunity. Internet search-engine advertising has broadly similar characteristics. Internet search-engine advertising may be more resilient than other forms of advertising to a major economic contraction.
- Directory advertising was a business that required particular conditions and innovations to develop. The advertising industry was well-developed by the early 1920s: advertising expenditure as a share of GDP was 2.8% in the early 1920s, compared to 2.0% in 2007. Directory advertising, however, was only 0.3% of total all-media advertising expenditure in the early 1920s. A well-informed book published in 1931 noted, “With a view to increasing this service, many improvements have been made in the general make-up and arrangement of classified telephone directories during the past few years.”[2] That directory advertising grew from 0.3% to 7.2% of all-media advertising expenditure shows the potential for innovation in the advertising business.
The directory advertising data series, as well as related data, are available both in a browser-friendly format and also as an Excel workbook. The formulas in the Excel workbook allow you to see exactly how I estimated the series. Please contribute to the analysis with your comments. Please also look for errors in the data and think about ways to improve the estimates.
Notes:
[1] The advertising of concern is local area advertising through printed reference books containing telephone number and location information and distributed freely to all households in the area. The Coen Structured Advertising Expenditure Dataset describes this category as “Yellow Pages.” The aggregate values in this category match closely the figures reported in Census surveys of services firms reporting revenue for print directory advertising. Figures for 1983 and earlier are constructed from telephone companies’ directory advertising revenues. Where common data exist (1980-1983), the Coen Yellow Page figures and these telephone company figures are similar. The Coen figures refer to advertising expenditure, while the company data concern advertising revenue. In my directory advertising expenditure series, I scale up the later figures by 15% to account for agency fees.
[2]Agnew, Hugh Elmer, Advertising Media: How to Weigh and Measure (D. Van Nostrand Co., 1931) pp. 309-310. At the time he authored this book, Agnew was Chairman, Department of Marketing, New York University. AT&T introduced “Where to Buy It” directories in 700 cities in 1928. These directories “listed national products and trademarks, along with the names and telephone numbers of local dealers handling the brands.” See Griese, Noel L. 2001. Arthur W. Page: publisher, public relations pioneer, patriot. Atlanta, GA: Anvil Pub., p. 121.