Our future is paper, not digital

It’s an interesting life, spending my days in the computer department of a Yellow Pages publisher, while my evenings and weekends are taken up with preparing for a lower-resource lifestyle that the end of cheap energy will bring us.  That’s a dichotomy that took a while to come to terms with; I love technology, enjoy working in the digital and mobile realms, and have invested significantly in my I.T. and Management skills, yet my vision of the future is a world that is lower energy, lower resources and considerable less affluent than the one we inhabit today.

Nothing has highlighted this conflict of expectations as much as the planning for new digital products. Currently there is significant demand for digital - in fact it’s the biggest objection our sales force hears when selling Yellow Pages – “I don’t need to be in the book, I am on the internet!”  Recently we ran a series of training course for our sales people, so they can explain better to our customers the value of print over digital, why those customers are seeing a lack of returns on their digital products, and a number of digital fallacies with the “adwords” model which I highlighted almost two years ago on this blog.

Our salespeople were very surprised at how poorly Google Adwords perform; by using Google's own tools, teaching them the Google keyword finder, they know how to calculate how much each it costs the advertiser each time the internet sends a customer their way.  We’re training our staff to impart that knowledge to our advertisers, because we want the businesses in our local communities to be informed consumers of advertising services, and that means giving them the tools to determine for themselves the return-on-investment for each advertising dollar.

so far our digital products to date have been very limited.  For an extra ten percent of the cost of the printed directory adverts, we can replicate the print advertising package online, and in our mobile app.  If that seems cheap –and it is –it reflects how much value we place on digital – worth perhaps a tenth of what the same exposure is worth in the books we deliver to all the households in a community.  Since we do not have a national presence, we have a local customer base around 5% of that of national yellow pages brands, we don't always score on the first page of Google's results. 

So how do we deliver value compared to them?  If the advertiser has a website, another link with the same name, address and phone number (NAT) increases the confidence Google has in their web site being "trusted".  I also suspect, from patterns in the data, that myyp.com has a lot of business people visiting it, perhaps up to a third of the traffic being B2B.

We regularly look at other digital products. Web sites are an obvious example, with many Yellow Pages publishers selling web sites, SEO services and other digital media, often from a third party.  Vanity mobile applications for businesses, and interactive ones that allow appointment setting, billing and a host of other services between consumer and business, have caught our eye.

So far, nothing has convinced us that it's a good enough value for the consumer, the advertiser, or ourselves, to adopt more than one product: SMS messaging. What I like about this is the level of technology required to support it: it works on the older "flip" style phones and will work on the older models that supported text messaging, even those limited to twitter-length messages.   

I like it because it is resilient for an electronic product.  It can work on a large number of phone platforms, including ones we made when there was still technology manufacturing in the United States. Even an eighties car phone, complete with brick battery, could receive the marketing blast with the addition of a "modem" of the same era.

Am I disappointed we won’t get to play with the latest and greatest digital products? Perhaps a little.  I still think there is time for a mobile application that helps refocus the consumer on his or her local community, reward local loyalty behavior in shopping patterns, and provide alternatives to the dollars hemorrhaging from our communities to Wall Street via the big, publically traded corporations. Products like punchcard are already a long way down the road, and I’ll be posting my predictions on what any “game-changing” application might look like soon.

Products and services are not the only area where technology meets the advertising world.  Our techs and programmers have their hands full making sure we are helping our sales force provide the best value-for-money we can, to design, test and deploy the systems that keep errors to a minimum, streamline the gathering and presentation so those customers can make informed choices, and deliver those choices to a still-loyal consumer base.

In the last few years we have taken our sales system electronic, deployed mobile internet access for salespeople on the road, and just last year we even gave our sale force smart phones.  Tablets are under consideration and who knows, the challenges of managing a few hundred iPads, Android tablets or Windows 8 slates may be in our future.  They will be used to sell a product that has changed little in over a century, and having stood the test of time will still be bringing value to advertisers when our grandchildren are coping with a world defined by resource depletion.

Call Tracking – when Yellow Pages techniques go bad

One of my recent projects revolves around remote call forwarding numbers. With the implementation of state-or-the-art sales software, we are looking at how we can also improve other services including the tracking of calls to our advertisers.  The most common way of doing so is to use a “call tracking number” - also called a Remote Call Forwarding (RCF) – that’s where a telephone number in the book is different number from the regular business number.  You call the 559-555-1234 printed in the Buy Local Guide, and behind the scenes the number forwards to 559-555-3912 – the front desk or Mr. Advertiser.

When the phone ringing or the door opening was the only way a customer got in touch, this model worked very well.  Though the use of the RCF we show how Yellow Pages advertising outperforms other traditional media, and also produces returns that are an order of magnitude above what digital products can deliver today.  However, the concept of an RCF number introduces problems when the advertiser is heavily invested in digital advertising.

While automation and computerization makes life easier and allows larger and larger amounts of data to be sifted, processed and cataloged, it does introduce flaws in those arenas where a computer does badly, like making intuitive jumps when two telephone numbers don’t match but the name, address, storefront, products, services –even the person smiling as they sell you a widget –are the same.  We can figure out they are the same business.

Computers cannot make such a leap of logic - even the really big ones at Google, Bing and Yahoo.   Search engines are not perfect, they are Frankenstein creations, with generation after generation building upon the successes and presumptions of their predecessors. They have to deal with diverse human languages developed over millennia, with local phrasings and idiosyncrasies, and the messy way we humans label things.

So when a local business has an RCF number printed in the Yellow Pages directory, what happens?  How does this RCF affect their online presence and ability to be found on Google?  Does it matter?

The answer is yes, and the impact can be very negative, particularly the ability of the advertiser to be found in the organic search engine results pages (SERPS).  Google is very clear that the most important common metric for local search is the NAP.  

Name.  

Address.  

Phone number.  

Linked together, this string of vital data about your business is a “key” – that is a unique reference that search engines use to put together all the info they have on the business.  The more consistent the information is, the better a business shows up for a relevant search.  In other words it adds to the pages “Page Rank”.  Add different, confusing data such as a different telephone number, particularly in a directory that is generally a “trusted source” due to having tens of thousands of correct numbers listed, and the damage could be considerable.

Even if the RCF number is complete new and not already in the Google database from being assigned to a different advertiser a couple of years ago, that new NAP-combination will create issues. With a few weeks of publication that telephone directory is keyed by data services, such as InfoGroup, Axciom or Localeze and distributed to many places, including Google and other Yellow Pages companies.     

Within weeks it is possible that the new RCF number will manage to confuse and confound one of the biggest corporations on the planet – Google.  To be more precise, it may have created almost-duplicate content in the database and when Mr. Consumer is looking for a widget provider, Google sees two telephone numbers for this business and it is not sure if it is looking at one or two different widget providers.

Google does not like what it perceives as duplicates (a method subject to great abuse in the SEO world) so it lists you lower down on the results page than the widget-provider across town, who never used an RCF number.

What can you do?

If most of your business comes from people walking though the door or from local customers, calling you, or responding to coupons in your local media, then this problem is not going to be that big a deal for you.  If you are based in a brick-and-mortar business, you customers are your neighbors, then I recommend spend your advertising dollars where they work - in a local delivered and distributed product.  Yellow pages are best (I'm biased) but I’d encourage you to support local newspapers and local radio.  If your customers are local, so should your advertising.  The potential loss from Google listing you twice is negligible when compared to knowing exactly which advert content generated the best results for your business.  

If your business is internet based and the majority of your customers are mail and internet-order, then you probably don’t want to use RCF numbers at all.  It’s when you fall between the two, serving a local market but spending a lot of your advertising dollars online, that is when it is going to be harder to use RCF’s effectively and without some negative impact. Here are some ideas.

One technique you may try is to use a slightly different name in your NAP, one that is associated with the call forwarding number but not with the normal business NAP and are less likely to end up in your local cluster. It means trying to juggle two sets of Google local data, and there’s no guarantee that algorithm changes designed to catch people duplicating listings for nefarious purposes won’t penalize these techniques in the future.  

It’s possible to display the correct NAP (original desired combination of Name, Address and Phone number) whenever the browser detects a GoogleBot or a BingBot, and the RCF number only when it’s a browser viewing the data. If you use RCF numbers internally, make sure your web master knows you are using forwarding numbers.

There are no easy solutions to this predicament.  The providers of RCF numbers need to address the issue of how it may impact the advertisers ongoing SEO efforts.  Unless they do so quickly, then the internet-based advertising companies, with no loyalty to the local communities, will dominate the conversation.  Sadly, it is in their interest to undermine the use of RCF on the basis of "it will mess up your internet advertising".  The last thing a company trying to sell you adwords wants you to have is research that shows just how much better the ROI is on local advertising.

The dreams the internet vendors sell are in the clouds, whereas the leads Yellow Pages creates are in your local community.

Setting a positive example for our communities.

After a few months of major projects, mainly the deployment of a new digital platform for our sales force, I finally have time to write part two.  In this post, I look at the options for local businesses trying to survive in an increasingly digital world.  Day after day, they are bombarded with the idea that everything has gone digital, everything and everyone is on the internet.  "The future is digital," they are told.

In fact, one of the more common objections a Yellow Pages advertising consultant hears is, “I don’t need to advertise in the Yellow Pages, I am on the internet.”

I’d agree with the second half that statement. I’ll even concede that many of their customers are also on the internet.  But the more important question is, how much trade does that business do via their online website, compared to the paying customers who pick up the phone and call, or simply walk through the door?

If your customers are not coming to you via the internet, is the internet the best place to chase those customers?  Can you afford to compete with an out-of-state internet giant, who leverage their size to beat any possible price?

Would you even want your relationships with your co-workers to be competitive, each pushing themselves harder to meet impossible targets? A warehouse of conveyors, with human picking machines running to meet a timetable. That's not the heart of the American business community. It's not the business model that built your community.

If your customers are local, if your business serves your local community, if your success relies on the people who live within easy travelling distance from your place business, then surely your advertising should address those people first? Local advertising provides results for local businesses.

Now the Yellow Pages are not the only local media in (your) town.  For brand and name recognition, a local radio station or outdoor billboards can help build your image.  For specific sales events, special promotions, or to take advantage of a particular season, radio and local newspapers are great ways of helping a potential customer consider what you have on offer.  Direct mail is another option, but the results are generally as poor as internet-only advertising, with a 2% - 3% doing the old-fashioned version of a “clicking though” – actually reading the mailing piece.

Yellow Pages should be a key part of a local advertising strategy because it’s there when the consumer wants it. A person reaching for the Yellow Pages is a person in your local community, who is most likely ready to make a purchase. That's supporting the community I can get behind! 

That’s not to say the internet does not have a part to play when it comes to buying locally.  Many of your customers may go online and research before they buy.  Today, many business owners and workers deal with consumers who are much more knowledgeable about the products they want.  But research does not replace holding an item in your hand; the internet does not give a feel to the level of quality of an item.  Most importantly, internet retailers only give people what they ask for.  They lack that face-to-face communication where you find out what they actually need. That human element, that connection local businesses have with their community, is worth preserving.

This election season, much politics is being made over “who built it” but the political wrangling is missing the point.  People in your community built it.  People in your community built the infrastructure.  People in your community built the businesses.  Most importantly, people in your community can build a better future when the money in your community, flows though the businesses, the workers, the shoppers in that community.   

Regardless of whether peak oil results in a much lower-energy world, or technology comes to our rescue and we move forward into a techno-utopia, the relationship between local community and local business will be vital.  Far worse than the vision of a post-carbon world, where local businesses are once again selling, repairing and supporting locally produced goods; is the dystopian vision of  a million small businesses, all trying to beat each other with ever lower online prices, while the remaining good jobs disappear out of their communities, in the frantic race to the bottom.  

Whatever the future holds, the success of our local communities will depend on the local leadership, of the local businesses, in those local communities. Local businesses have local options.  Yellow Pages online is an important part of a strategy, not a replacement.  Local radio, local newspapers, local advertising agencies that can help with your marketing plans.

Most importantly, make sure your customers know you support the buy local campaign. 

Symbiotic versus parasitic businesses

The life style westerners have enjoyed these last few decades is unique in human history.  Never before has every fruit and vegetable been available in our stores throughout the year. In no previous age have the merchants catered to the whims of the populace rather than to the whims of just a select few.  We have shared in the riches of a century of cheap, portable energy. It’s been great.  But I fear the party may be coming to a close.  With supply at a plateau and demand from developing nations climbing, soon we are going to be in an international bidding war for oil.

The energy supply is going to get vastly more expensive as supply fails to keep up with demand.  That will put an upward pressure on transportation costs, making distance from supplier to seller to consumer a far more significant factor.  The big internet retailers are dependent on that cheap energy to get their goods from centralized depots to consumer’s front doors.  Costs also depend on volume, which will decline as spending falls, and result in more and more jobs lost in the inevitable demand destruction.

As the cost of transport gets more expensive, the traditional model of local retailers serving the community will come back to the fore.  When it costs the consumer more to ship from out of state, despite the tax advantages internet retailers enjoy, expect to see more people searching for what they want back on the Main street.

Communities are defined by how far you can travel in a reasonable time. Not that long ago, it took as long to travel from village to village as it does today to travel continents –all because of cheap energy.  As long-distance travel becomes less of an everyday activity, our interests will, for the most part, become more localized. Localization is both a symptom and a solution to the predicament of declining energy supplies.

Now before I extol the virtues of adopting the ‘buy local’ lifestyle, I’d first like to talk about those internet retailers. When I buy from a local business, a reasonable portion of that money continues to circulate around my community.  Even the big box retailers contribute some money back to the community though the wages spent locally by their employees.

The business community has always shared a symbiotic relationship with the consumer.  The health of our community is dependent on the ‘velocity of money’ –the transactions from person to person that earns us our daily bread.  Our employees live and work in the community that supports our businesses, and the lives of our employees are intertwined with our customers.  We enjoy a symbiosis that goes back to the earliest days of barter and the marketplace.

The large, internet-only retailers, in an ecological sense, are parasites.  They contribute little or nothing back to the local communities beyond the wages of the occasional delivery driver. They suck money out of local economies into the stock market. In a world of digital money, we may not see that green river flowing out of our communities and into those nebulous ‘markets’.  If I could believe in the paradigm of infinite growth, I would not find this a bad thing.  Our pensions, our 401K funds, and our other investments rely on the markets.

But in a world constrained by energy limits, where the impact of oil shocks threatens economic security, there is competition between the needs of Main Street and the desires of the giant conglomerates who are able to take advantage of energy to grow to a size that can push smaller, local retailers out of the marketplace.

In many ways it is a private sector reflection of the political decisions of the last few years to protect ‘Wall Street’ rather than ‘Main Street’. The concentration of wealth in giant corporations like Amazon, the growth of giant multinational corporations, all reflect the growth of big government. 

Power often concentrates in an individual, politically, that may be in the form of a President or a King. In business, it may take the form of the legal fiction of a corporate person.  It represents the oldest form of social order, monarchy. Today, we see the scale that is possible when there is an almost unlimited amount of energy available.

When we talk about our communities being drained of money, how can we define community?  At a city level? At a county level? How about at a state level?

How about you, the consumer, deciding what constitutes your community?

Actually, you already have.  You, and everyone in your community for the last century or more, have defined what community is by your shopping patterns.  It’s how far you are willing to travel to purchase the goods and services you need.  That model has existed for centuries, people shopping where they live and work.  We almost lost that model of local people spending money in local shops, the drive for lowest possible price before any cost threw a lot of small businesses under the bus.  Again, this is a result of cheap energy that subsidizes the cost of doing business for companies with no investment locally.

Luckily, we still have a legacy of the older shopping patterns before the parasites came along.  It’s called a telephone directory. Businesses buy advertising in directories that serve their customers. The majority of businesses in your local directory only advertise in that one directory – you, not the million on the internet, are their market. The Yellow Pages have been in a symbiotic relationship with you since your parents started shopping for your nursery.

The changing energy costs will affect our industry as much as every other. As transportation costs rise, I expect directories to fragment; a rural directory today that may have three medium-sized communities within its pages, may in the future, be replaced by three smaller directories.  If the consumer travels less frequently to shop, then the value of advertising over a wider area will drop.

The Yellow Pages is all about competition. They show businesses competing for the money moving through their local community.  Yellow Pages shows merchants side by side, letting the consumer choose with whom they wish to speak..  At the same time, we advise businesses on how best to convey their strengths through their advertising. As such, local directories are a reflection of the health of the community; a strong, vibrant business community is a healthy customer base for Yellow Pages companies. We only succeed when our local communities succeed.

In the aftermath of the Great Recession, it is far too easy to open the Better Book and blame our woes on our competitor down the street.  Yet if that were so, what explains the blight in our communities?  If we lost our revenue to our local competitors, the money would still be circulating between paycheck and till receipts.  We’d tighten our belts as our customers did likewise, and adjust to the ever-evolving marketplace. Some uncompetitive businesses would not survive, and a new equilibrium would be achieved.  Businesses have gone through this cycle a myriad of times.

Shoppers are not tightening their belts.  Instead they are changing their shopping habits. The online retailers have the advantage of not having to support the local community. They employ no one locally.  They often avoid taxes by incorporating elsewhere. They appear to provide great value to the consumer who feels the pressure in his or her pocket because there is less money flowing though the community. Yes, it’s the same argument used against big-box stores; except even if those stores were to become the only game in town, it would reach some equilibrium within the community it served.  Not so with the internet corporations.

The relationship between consumer and merchant, on a local scale, is always symbiotic. Not so for the internet parasites. They survive by feeding off local communities and profit by giving nothing back.

Next post, I will suggest ideas on how local companies can survive until the inevitable increase of energy costs levels the playing field and brings the focus back where it belongs, in our communities.

Spam, spam, spam spam....

I don’t get to blog often these days, my writing exploits have taken a different turn. My first short story, "Caravan of Hopes", will be out in an anthology of stories regarding peak oil this fall.

But my career is still firmly centered in advertising, and the Yellow Pages industry in particular.  Today, I’m going to rant about spam, and the lack of anyone out there actually dealing with the problem.  All the current anti-spam packages do is treat the symptoms, and make a lot of money in the process.

Don’t get me wrong, I find our spam filtering device invaluable.  The number of spam emails I get at work is minimal.  It’s not the same at home, though, where I often wade, digitally speaking, though far more spam than real email.  I’ve seen statistics saying 90% of email today is spam.

That’s one hell of a signal to noise ratio.  90% of the clicks in my inbox are a waste of my resources.  In my opinion, however, the answer to the problem is not stopping spam, it’s increasing the noise to signal ratio for advertisers using spam.

Currently, there are enough people who click-through spam, then buy something, to give an advertiser a reason to continue junk mailing our inboxes.  For every few million email messages sent, a few suckers fall prey, and an advertiser pays for a ‘business lead.”

But what if the click-throughs were not from real people, just like the spam you get is not really your uncle Joe emailing you with an offer you can’t refuse?  What if we could increase the signal-to-noise ratio for the advertiser?  They would be paying the spammer for traffic that generates no revenue.  In a perverse twist on ‘click-fraud’, the spammers would see an immediate increase in revenue, followed by a collapse of the market and possible lawsuits.

Obviously, I don’t want to click on every spam I receive just to help the advertiser waste their money.  I’m sure neither do any of my readers. What I want is an anti-spam package that identifies (automatically or via ‘mark as spam’) unwanted email, forwards it to a server, where an automated program (a spider) can follow the links in a manner that is indistinguishable from a human clicking on the link.   

To maintain click value, spammers would have to start avoiding email addresses that triggered wasteful traffic. Alternatively, they would have to drop the value of the traffic as the conversion rate plummets, reducing the effectiveness of the advertising model.  

Signal to noise.  I want to turn the tables from the ‘noise’ being my problem to the ‘noise’ being the advertiser’s problem. I want to see their costs for sending unsolicited email to go up while their conversions go down.  Companies who hire spammers don’t care about potential customers or they would not alienate the majority of them, in the hope that there are enough suckers to make it worth their while. Make them pay for the spam in your inbox with no hope of a conversion.

Of course, I’d also like to be able to mark commercial emails as ‘not spam for me’ if I do, indeed, have a reason to hear from an advertiser.  I want to encourage responsible use of email as a marketing and communication medium between businesses and customers. 

Now that’s an anti-spam product that I would be more than happy to pay an annual fee for.   

I like to have as much control as possible over what advertising that enters my life. That’s why I no longer watch TV; I use the internet to stay current with events. It’s also why I like working in the Yellow Pages industry.  The yellow pages are there when I need to buy something and sit quietly on top of my refrigerator for the rest of the year.  I also know that every business I find in there is invested in my local community, not some scam from the other side of the world. Yellow pages builds trust like no other medium.

For those of you who came here expecting a Monty Python reference, here you go:

2012 is here

My apologies for not posting for a while. Family matters have taken up a lot of my attention, with my wife taking a work contract in Europe and the kids staying here in Calfironia with me.

I will be resuming my posting on Peak Oil and the impacts it is having on Local Search, particularly Yellow Pages, soon. 

No post this week

In the last two weeks I have attended two conferences, spend a week in the UK, and lost one of my best friends and our best man to a sudden heart attack. Normal service will be resumed in two weeks.

Comparative: Internet versus Yellow Pages

A month ago I commented on the attempted ban of Yellow Pages in San Francisco.  Last post I talked about resilience and how the local Yellow Pages book reflects, to a great degree, the resilience of a community.  This week I plan to discuss how the vastly different media of Yellow Pages and Internet-only advertising serve different business interests.

Many people thought that the internet would be the great leveler in the advertising world.  Suddenly, a small mom-and-pop store could put up a web site and compete in the global marketplace with the big international conglomerates.   Even today, internet advertising as a stand-alone product is sold with this underlying premise.   

To be fair, the internet had given many entrepreneurs a place to start; the simplicity of setting up an on-line store allowed a new generation to experience running their own business.  From simply selling a few items on Ebay to setting up a dedicated online storefront, the dream of self-determination became attainable for many more people than ever before.  From the quiet confines of a spare bedroom, thousands of individuals pursued their dreams of a better label, that of self-employed businessperson.  Some purchased stock, photographed it, listed it, lovingly packaged and shipped it, all over the country.   Others simply set up fronts for drop-shipping companies and waited for the orders to come flooding in.

Most found out that business was not that simple.  Finding customers - in other words, good business leads - has been the challenge for businesses since the invention of commerce.  Even the best web site is worthless if there are no leads to convert to sales.  

Lucky for the internet startup, there is a not-ostensibly-evil company that loves to connect people looking for products and services with suppliers: Google.  All an entrepreneur has to do is create the perfect site optimized for the search engines like Google, Bing, Yahoo etc, and watch the leads come in.   

As many have found out, this “Search Engine Optimization” (SEO) is not easy. For a start, the rules always change.  Or to put it into technical terms, “Google changes the algorithm.” A site that is top of the page this week may be nowhere to be found by the time the next blog post comes out.  A competitor may design a better site tomorrow, or the parameters may change.  Maybe you have a fast, slick, text heavy site that works well - then next week, video SEO becomes more important in the calculation somewhere in a server farm and, it is back to the web site drawing board.  Well not exactly. Most sites can be improved fairly easily, with good advice from an SEO consultant like Andrew Shortland, or even by following one of the better SEO blogs.

So who has the greatest resources to throw at SEO?  The home business examples outlined above? The Wall-Street backed mega-warehouse set up in a state with no sales tax? The big box stores you find at the local retail park?  Somehow I don’t think the start-up in the spare bedroom has the development resources to take on Target, Walmart, Amazon et al in the SEO arena.

But even without the resources to develop a site that can compete with the big players, the entrepreneur may get lucky in design and get to the top of the SEO rankings.  That does not mean that they are the first result on the page.  That is usually reserved for paid positions, a system called “Search Engine Marketing” (SEM), a placement at the top of the Google search results that varies in cost between ten cents to almost fifty five dollars ($ 54.91) per click (assuming the user thinks that result is relevant and clicks on the link). 

Do a Google search for popular products and you will find results including the regular big box stores like Target, Walmart, Kmart, etc.  Many times you will find the top result is a paid listing from one of the big box stores.  A search for “autumn wear” today will have Nordstrom, Target and TopShop in the paid results.  That is worth thinking about.  Corporations who can afford to have teams of SEO specialists on staff, constantly changing the website to give the maximum positioning, STILL pay to be on the first page of Google results.  SEO in itself is subject to the whims of those who write the formula - those who rely on formula alone are rolling the dice.  The Search Engine businesses like Google and Bing know this and know that businesses will buy that traffic from them.

So it’s pretty obvious that small businesses do not have the resources to compete with the larger, national and international chains in the internet marketplace.  They end up spending money either on the SEM paid listings or using a third party marketplace like Ebay, Amazon, or when the margins get too thin, Craiglist.   Rather than being the great leveling marketplace, the internet gives distinct advantages in retail to large chains over the small, local businesses. 

Not all internet advertising is dominated by national players, though.  The service industry, by its nature, tends to be more localized.  So let’s pick the fourth most expensive search terms and look at how the internet stands up:  Attorney.

If an individual in San Francisco needs an Attorney and goes to the internet, searches for one, and clicks on the top result, then that business lead may very well have cost the partnership $ 47.00.  That’s the price Google is currently charging to direct a person searching for an attorney to their web site. That's just for the click-through to the website.  At this point the person searching is just looking around, seeing if this business might meet their needs. On average, maybe one in twenty will pick up the phone or send an email.  So for each phone call or email the attorney received, it is likely to have cost him or her more than nine hundred dollars.   

If a person had picked up a Yellow Pages, the cost of displaying that ad was around 10 cents per issue for the largest, full color page!  Okay, that’s only potential customers, though, not everyone who received a Yellow Pages will need a lawyer, even in San Francisco.  Luckily, the Yellow Pages industry has a way of tracking usage:  We pick a test case, put a different number in the book, and forward telephone calls on from that number to the regular business number.  Thus we know exactly how many business leads an advert of a particular size generates in a market.  So how many business leads would the most expensive Yellow Pages Advertising create, and what is the cost per qualified lead?  Examples over the last couple of years shows that a full page package under Attorney can bring in upwards of 1200 leads at around $ 30.00 a phone call to the attorney in San Francisco. 

Yellow Pages, an industry that creates the artwork, proofs it, modifies it, gets customer approval, then prints a physical product and distributes it to over 600,000 places in the city, can do so on two-thirds of the cost per lead of what it takes to get Google to provide a simple link.  The sales, production and distribution of the Yellow Pages also provides many jobs for the residents of the city.  It provides a local search function that does not externalize the costs onto the public and the industry goes out of its way to be sustainable, both as a product and as a business model in the community.  Internet-only models externalize costs while charging far more providing nothing of resilience. 

More importantly, the Attorney in this example who is advertising in the local book is likely to be living in San Francisco, paying local state and city taxes, contributing to the local community and has an interest in the well-being of his or her community. 

Now there will be other categories of business that Google can provide leads to that are cheaper than Yellow Pages.  Those cheaper leads, however, are being chased by the same national and international players. In the same way as the economies of scale of national chains can use the availability of cheap energy to undercut the prices of locally owned businesses, Google has the ability to give big SEM spenders (those with large internet advertising budgets) a competitive advantage that drains money out of local communities into Wall Street.

Of course, the internet should have a place in the advertising strategy of any business today.  However, it does not have to be costly or paid for at the expense of more traditional and time-proven media.  To work effectively, local businesses need to work together, to network in a way that leverages the local aspect of their markets, and to promote their common, local interest.  That’s what the Yellow Pages have always done, sharing the production and distribution costs of the original Search Engine between all the advertisers contained therein. 

Next blog post, I’ll bring the conversation back to peak oil and how these models will stand up to the challenges we face in the twilight of the oil age.        

Resilience

Recently I had the pleasure of attending the kick-off of the 2012 San Francisco sales campaign for Valley Yellow Pages.  It certainly made life in the back office of the corporate headquarters appear quiet in comparison.  The Regional Vice President gave away the secret of the success of his region: LSD.

At this point I really knew for certain that this was more interesting than life in the Information Systems department!  He went on, however, to explain further.  LSD stood for "Laughing," "Singing," "Dancing;" the importance of a good, positive attitude.  Not just a forced smile but the act of remembering to take joy in life.

Why is it important to tell people what should be self evident?  Because it takes a certain type of individual to be a good “outside sales person,” particularly in today’s uncertain economy.  For those who are unfamiliar with the term, an outside sales person is one who conducts his sales meeting outside his office – usually at the client’s place of business.  In British parlance, it’s like the “off in “off licence” but with less moral hazard.   

It is not an easy job.  The salesperson faces multiple rejections every single day, sometimes a polite “no thank you” but often a lot ruder, up to profanity and abuse.  Businesses are struggling in an uncertain economy, tempers are short and often those business owners make the mistake of perceiving Yellow Pages as an expense instead of an investment.  Their frustration with the world may cause them to lash out at an unwanted telephone call or personal visit.  The Yellow Pages salesperson has to shrug that abuse off, put on a genuine smile, and go see the next potential customer.  Setbacks are a daily fact of life, the best laid plans and presentations mean nothing if the decision maker does not stop and listen to what our company can do for them.  A Yellow Pages salesperson needs an attribute that is sorely lacking in society today:  Resilience.  

Resilience is the ability to recover from shock, injury or disturbance.  It is a term that can be applied to an individual, a group, a business, a community and even a nation.  For a business, or even a business sector, resilience is the ability to weather shock in the supply chain.  For example, the lack of resiliency in the automotive manufacturing sector was highlighted when the Japan earthquake earlier this year resulted in factories shutting down due to lack of components.    In business, the opposite of resilience is “Just In Time” (JIT) provisioning.  People should be familiar with it.  When you go to the supermarket, the good on the shelves were probably delivered within the last three days - “just in time” for you to buy them.  That is not very resilient.  Ask anyone who tried to get food and water during the aftermath of a serious earthquake, flood or hurricane.  JIT means having all your eggs in someone else’s basket and relying on them to deliver them on time.  One setback and things grind to a halt. That’s what happened to everyone whose eggs happened to be laid in northern Japan earlier this year.

Resilience means redundancy in the critical infrastructure. For a community, that means having more than one source of each product and service.  Just as importantly, it means that those competing businesses need to have diverse suppliers.  For a community to have resilience, it must have a vibrant, healthy business economy with connections to that local community.  A big box superstore that ships in goods and ships out profits using the JIT model neither contributes much to the local economy nor to its resilience.       

Want to know how resilient your community is?  Pick up the phone book.  It is a snapshot of the health of your local business community.  Forget the massaged statistics of the government’s Bureau of Labor Statistics or the older models of economic factors maintained by Shadow Stats - did you know that to keep down the official rate of inflation and unemployment and to boost the appearance of continual growth, the government, regardless of political party, changes the rules on a regular basis? 

There is not a better gauge of your local economy than your Yellow Pages book.  Advertising is purchased for a year with those orders often placed months in advance.  It is an indicator of the confidence of a business owner that they will keep their doors open long term.  For you the consumer, that’s a vital factor if the goods or services you purchase come with a guarantee or warranty.  Is the business confident enough to invest in advertising that will bring in business for another year? Or are they pulling back, only spending money in short-term advertising campaigns?

Oil spikes are a major threat to JIT delivery models.  If your community gets all of its vital supplies trucked in from hundreds of miles away, then when gas prices go up, so does everything you buy. When political or geological factors reduce or stop that oil from flowing freely, those goods and services will no longer be available.  The big chains will close their doors indefinitely, laying off all the local workers, while the shareholders and decision makers pull back to the communities they are invested in.  Big box stores are not invested in your community.  Developers built the infrastructure of the retail parks with taxpayer money, either in grants, tax breaks or other ‘incentives” to entice the development to that location.  Those giant buildings were then leased to the big box store, who would not think twice about defaulting on the lease if they felt it served their fiduciary responsibility to their shareholders.

There is another group of very resilient individuals who know what it is like to get up every day, go out and see what they can offer in the way of help to businesses, only to face “no” after “no” after “no.”  They know what it is like to have the door slammed in the face, only to put on a genuine smile and move on to the next business with the important question:  “What can I do today to help your business do better?”

Those people are the unemployed. 

If you have what it takes to get up, day after day, to keep approaching business after business, not taking that "no" as the final answer that will define your life, if you know, deep down in your heart you have something valuable to offer if you can get a few minutes time in front of the decision maker - then you know you are resilient.  In which case, have you considered a job in Yellow Pages?  Don’t take no for an answer.  Keep going back to the recruiting manager.  Show them by your resilience that you have what it takes to help our Yellow Pages industry keep our local communities strong by promoting a healthy, vibrant local business community.  Tell them I referred you.  (Disclaimer: I am the Information System Manager at Valley Yellow Pages and have no influence of hiring of salespeople; - I only influence electrons.)

No trees were harmed in the creation of this Blog.  However, quite a bit of coal was dug out of the ground, burned, and used to generate electricity to power the servers, the internet, and your computer or tablet. 

Who does a Yellow Pages Ban serve? Who profits?

Last post I highlighted the assault on the Yellow Pages industry currently underway in the city of San Francisco and the connection its main advocate, David Chiu, has with rival media, that being a possible factor in his desire to use policy to favor one advertising medium over the other.

I do not know President Chiu’s motivations.  I make no claims of any psychic powers.  It is commonly believed that he hopes to run for Mayer of San Francisco and I believe this legislation is an attempt to influence the less educated members of the environmental lobby.  A cynical attempt at manipulation or not, this blog will highlight how Yellow Pages stacks up against the competition when it comes to serving not just the advertising media itself, but the environment, the advertisers, and also the local community.  It will show that, contrary to popular misconceptions, Yellow Pages is far better for the environment than many of its competitors.  I’m not going to go into usage statistics, or conversion rates of various industries.  This is not a blog to promote Yellow Pages but rather to discuss it in the context of declining energy availability. 

A term I want to introduce to readers who may not be familiar with it is “externalizing costs.”  When a cost is externalized it means that the corporation is no longer footing that bill. Instead it falls on either the consumer or, more often, on society in general.  The most prevalent example of externalized costs is the banking industry, which made billions gambling on the markets, and when they lost money, came to the taxpayer, who bailed them out with trillions of dollars borrowed from the future earnings of American workers.  The oil industry also externalizes costs; gas prices would be significantly higher if the American military were not deployed in the gulf to protect our business interests.  From the rising cost of insurance against maritime piracy to the sale of discounted military hardware to Saudi Arabia to the industry subsidies from the government, the cost of oil is far more than what we pay at the pump.

Externalizing costs also happens on smaller scales, often without people realizing. Who pays for the delivery of the advertising  you see each day?  In a number of cases, you as the consumer pay the bulk of delivery cost.  Some forms of media share the costs between advertiser and consumer and a few forms of advertising expect the seller to pay the total cost of distribution.  

Online advertising is one of the mediums where the majority of the cost of delivery is placed on the consumer.  In this case, the cost is externalized on the person paying for the internet connection.   If you do not have an internet connection or cannot afford one, then you are excluded as a customer. 

Online advertisers will not reach you unless you pay for the internet connection so that advertising can be delivered to your computer, your tablet, or your phone.   While it may not be obvious, when you see an advertisement digitally, (be it a website, a banner ad or a spam email in your inbox) you as a consumer subsidized the delivery of that advert. 

This is not a new model. Newspapers and magazines have long charged readers as well as subsidizing the production and distribution costs with advertising rates.  Even television and radio cost the consumer the price of the equipment and the power to run it.  Unsolicited mail is perhaps the closest distribution model to Yellow Pages.  Paper, delivered to the door, is free of direct costs to the user but the public still pays for distribution in the form of subsidies to the post office.

Yellow Page is a medium that is wholly paid for by the advertiser.  It does not cost the consumer anything for production or the delivery of the product.  The publisher pays for the delivery.  It is free to everyone who has not ‘opted out’ of delivery.   Every other media externalizes some or all of the costs onto the public or the taxpayer.  So who benefits from banning the Yellow Pages?  Certainly not the consumers or the taxpayers.  The only ones who benefit are the other advertising mediums who, we have shown, are subsidized one way or another.

Beyond the question of who pays, let us take a look at the wider environmental impact of the various media.  Most people in the delivery areas for our book, the Valley Yellow Pages (Disclosure:  I am the Information Systems Manager for this publisher) get their electricity from Pacific Gas and Electric (PG&E).  The current rate for electricity varies depending on use, but most consumers end up being billed at the highest rate (the lowest rate will not cover the cost of running a fridge and a couple of  light bulbs for a month)  which currently is 40 cents a kilowatt hour. 

PG&E, like many companies, also externalize costs.  Power stations produce a massive amount of pollution.  More often than not, it is the public who pay the cost of dealing with that pollution, because power corporations have the resources to lobby to limit any regulations that would require them deal with the pollution themselves.  Every time a consumer requires electrical power to search for a product or service they need, they have added to the environmental impact of the power generation. 

The power is not only used by the consumer switching on their computer or charging their phones and tablets.  One of the biggest users of power today is the internet itself.  In fact, the internet uses more power than all but the five biggest countries use, far more than even India or Germany uses.   Google and other providers consume huge amounts of electrical power to run their data centers, executing more than a billion searches each day; and each search engages around a thousand servers as it scans its various data centers for the information you are looking for.  Google uses so much energy that it tries to keep the exact amount a secret.  

The switches and other parts of the infrastructure, invisible and rarely thought of by most internet users, also consume power. From the advertiser going online to select his Google Adwords to the users searching for what they want, the power companies are an additional winner when a city bans the phone book.

I’m not going to talk about the actual production of the Yellow Pages beyond saying that it is printed on paper made from recycled materials and wood chips from the lumber industry.  Not a single tree is cut down to produce the Yellow Pages.  Almost every publisher has adopted the use of recycled materials, often at a higher cost than ‘virgin’ paper.   The inks, glue, etc used in the book are biodegradable and free of toxins.  More information on how green the Yellow Pages is can be found here.

Let us return to oil, this being a blog that merges Yellow Pages with the impact that Peak Oil is having -  and will have  - over the coming decades.  The telephone book is delivered once a year by a private distribution company.  The number of books delivered is well known and publically available since advertising costs are predicated on the number of consumers the book reaches.  In the past there have  been challenges to the delivery numbers and the industry responded by taking part in independent audits – validating the value of the Yellow Pages long before the internet became a part of our everyday life.

Delivery of the book does take energy, in the form of gas used to deliver the printed books to the doorstep of everyone who wants one.  That delivery occurs once per year, on routes that are designed for both efficiency and energy savings; after all, the delivery company wants to save costs just as much as we consumers do.  Compare that with unsolicited mail the post office delivers to our doors six days a week.  While the routes are equally optimized by the post office, you, the consumer, subsidize the cheaper bulk mail rate with higher costs on first class stamps and public bailouts of the postal service.  

Next post, I will deal with other ‘green’ aspects of the Yellow Pages,  how Yellow Pages plays a part in sustainable and resilient communities and give some insider secrets on how the industry is changing to meet the demands of resource depletion.

A return to blogging

When I began this blog I expected to post at least twice a month.  After a couple of weeks however, my employer announced they were going to release a “Social Media” policy to offer guidelines to people talking about our industry.  I thought it a good idea to wait for this, so I did not inadvertently violate a policy that wasn’t written yet.   Not for fear of upsetting my employer - they are the most reasonable company I have worked for in the United States.  Rather it was the factor that guided the company to actually develop the social media policy that made me want to wait:  Fairness. 

The telephone directory represents one of the most level playing fields in advertising.  Delivered freely to every household that wants one, it expresses our advertisers messages as they want to be expressed, as large or as small, in color or in the traditional black and yellow.  Side by side, page by page, the information a consumer wants is available when they want it, without influence from the media and it leaves the decision to the consumer.   Yellow Pages publishers do not play favorites; generally in the industry, the order of advertising is governed by strict rules based on size and when the advertising was purchased.   Every business is a region is contacted to see if how much representation the advertiser wants in the book and even if they choose to not spend a cent on advertising, we still include basic information.  Independent Yellow Pages, like Valley Yellow Pages (whom I work for,) pride themselves on being as inclusive as possible.  

Since before I joined the company, there were rules prohibiting employees from endorsing an advertiser; it is not our place to promote one advertiser over another.  In the last century, it took quite a bit of effort to endorse the product or supplier, but that changed with social marketing.  Now, a person can endorse a supplier via an on-line review in a matter of minutes.  The possibility of a conflict of interest is much higher now.  For example, if an advertiser reduced the size of his or her advertising and then got a negative review from an employee, they might feel that the review was retaliatory. Yell have been accused of similar unethical behavior in the past, with some of their clients accusing them of manipulating reviews to pressure advertisers to subscribe to costly services.  We are proud of our independence and neutrality of our product and trust the public to make informed decision with the information they are given.  This contrasts with other media like radio, who often have advertisements in the form of endorsements from the presenters. 

So now the policy is in place and I must govern my online behavior by its contents.  That means whenever I talk about the Yellow Pages industry, I am required to explicitly disclose my connection:  I am the Information System Manager for Valley Yellow Pages.  I am expected to conduct myself with due order and propriety since my actions can reflect on the company.  I am expected to make it clear that what I write (like this) is my own opinion and not that of the company.  I cannot criticize the products and services of the company, our competitors or even the industry in general.  It remains to be seen if I get my hand slapped for violating this last one, as I favor honesty above all else.     

Nine and a half months after Valley Yellow Pages began the process of writing a Social Media Policy, it was finally released.  Why did it take longer to produce a 717 word document than it will take our departmental assistant to have her baby?    

It comes down to one word: Priorities.

When free speech, access to free information and the environment are at stake, then those topics take priority over minor internal matters.  I’m talking about the assault on these principles that are currently underway in the city of San Francisco.  I believe our company, along with the industry in general, is committed to those principles and to challenging what we see as an unconstitutional assault on one specific business sector.

In February of this year, the Board of Supervisors in San Francisco, headed by its president, David Chiu, sought to impose restrictions on the delivery of the Yellow Pages that amount to a de facto ban.  Phrased as an “opt in” proposal it sounds like it is offering choice while restricting waste.  Nothing could be further from the truth.

The Yellow Pages Industry is one that has made great strides in the last decades to minimize its impact to the environment, driven not by political mandates but by a desire to do the right thing.  Few people know that it is more expensive to print directories on mainly recycled paper, that toxin-free ink and glue costs more than the alternatives on the market, that environmental concerns often trump the bottom line.  Of course, the Yellow Pages are not the only paper advertising media delivered to households all over the country.  Junk mail is a far larger use of paper and ink, 15 times more based on the volume delivered to me a few years ago.  Yet junk mail, supported by a powerful Postal union, is left untouched.  “Saving the trees” is a straw man argument against the Yellow Pages industry.

So who benefits from a de facto ban on Yellow Pages in San Francisco?  The main benefactor will be other media types who are not discriminated against in this legislation.  The most prominent, and the most outspoken at the hearing in San Francisco, were the internet advertising and internet communications companies who would be the beneficiaries of those advertising dollars were a ban to be implemented.  I suppose I should not be surprised by this; David Chiu’s biography makes it clear his internet industry connections:

“Before joining the Board, David was a founder and Chief Operating Officer of Grassroots Enterprise, an online communications technology company.”   

In my next blog post, I will expound on the reason why online advertising is worse for the environment than Yellow Pages, worse for the consumer, worse for the advertiser and favors the big international corporations over the small businesses that are the heart of our communities.

Pausing in the garden

As detailed in previous posts, the decline of oil production necessitates demand reduction.  In other words, we have to use less to avoid the price spiking.  Whether the impetus is geological restraints or the dangers of speculators causing problems while lining their own pockets is hardly relevant to the challenges ahead, oil consumption goes down one way or another.  Reducing demand by reducing income (allowing unemployment to stay high or even increase) may be politically unacceptable to say out loud, but the statistics say it is happening already.  As much as individuals might want to blame others based on whether they follow a red elephant or a blue donkey, the fact of the matter is that they too are subject to the mindless tides of history and the unassailable forces of resource depletion.

Unemployment numbers are apparently stable.  That is to say, the number of people falling between the cracks, no longer seeking work because they have given up looking, falling off the 99-week unemployment numbers, etc, is roughly equal to those losing jobs.  Two years without a job. As one poster in a forum said a while ago, “After 99 weeks you are no longer unemployed, you are a stay –at-home parent.”  This brings up an interesting point and highlights how things have changed over the last century.

Whatever happened to the household economy?  So few people have heard about it these days. Yet for our parents’ and grandparents’ generations were intimately familiar with it.  It is recognition that a person staying at home and not entering the job market can make a major contribution to the household.

Since World War II, when “Rosie the Riveter” left the comfort of the kitchen and went out into the workplace while her husband battled on foreign soil, the idea that both adults in a home can work and still bring up a family has become common.  There is an impression today that a “stay-at-home” parent is not contributing that much.  Today that can be true.  A few decades ago it was a long way from the truth.

       

The household economy is more than getting kids to school, cleaning the house and then watching the shopping channel for most of the day.  It used to be normal for houses to have kitchen gardens.  Instead of a perfectly manicured lawn surrounded by pretty flowers and a picket fence, the average home of even a half-century ago had a garden that produced food and herbs for the family.  Even in the 1970’s, in my home town, almost the entire rear garden of our modest townhouse was dedicated to producing food.  Potatoes, carrots, string beans and peas were regular annual crops. Strawberries and raspberries grew in the corners.  I vividly remember, around the age of eight, helping my father put in a large solar greenhouse that allowed us to grow tomatoes and germinate the seeds a little earlier each year. 

Today most people outsource their food production.  I know that is not the normal term to use for going to a supermarket and picking up a bunch of microwaveable pre-processed packages of food, but essentially that is what we’ve done.  

Outsourcing began in your home and eventually spread to other areas of the economy.  Sure, there has always been some outsourcing of food production.  Not every home in history raised meat or even enough vegetables for everyone.  But the format of purchased food has changed significantly.  Potatoes that were once grown at home were replaced with store-bought potatoes from the local shop, which in turn spurred the economies of scale as supermarkets sent small grocers to the trash heap of history.  Real, fresh potatoes, with dirt still on them gave way to a myriad of pre-processed potatoes: tinned and peeled baby potatoes, washed bags of potatoes, frozen potatoes, pre-cut potatoes, bags of fries to be dropped into hot oil.  We even have fries with the oil impregnated into the surface so they will cook in the oven.  This outsourcing of the process of taking a vegetable out of the ground and making a meal out of it reached its apex with the powdered potato mix.  Just add boiling water, maybe some butter, and stir.

Growing food is not the only activity that used to be done inside the home but was outsourced after World War II.  Clothing is another item that became cheaper to buy than to make oneself.  I remember many of my sweaters and jumpers being knitted by my grandmother and later my mother. A bunch of ladies sitting and talking while knitting was not an uncommon sight.  Even blankets were often produced by hand.  Preserving food also used to be very common, with drying and canning a regular skill of previous generations.  Child care, a major contribution to the household that grandparents used to make – and loved doing so – has been replaced by nannies and day care centers.  Very few people repair items today. Instead, we throw those items away and replaced with the latest model from the shops.  

This outsourcing has grown the economy.  Having both adults in the typical household out in the workplace requires more money spent, which in turn increases the velocity of money moving through the economy.  With cheap oil, large agricultural businesses produce potatoes, corn, wheat -- any manner of foodstuffs -- far cheaper than at any time in history.  For every ten calories of oil energy used we can get one calorie of food delivered to our supermarket.

In recent years, with both people working and bringing in wages, the cost of food was not such an issue.  Food became cheap not because of economies of scale alone, but because of the advantages of petrochemical fertilizer and pest control.  In the same way as manufacturing jobs were undercut by factories in developing countries, the household economy was undercut by the subsidies of using oil in the production of food.  As money passed through the economy to pay for goods and services that used to be handled at home, the result was a growing economy, growing tax receipts and growing regulation. 

An entire bureaucracy has grown up around food, mainly geared to promoting large-scale farming controlled by corporations who can afford to make the correct level of campaign contributions necessary to ensure a free market for food is no longer tolerated. Under the guise of “health and safety” the FDA in the US is little more than a mercenary force hired out to the big agribusinesses to make sure nothing threatens the cartels of big producers.  Rules on making a living from producing food and selling that product are written in such a manner as to make cottage industries unprofitable.  Even when the rules are followed, small producers are harassed until they quit competing with the politically connected corporations.    It’s sold to the public as “health and safety” even while the majority of the food borne illnesses that afflict the US population each year come about from the unsavory conditions of giant factory farms.  Fines for breaking the rules are set high enough to put a small farm out of business yet low enough that it is cheaper for a factory farm to pay them than to make their processes sane and sanitary. 

With every activity outsourced from within the home to the marketplace, the economy grew as those services now required cash changing hands.   Without us realizing it, the world changed to one that required both adults in the typical household to be out working just to pay the bills.  For an economy based on debt to grow, more has to be produced each year.  Part of that growth is in the form of inflation.  Food and energy, two of the biggest costs of any household, are excluded from the CPI – the consumer Price Index – the standard measure of inflation.  Food prices in the UK went up 9.8% over the last year.  The US is seeing price increases two or three times the CPI.  So again this year, typical wages will not keep up with the price increases for necessities.  

As unemployment stays steady by virtue of a large number of people no longer counted among the unemployed, and as food prices rise, there is increasing pressure being put on the consumers.  Even without a so-called ‘credit crunch’ there would be a downward pressure on consumption, the heart of the American economy.

What does this have to do with Yellow Pages?  I’m glad you asked.  Yellow Pages do well when local communities do well.  When people are hurting, so are local businesses, and part of that pain is passed on to the service companies that help maintain a vibrant local marketplace. 

For the local business to return to a healthy turnover, people need more money in their pockets to spend.  Government and state debts make using tax cuts as a way of putting money in pockets very unlikely, the government being very reluctant to risk the inflation that would ensue.  Borrowers are, for the most part, reluctant to take on additional debt in the current economy, and credit is hard to come by as banks reduce their exposure to consumer bankruptcies.

A return to some of the principles of the household economy is one way forward for local communities.  Home gardening is one such aspect that could be of benefit both to the local people, the business community and the local Yellow Pages.  For a start, a community that can produce and preserve a portion of its own food is much more resilient to the vicissitudes of a disintegrating economy.  Stores typically have no more than three days worth of supplies in stock, and any number of disasters, natural or man-made, can interrupt deliveries.  People rarely keep long-term supplies of food and other essentials at home.  This is a concern for many people who follow the news in detail and are interested in the resiliency of our communities.  John Michael Greer’s “Green Wizards” project is a grass-roots movement to share knowledge of local gardening and to encourage food independence in the face of an uncertain future.

When I was a child, shopping was a weekly activity and in bad weather, bi-weekly.   The trip to the supermarket was for tinned items that were not grown locally, things such as fruit (like oranges and bananas) from exotic lands and those little luxuries we enjoyed, like tea and coffee.  Milk was delivered to the door each morning, along with yogurt or a variety of other dairy products.  We purchased meat from the local butcher’s shop, all locally raised and prepared. Entire carcasses of pigs and cows hung from hooks at the back of the shop, glimpsed though the open cold-room door from time to time.  Bread was baked locally - and cut while you waited.  Sound like a picture of the long-forgotten past?  This was a South Wales village in the 1980’s, struggling to cope with unemployment from mine closures and an official inflation rate over 15%.  These are skills that were commonly practiced in living memory even within the most affluent of western economies. 

Today, it’s unusual to go more than three days between visits to the supermarket.  As prices go up, the proportion of money going to grocery stores will increase at the expense of discretionary spending, further depressing the local economy.  A lot of that increased revenue on foodstuffs will flow to the big banks and hedge funds that have been speculating on the cost of commodities like corn and wheat, driving prices higher.

So the promotion of growing food at home can have multiple impacts on the local community.  Supermarkets and grocers would see a decline in trade as more people consume produce that is grown locally, but they are not exactly the biggest purchasers of Yellow Pages advertising.  By reducing the total cost of putting food on the table, people free up money for other discretionary spending. 

So how can Yellow Pages help?  Guides are a common feature of modern Yellow Pages that have a track record of delivering valid and valuable local information.  A local growing guide for fruits and vegetables could prove to be an excellent source of useful information for the would-be gardener. Since each directory is produced for a local community, the data and advice can easily be tailored to the local conditions.  Useful tips could include information like sunrise and sunset times; expected first and last frost; and estimated dates for sprouting, planting and harvesting. What grows well and at what time of the year?  How do you deal with local bugs?   How about a blank lined page where people can record planting days, estimated harvesting days, etc.?

Not all are blessed with a green thumb or a patch of land they can grow food on.  That opens up opportunities for Community Supported Agriculture, particularly those who have work-sharing arrangements, to advertise in the guide.  Gardening shops would also benefit from being able to purchase advertising in such a specialty section. Landscapers and gardeners who are willing to move outside the realm of lilies and lawns can develop a whole new line of income -- advising and even helping their clients grow some of their food.

A lot of people feel that the telephone book is an anachronism and serves no useful purpose.  Usage studies show this to be a false impression, promoted by online marketers who are competing for the advertising dollars.  Making the book more practical and useful for the consumer goes a long way to countering that image.  At the same time it creates opportunities for local business to advertise in a new guide section.  It would be nice, as I pause in my garden and think about the Yellow Pages, not to be thinking about what I can do to improve it but what it can do for me.   

A world of limits

As detailed recently, we are running up against hard limits in oil production and this has a huge potential impact on business. Declining incomes for the majority of American families have a cascading effect on consumption. With the uncertainty of the economy, many people are saving more. For most, saving is accomplished by paying down debt, not by storing up wealth for hard times. For many, it is too late; those hard times are here now.

By paying down their debt, people are destroying money. That may seem a strange idea to many, but money is created and destroyed by the stroke of a pen. When you buy something on credit, the money that pays for that item comes into existence at that time. It did not exist before. It is secured against your word that you will pay it back with interest. That promise to pay is treated as an asset, a lien against your future productivity. Like any asset, it can be and is traded. So when you pay down you debts that money you paid back no longer exists. Your cash cancels out your promise to pay.

With less money available, demand for goods drops. To attract what money is flowing through the economy, prices come down. We call this deflation. Many people think we are in a deflationary spiral. As jobs disappear, the money available to be spent decreases. People declare bankruptcy, which discharges all the debt they hold. This is good for the individual, but the income stream from those debts is lost to the banks. With the money gone, there is less money left to chase goods and services, the effect being that prices decline. Those still in business have to cut costs and this can impact all forms of advertising, even Yellow Pages.

Since contracts for Yellow Pages advertising are a long-term investment, paying off over the year that the book is next to people’s phones, the industry tends to be slower losing revenue in a recession but also slower coming back out. A business wanting to advertise in newspaper, direct mail, radio, television or even the internet can start and stop their programs at any time. Yellow pages run on an annual cycle, which makes it a good medium-term indication of business confidence. Want to know how well your local business community is doing? Look at the relative size between the books this year and the next ones that land on your door. Some will tell you that it’s because Yellow Pages is dead. Market research tells us otherwise, with 64% of respondents who were surveyed by telephone (rather than self-selecting on an internet poll) saying they used printed Yellow Pages only, and a further 19% turned to print when they gave up searching online for what they wanted to buy locally.

Money on a larger scale is produced at the stroke of a pen. Through the Federal Reserve (a private bank) and the U.S. Treasury, money is borrowed into existence. The details are beyond the scope of this post but suffice to say that billions of dollars are borrowed on behalf of the taxpayer. Currently the amount owed is in the trillions. Since 2007 we’ve been adding to it at a rate never before seen. Before 2007, the word trillion was most often heard during cheesy science fiction films. In the 1997 film “Austin Powers” the sum of “one hundred billion dollars” was the ludicrous sum Dr. Evil wanted from the world – or else he would destroy it. In 2007, Paulson went on his knees before Congress to beg them to give the banks seven times that or their actions would destroy the US.

The problem is not limited to the American consumer and the businesses that the American consumer keeps afloat via his or her spending. Both the UK and many of its European neighbors have run deficits for a long time. So what happens when the bubble pops for everyone? We are in the middle of finding out the answer to that right now. Since 2008, the central banks of various economies have been working together to try and manage the crisis. That accord is beginning to break down.

The problem changed this summer, when most countries chose to face the issue of their debt now and begin implementing austerity measures. Some countries (Portugal, Italy, Ireland, Greece, Spain – the PIIGS) have little choice. They are bound by the rules of their membership in the Euro zone. These moves by sovereign governments are not popular, as evidenced by the internal conflict with their citizens who are faced with paying the bill for what they see as the actions of a few bankers.

The UK implemented frugal measures voluntarily, using the mandate of the recent election to introduce cuts that will cause social problems for decades to come. In both cases, the cure is seen as better than the long-term consequence of a collapse of their currency.

The USA, however, chose audacity over austerity. For us, it is business as usual - until the rest of the world intervenes to cut our government's reckless addiction to credit. The American people are saving more and spending less, adopting personal measures of frugality. Many do so with no choice, unemployment bringing an end to their middle class lifestyle. Others still have jobs but find the difference between earning and spending can no longer be hidden with easy credit. For individuals, the bills are already coming due in the form of reduced credit lines and the end of the ATM-house.

The government, however, has no such problem at present. They have the keys to the vault, or rather, the printing press.

It will not be easy for the rest of the world to rein in the American government. For many years the American consumer was the beating heart of global trade. For many economies, the health of the USA was their health too. American imports have fueled the growth in many markets. A lot of the jobs people now do in poorer nations were once done in the US. We exported those jobs over the last few decades so that prices could fall slightly and profits could soar. In the theoretical world of economists, where growth hath no bounds, this is an effective model, with the profits from off-shoring jobs creating value for pension funds. Those pension funds keep the increasingly aging population of America spending long into retirement. Unfortunately, growth has limits and the models failed. Businesses collapsed and confidence in the economy plummeted.

The American consumer is no longer buying as much as a few years ago. When the jobs went abroad, so did their income. The money we send abroad to buy things we think we need continues to come back in one prevalent form: the purchase of US treasuries. In other words, we export one major product: debt.

We can do this because of the Dollar’s status as the reserve currency of the world. This will be challenged in the coming years; the BRIC nations (Brazil, Russia, India and China) are among those pushing for Special Drawing Rights – based on a basket of currencies, to be the new reserve currency.

When the Dollar loses the reserve currency status, then the voluntary adoption of austerity measures will no longer be necessary. America will compete equally with other countries around the world. Our other major export, hi-tech arms, will continue. Life in the US, however, will get more interesting.

It looked, for a while at least, like central banks around the world would try and inflate their currencies out of the debt trap. That option closed in June 2010 when the US resisted the idea of austerity at a G20 summit.

With the writing on the wall for the Dollar’s status, America has to become an exporting nation. The problem is our goods are too expensive compared to far eastern markets. To be competitive, the Dollar has to lose value against other currencies, although no government can afford to admit to doing so openly. So far efforts to do so are working to a small extent. Over the last few weeks the Dollar has lost ground to the commonly tracked Dollar index. It has also lost a lot of ground when compared to the value of Gold and Silver, which are pushing new highs.

Other countries are opposed to this. America is still a major importer of certain types of goods, some raw resources (oil being the best known) and luxury goods. To avoid becoming the dumping ground for goods coming out of the exporting countries, each nation is seeking to devalue their own currency. The ‘race to the bottom’ for wages has evolved into the ‘race to the bottom’ for currency value. It’s the public basis for the stance against China’s currency being pegged too low against the Dollar and the demand from Congress that it be revalued by around 20%.

The goals are not just to prop up exports and keep the level of imports down. Governments want to do this to maintain a positive trade balance, but they are not the only influences. There are large financial sharks in the pool, and they are hungry for profits. In order to encourage borrowing, the government is holding interest rates at close to zero. The big banks are more than happy to borrow money on these terms. All they need to do is ensure that they get a decent rate of return on that money. Those returns need to offset the declining value of the Dollar. In light of this, how does the tension between American and Chinese currency come in? Borrowing billions from the Fed and buying China’s currency is potentially lucrative. Put simply, if the Yuan is worth $ 1.00 today and next week, thanks to currency movements, it is worth $ 1.20, the banks make a huge windfall. When I was in Europe last June, one Euro would buy $ 1.19. Today it will buy $ 1.39. If I’d borrowed money at 0.25% four months ago and put it into Euros, I’d be laughing all the way to the bank. Oh wait, I would be a bank.

Why lend money to Americans who are saving instead of borrowing, when you can park the money in a different currency and see it grow in relative value to the Dollar?

Just like other countries oppose being the dumping ground for export goods, other nations do not want to be the dumping ground for dollars. Speculators, who cannot get a good return on investments when the interest rates are close to zero in the US, want to invest those dollars elsewhere. As they flood the marketplaces in other countries, they create inflation. This is good for the investors, who reap the benefits of the economy that overheats and inflates. Speculation is like a parasite that attaches to the host and pumps in an agent that causes inflammation, then draws out vital fluids. The end result can be seen in the US today.

This process makes Americans poorer in comparison to the citizens of other developed nations – at least compared to a year ago. Americans are still better off by far in respect to their access to resources, food, clean water and many other essentials. But they can afford far fewer luxury items. In terms of paper wealth, a foreign millionaire has seen his riches rise in comparison to US millionaires. A dollar buys less pounds, yen or yuan than a year ago. For American millionaires to keep up with the foreign Joneses, their net worth -- measured in dollars -- needs to rise.

Income is a zero-sum gain in the face of the production limits of oil. For one to become significantly better off, others have to reduce their standard of living. This is well underway in the US with continuing unemployment, cuts in welfare spending and inflation of necessities while non-essentials are undergoing a deflationary spiral.

High unemployment drives down wage levels, which translate to higher profits for businesses and higher dividends to shareholders. However, it is not a long-term solution since employers are also consumers in the marketplace and overall sales of everything but the most essential supplies will be impacted. With the American consumer impoverished then those goods that were exported to the US must find a new home.

So how will this impact Yellow Pages? An increasingly polarized population and a disappearing middle class will mean two disparate audiences, each with different priorities and spending patterns. For those who get the end of the stick with the sponge on it, the internet will again become a luxury. People who do not need a computer at home will cut costs. Internet cafés, common in Europe, may become a feature of communities. A lot more manufacturing will need to be done in the US if Americans are to afford goods. Many products will no longer be cheaper to import. The printed Yellow Pages will still be delivered for free to everyone who chooses not to opt out.

On the other end of the spectrum, those who do well in the coming collapse will see their personal fortunes soar in everything except comparative value to the rich in other countries. The import market will increasingly target the very rich, who will expect a level of personal service. With energy being less of an issue for those with plenty of money, online advertising may target this market, with elements of personalization and security becoming key factors in the decision on which internet search product to use.