Ricardo's Business

SBS Presenter Ricardo Goncalves with the latest in finance.

Waking up to its Sensis

21 February 2013, 15:54 PM | Source: Ricardo Goncalves, SBS

As I was looking through old Telstra ASX releases, I found a headline from the mid-2000's which read "Sensis exceeds FY04 target".

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In those days, Sensis, a Telstra subsidiary which operates the Yellow and White Pages, was flourishing.
 
I had a few mates that worked in the company, mostly in the call centre, and they told me stories of how much fun they had and the perks associated with the job.
 
It seemed like a social and fun place to work. So much so, even I thought about potential opportunities, until I realised I loved telling stories, and the camera a bit too much.
 
Boss, Bruce Akhurst at the time, was always more than happy to give me interviews from the company's modern and central Melbourne head office when I worked for Sky News.
 
He would tell me of the plans to move the company from a traditional print business to online.
 
In 2004, it bought the Trading Post which increased total advertising market share to around 15 per cent from 13 per cent while online advertising revenue share hit 26 per cent.
 
But did that move take too long, or has the company suffered the same fate as many others who have seen their customers move away from print to digital?
 
Sensis' main product is the Yellow Pages.
 
In 2006, revenues for the thick classified book was around $1.2bn. It peaked in 2009 at $1.3bn. Last year, it fell to $861m.
 
Similarly, total income at Sensis fell from $2.25bn in 2009 to $1.47bn in 2012.
 
Earlier this month, Telstra revealed earnings before interest fell for the half year at Sensis, fell 70 per cent to $28m.
 
Overall digital media revenue declined by 7 per cent, while revenue at Sensis was down 12.5 per cent.
 
There was one bright spot in the report, with digital revenue growth at 11 per cent, an improvement from 2.5 per cent a year ago.
 
But it’s obvious growth at the company has stalled, so much so, that today it confirmed around 650 jobs will be slashed as it undergoes a major restructure that will accelerate its transition to a digital media business.
 
In a statement, its Managing Director, John Allan "Until now we have been operating with an out-dated print-based model - this is no longer sustainable for us. As we have made clear in the past, we will continue to produce Yellow and White Pages books to meet the needs of customers and advertisers who rely on the printed directories, but our future is online and mobile where the vast majority of search and directory business takes place".
 
Sensis notes that more than 60 per cent  of its customers are now advertising online and in mobile apps while its White and Yellow Pages digital services received 18.4m visits in January 2013.
 
While its crowing about the move to digital, as a consumer I can't remember ever using the Yellow Pages online search tool, have you? I tend to go straight to Google.
 
Google in comparison, pulled in 10 times more revenue in the last three months of last year, than Sensis did in all of 2012.
 
Net profit almost hit $3bn in the December quarter.
 
Now, Sensis is playing catch up by establishing a new digital Customer Management Centre, improved IT capabilities and is restructuring its Yellow Pages sales operating model to become more profitable.
 
It will be interesting to see how Sensis develops as a digital company, and what kind of marketing strategy it will use to promote its brand and the strategies it will develop to try and tackle global competitors like Google.
 
More sock hand puppets perhaps?
 
1234.

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Outsourcing is NOT the future

Outsourced - from Melbourne, 2 months ago

What Sensis, and all media outlets, are failing to mention within these articles about the decline of Sensis and their "new" model to transform to a digital structure is that of those 650 jobs, 400 of them are their digital designers and production staff. These roles are about to be outsourced to India and the Philippines, so expect to see Sensis profit decline even further as their lose the loyalty of their customer base because of this decision.

Justice has prevailed

Justine - from Melbourne, 3 months ago

What the current CEO neglected to add is the total mismanagement of this company by the previous CEO and his cronies . Over 300 million dollars was spent on the failed igen system which was responsible for driving our loyal customers away. Incorrect advertisements, requests for changes to the content of their online advertising taking months on end to be auctioned, ongoing billing errors, and this was only the tip of the Iceberg. No wonder Sensis has sailed into the abyss !

Indeed...

CrazyGray - from Melbourne, 3 months ago

...I asked a simliar question of several people months back, i.e., "When was the last time you reached for the yellow / white pages?" (and NOT just to prop up a monitor or jam open a door!) The answers were all the same "uhm...can't remember". It's not a surprise to see profits from these out-dated sources of information dying off, like-wise with going to the on-line version - why bother? Google is faster and more accurate. Expect to see the whole lot shut-down in 3-4 years, I'd say.