NEW YORK (AP) — Dex One Corp. and SuperMedia Inc., two Yellow Pages publishers, on Tuesday said they agreed to merge, with the goal of saving money in a dwindling business.
Shareholders in the companies will exchange their shares for new shares in a new company, Dex Media.
Based on the closing stock prices of Dex One and SuperMedia on Monday, the new company would be worth $100 million. But shares of both existing companies jumped in heavy Tuesday morning trading, putting the total value of the new company at about $115 million.
Shares of Dex One added 48 cents, or 39 percent, to $1.81, while SuperMedia shares gained $1.27, or 49 percent, to $3.85.
Dex One shareholders will own 60 percent of the new company and SuperMedia shareholders will own 40 percent, proportions that reflect the relative values of the companies as of Monday’s close.
The companies said Dex Media should be able to cut annual costs by $150 million to $175 million by 2015, partly by job cuts. The two companies employ a combined 5,800 people.
The deal is expected to close in the fourth quarter of this year.
The CEO of SuperMedia, Peter McDonald, will be CEO of the combined company. Alan Schultz, chairman of Dex One’s board, will chair the board of the combined company.
Alfred Mockett, Dex One’s CEO, will step down when the deal closes.
Both companies filed for Chapter 11 bankruptcy protection in 2009, as consumers shifted from using printed directories to doing online searches. They exited bankruptcy in 2010. Both sell listings in online directories as well, but have been unable to compensate fully for the drop in print revenue.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
(a) On August 23, 2011, Dex One Corporation (DEXO) (the “Company”) was notified by the New York Stock Exchange (the “NYSE”) that the Company had fallen below one of the NYSE’s continued listing standards. Rule 802.01B(III)(ii) of the NYSE Listed Company Manual requires that the Company’s average total market capitalization over a consecutive 30 trading-day period equal or exceed $100 million.
Under applicable NYSE rules, the Company has 10 days from receipt of the notice to inform the NYSE that it intends to cure the deficiency and 45 days from the receipt of the notice to submit a plan advising the NYSE of definitive action the Company proposes to take that would bring it into compliance with Rule 802.01B(III)(ii) within 18 months of receipt of the notice. The Company notified the NYSE that it intends to cure the deficiency within the prescribed timeframe.
As required under NYSE rules, the Company issued a Press Release on August 26, 2011, announcing that it had received the notice of non-compliance and that the Company intends to cure the deficiency within the prescribed timeframe. A copy of this press release is attached hereto as Exhibit 99.1 to this Form 8-K.
Item 9.01. Financial Statements and Exhibits.
Have you considered buying a bucket of clicks from Dex One for your online marketing? If you have, or if you are currently buying “Clicks programs” from Dex, you might want to read this entire article.
Most yellow pages companies, Dex included, sign the business to a year contract and generally never talk about the program again until it’s time to renew. The customer has an idea of the search engine(s) that they could be marketed on, and a number of guaranteed clicks, but that is about the limits. You can see, from their own site, they are intentionally vague, and they don’t even guarantee that you will even appear up on Google, Yahoo, or Bing.
Link to dex : http://www.dexoneadvertising.com/our_products/top_local_search_sites
The one thing people don’t understand about PPC programs is cost. Search Engine Marketing is a true form of capitalism, every keyword is acquired through a bid process. Dex doesn’t receive discounts from the engines that are not available to everyone through quality score incentives. Dex clicks programs are sold on tier 1 search engines, but fills their clicks programs from other sources as well. The customer pays the same rate regardless if the click comes from Google, or is self fulfilled from dexknows.com, and not all clicks convert at the same rate. Some simple research through Google’s adwords tool on your industry, and a calculator will quickly provide you the simple truth…The information that doesn’t add up.
The reason it doesn’t add up is because, if all clicks were filled from tier 1 engines only, Dex couldn’t set the rate for the packages so low and still make any money. They fill their programs from other sources that charge, as low as 10 cents a click, and Dex in turn sells the clicks at a higher rate. It’s a great strategy, except that 10 cent off topic clicks don’t convert in to customers at the same rate as a search result generated clicks from a tier 1 engine. The best way to describe the difference between the two is the difference between an active buyer (tier 1 engine) and someone that is doing research (tier 2 or 3 source). Sure you are getting the traffic to tour digital storefront but lots are not buyers.
The reporting leaves the customer missing the major information on the performance such as:
This morning I stumbled across the best demonstration of what Online Marketing Looks like to DEX, you should click on the image below and pay attention to the right (paid) side of the search results page.
Every ad on the right side of the page is a DEX clicks ad. If you notice that every ad is similar, with the only element that changes being the phone number, address, and web address. Every Dex rep will talk with you about the importance of the R.A.S.C.I.L. factors in advertising.
Yet every ad in the results page has the exact same attention line, not much sets one advertiser apart from the others. Dex has always been very successful in setting customers apart from each other in print media, but the search engine result page above shows that running an online media program is not their specialty.
Look at the performance of their own website, below you can see overall global traffic to dexknows.com since 2007, and dexonline.com since 2004 according to Google Trends. Dex made a shift in the URL in 2007, dexonline.com will still get you to dexknows.com but you can see that the traffic to their own site has fallen bellow levels of 2004.
Now that we have a basic understanding of the data above, lets talk about how that traffic is currently generated. Dex uses a landing page, (digital storefronts) for all “Clicks” program they run, and you, the customer, don’t even get to use your website. All “Digital Storefronts” are retained on the dexknows.com domain, so all traffic through a “Clicks” program credits the dexknows.com domain with the traffic.
With this process, dexknows.com gets to take “Traffic Credit” for every “Clicks” program they run, and the number you see in the graph above is achieved on the back of every paying “Clicks” customer they have. The concern then becomes, if Dex allowed their “clicks” programs to drive traffic to the customers real website, and lost “Traffic Credit” for all those campaigns…what would the trends number look like?
With the economic climate that we are currently in, and the advertising budgets of small & medium sized companies being tightened, making the most out of our advertising dollars should be paramount in your decision making process. The intent of this article is provide a business owner with enough information about the other topics that should be considered when making this purchase. Not all online advertising programs are created equally.
If the yellow pages industry didn’t already have enough on their plate because of diminished usage and advertisers abandoning ship. Now that Seattle has passed legislation that impacts directory publishers, San Francisco has followed in suite, but with mush worse implications to the publishers.
The first shot in the war against unwanted phone books was fired in Seattle. The city council passed a law in November that forced phone-book publishers like Dex One to apply for a permit and pay 14 cents per copy in order dump yellow pages on people’s doorsteps.
Now, after court battles have been fought and won by the city of Seattle, San Francisco has decided that this brand of resident empowerment is right up its alley. So it’s replicating the law–but with more teeth.
As Good Cities reports, the city’s board of supervisors (there is no city council in San Francisco) preliminarily passed an ordinance that severely cracks down on phone-book deliveries.
A federal judge has rejected an attempt to block Seattle’s new yellow pages opt-out program, after the city passed one of the toughest laws in the country targeting yellow pages, and phone book companies fought back.
Seattle unveiled its opt-out registry last week. The same day, Dex One – the city’s largest yellow pages distributor – filed a second motion to temporarily halt the program as part of an ongoing lawsuit. The complaint alleges Seattle’s ordinance violates the First Amendment.
On Sunday, U.S. District Court Judge James Robart rejected the motions. Robart wrote:
Because Plaintiffs have failed to demonstrate a likelihood of success on the merits of their First Amendment claim, because any First Amendment impact on the public is limited, and because the City and its residents have competing public interests in privacy and waste reduction, the court finds the Plaintiffs have failed to demonstrate that a preliminary injunction is in the public interest.”
It seems that the Yellow Pages Association is following in the footsteps of its members, Dex One (formally Dex Media, Qwest Dex Uswest Dex), and SuperMedia (formally Idearc, Verizon). According to a recent SearchEngineLand.com publication, the Yellow Pages Association has changed its name to the “Local Search Association.” The name change reflects the transformation of yellow pages usage from publishers of primarily print directories to multi-platform providers of leads, calls and clicks to local businesses.
With the decreased usage of the yellow pages year over year, the transformation was inevitable. The directional media publishers have realized that the need for a broader product suite is mandatory, and their offerings thus far have been less than enough to keep up with the growing gap in lost print revenues.
With this in mind, the organization is also reaching out to new constituencies that surround the yellow pages and local search industries. New members of the expanded trade association include CityGrid, MerchEngines, Kudzu, Telnic Limited, Kenshoo, Thrive Analytics, deCarta, dotMobi, and VendAsta Technologies, as reported by Searchengineland.com.
Local publishers in the Denver Metro area have implemented pay per click (PPC) products into their offerings, but haven’t backed it with any real measurable technology. Most campaigns that I have seen don’t use the customer’s native website, and some even use a landing page built into the vendor’s site i.e. Dex One. They also seem to be using the “Clicks” money on a tier structure in that clicks fulfilled off the publishers yellow pages site are being charged at the same rate or higher than those filled by Google.
If you look at the overall site usage (above), you can see that online yellow pages usage has returned to the levels of 2004 or below. With the decrease of organically generated traffic to the online yellow pages sites necessitating the purchase of paid inclusion in SERPs, which has resulted in higher costs to their customers, coupled with lower usage online as well as offline, making the foreseeable future of the yellow page publishers very bleak.
Spyfu.com Estimated daily spend report
The Yellow Pages Association is certainly taking a more proactive approach in changing the image of the association, rather than trying to add product offerings. I have always been a big believer in do what you do best. Dex (in Denver) is unquestionably the thousand pound gorilla in the print yellow pages space, and still has the lion’s share of usage when it comes to print, but they are failing to keep up with all their competitors in the local internet space.
I will continue to monitor the trends reports and keep you apprised of the situation.
