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Yellow Media to build websites for smaller clients

Yellow Media chief executive officer Marc Tellier

Graham Hughes

Small and medium-sized businesses unhappy with the websites they've cobbled together on their own will soon have a new resource for building an online presence: the same company that has published their phone book ads for years.

Yellow Media , which recently launched an online advertising business for larger national advertisers, will start building websites for its smaller local clients in the new year, chief executive officer Marc Tellier said in an interview on Wednesday.

It's part of an overall strategy to help the Montreal-based company move beyond the Yellow Pages print product. Online now accounts for 27 per cent of Yellow Media's revenue.

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"We are in transformation," Mr. Tellier said.

Yellow Media has already built a few hundred websites for higher-end clients this year, and he said there is an opportunity to extend that business to its core clientele: local advertisers.

"Artistic value doesn't rank very high - doesn't rank anywhere on the Google algorithm," he said, adding that the company sees a need that the Web giant doesn't fill. "What's missing in our product portfolio now is websites."

The company reported third-quarter earnings of $74.7-million or 15 cents a share on Wednesday, reversing a year-ago loss of $168.5-million or 33 cents.

Revenue was up nearly 5 per cent in the three months ended Sept. 30, to $428.6-million.

With online contributing a substantial share of its revenue, the question is whether Yellow Media can continue that growth on the Web and on other digital platforms such as mobile phones. Management expects mobile to account for 20 per cent of online traffic by the end of this year.

However, that traffic has yet to make money for the company; its mobile apps are free and do not carry ads.

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That could change, however, as Yellow Media tries to expand its presence on smart phones.

Last month, it announced a deal with Telus Corp. to preload its Yellow Pages app on BlackBerry phones activated by Telus customers. Mr. Tellier said the company is in talks with other wireless carriers on similar deals. He added that if mobile grows next year to 30 to 40 per cent of its online traffic, Yellow Media would consider selling ads on the mobile platform.

But analysts are cautious, noting that as the mobile advertising market grows, it will also become more crowded. For a directory advertising company such as Yellow Media, offering mobile exposure to its clients may simply be the cost of doing business.

"For now, it's value-added for being a Yellow Pages customer in print or online," Mr. Tellier said. The bundling allows Yellow Media sales staff to offer clients a way to reach customers in the mobile space, to compensate for any erosion on the print side, he said.

"One of our challenges clearly is, and will continue to be, communicating that our strategy will allow us to extend our market leadership in our traditional market to these new digital markets."

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