YELLOW PAGES SHOPS BRACE FOR EXPECTED BOOM IN DIRECTORIES; DEREGULATION SHOULD HELP SPUR NEW EXPANSION;ONLINE VERSIONS ARE IMPENDING

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Yellow Pages ad agencies foresee new growth in the $10 billion directory advertising market as a result of the telecommunications bill signed into law by President Clinton.

With national long-distance carriers gearing up to compete in the local phone market, agency executives anticipate parallel competition in directory publishing.

"There are going to be many more directories on the street," said John Joseph, president of Ketchum Directory Advertising, Chicago.

Need for Media Planning

"A national advertiser really finds value in media planning," said Ed Schneck, exec VP, Wahlstrom & Co., Stamford, Conn., a division of True North Communications. "With more than 6,000 books out there already, there's a lot of complexity. With the changes, there's going to be more complexity."

The imminent arrival of online directories will further add to that role, agency executives say. Several Yellow Pages publishers are developing models; Mr. Joseph predicts at least one of them will be online in another 60 to 90 days.

The looming proliferation of directories creates as big a challenge as an opportunity, Mr. Joseph cautions.

"Our challenge is to continue to prove the value of our product," he said.

Prices Could Drop

The ad world knows that directories carry high margins, and increased competition could lead to reduced prices, he said.

In the past, Yellow Pages ad pricing has been relatively inelastic, meaning that volume growth has translated into sales growth. But the new era of competition could change that.

TMP Worldwide, New York, is the largest directory agency, with about a third of the U.S. market. Only about 15% of the $10 billion in annual directory billings gets placed through agencies.

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