SENSIS has issued a stark warning it faces three years of falling revenues before a strategy unveiled yesterday can stop the haemorrhage. The Telstra subsidiary predicted the new $350 million digital marketing hub aimed at small and medium-sized businesses would transform the company from a print-focused operation into an online powerhouse that will reignite revenue growth.
The group said that after three years, digital earnings from its products, which includes the Yellow Pages, will have overtaken print.
Sensis chief executive Bruce Akhurst said he expected revenue to slip about 5 per cent this year while earnings before tax would suffer a decline of almost 10 per cent.
Similar slumps would be reported in 2012 and 2013 before growth returned.
Stripping 5 per cent from Sensis’s revenue last year would see a decline of $10 million to about $205 million.
Sensis contributes to about 10 per cent of Telstra’s earnings.
Mr Akhurst said the strategy “creates a new place to play” for advertisers to consolidate and measure marketing efforts and for users to find information more efficiently across a range of platforms from print through to the iPad and websites.
Dubbed Marketing Made Easy, the strategy was labelled by Sensis chief operating officer Gerry Sutton as a “kick-ass solution” for advertisers.
Mr Akhurst said Sensis was a “digital-led business” that was “uniquely positioned to drive advertiser return on investment” and source long-term profit from digital opportunities. .
However, industry analysts were less optimistic that the strategy, which has cost $350 million to design and implement, would reap the rewards Sensis predicts.
“This is a very sorry tale about a business that used to be promoted by the company as a star, capable of producing compound growth at around 7 per cent a year in the long term,” BBY analyst Mark McDonnell said.
“And today we are told that this is a business going backwards, with considerably more effort being put into providing more product, yet resulting in a reduction in earnings.”
He questioned whether Sensis would be able to confront its “structural decline”.
Asked at the briefing if the business was preparing to be spun-off, Mr Akhurst said he could not comment on a matter that would be for the parent company, Telstra, to decide.
Telstra shares yesterday added 2c to finish at $2.76.
>>Sensis confronts the digital dilemma
55 per cent of businesses with the internet have a lack of expertise or knowledge
62 per cent of advertisers don’t measure return on investment figures
>>Of them:
32 per cent say it is too time consuming
17 per cent don’t know how
7 per cent say it is too hard or there’s no accurate way
>>And among small businesses:
85 per cent of SMEs don’t use social media
Only 17 per cent of SMEs have a digital strategyOlga Galacho – March 30, 2011
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3 comments
A group of us, all retired CEOs, do an analysis of a company once a year for fun. In 2010 we looked at Sensis. Through a friend of a friend we gained access to a couple of Sensis employees whom we came to regard as trustworthy confidants. They told a sorry story of numbers-obsessed middle managers who had no idea of staff welfare. It was all about delivery of figures, bugger the poor software the road representatives were burdened with. Feedback from angry or disillusioned customers was ignored, the reps being told to ‘try harder’. Staff meetings were harangued by the need to keep the numbers up. And on it went. Our examination of the company’s performance gave the strong impression of an organisation that had lost its way. Maybe going digital (which it has done already) will be the answer. Senior management, however, needs a bomb under it.johnb of victoria Posted at 7:05 AM March 30, 2011
Sensis are senseless. I have not opened a yellow pages nor white pages book in over 10 years. I have not used the online version in over 5 years, I just google everything I am looking for. The whereis cant compete with google maps on my pc and on my iphone. they have always tried to convince the small business owner that they need sensis products to grow their business. but what they need to do is work out why consumers are not using their products. My company dropped its yellowpages ad put more effort into getting better google results and business is growing. sensis=senselessjames of brighton east Posted at 6:55 AM March 30, 2011
Wow, are that many businesses still paying to print ads in a book that I drop in the recycling bin the day it arrives?Tim of Melbourne Posted at 12:50 AM March 30, 2011
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heraldsun.com.au/business/strategy-faces-lean-start-sensis-digital-d-day/story-e6frfh4f-1226030351800
james of brighton, you may find that many of your search results through Google are now actually coming from the Yellow Pages due to the recent agreements in place between the two companies.
Perhaps it’s just a first step of Sensis being bought out by Google? They had the Google CEO talking with them last Friday.
if google did that , they would corrupt the very basis of their value….being able to find useful sites and information. YP results are just listings and people will stop using google, if all it does it brings up YP info…..god help Google if they do that. They should not inherit Sensis problems
As an ex Sensis employee of some 14 years I feel that the business went backwards the day that Telstra installed its own management team. Comments such as “Just fax the paperwork through for signature” on a $50,000-00 advertising contract was a sign to me that customer service had hit new lows. these comments came from the then CEO.