Breaking down the silos (if he can)
Telecommunications industry analyst and Buddecom founder Paul Budde says the biggest problem Sensis faces is that it is a paper-based legacy business. “If you’re an internet-based publisher, you operate typically on a tenth of the cost of a paper-based company. If you don’t have that legacy, you can be far more flexible in your business. What Sensis is trying to do means cannibalising their printed product.”
Given ads in print cost far more than ads online, it’s difficult for Sensis to move from one to the other without radically rethinking how it operates.
One way to diminish costs is to break down the siloed organisations that make up Telstra Media (Foxtel, Sensis, Bigpond etc). “You could start fusing the companies into one big digital media company.”
However, Allan could be stymied in any attempts to do this. Budde claims Allan’s new boss, Telstra’s newly appointed digital media tsar Rick Ellis, doesn’t intend to integrate the businesses.
“This shows Telstra isn’t willing to transform that whole business…They’re trying to protect their incumbency as much as possible. That’s why in the past decade, they’ve missed the boat, and if you ask me it’s a recipe for disaster.”
Asked if Allan could address this, Budde is pessimistic.
“His boss has clearly indicated how it’s going to be. He believes there’ll be a revival of Sensis… [Allan] doesn’t have a lot of room to move.”
Capitalising on what remains
Telecommunications writer Paul Wallbank says Sensis still has “a 1970s business model” where salespeople go out and sell Yellow Pages advertising. “They should have done away with that 10 years ago.”
He thinks the key challenge for Allan is to make the most of what remains of the business.
“He’ll need to execute on what remains of their advantages and assets – things like [online recommendation service] Yelp, [events finder] CitySearch, and what remains of the directories business.”
“Sensis have completely failed to execute on the advantages they had in the marketplace in the last 20 years. They had an almost unstoppable position as the primary small business marketing outlet, and they squandered that with the rise of Google and the web,” Wallbank says.
Wallbank isn’t sure the new digital strategy goes far enough. ‘They’re still charging a lot for things other people are providing cheaper.”
He adds that its market share in their legacy print business will inevitably diminish.
“The businesses still advertising with Yellow Pages are older businesses with older business models. It’s a terminally declining market.”
Can Sensis be saved?
Wallbank says the long-term survival of Sensis will depend on how good Allan is. “My own personal feeling is it’s probably beyond the point of no return.”
Budde is similarly critical.
“I think it has been a disaster. Telstra has left it far too late to make the move and now they have great difficulties reconciling the old business they would like to protect as it’s very profitable.”
“To move into digital media, you have to cannibalise your own profits and break down your silos.
“My opinion is that it will further decline. With cost-cutting and the like it may still remain profitable for a while, but you’re clearly seeing an overall decline until it peters out in five or 10 years’ time.
“There still is some opportunity to turn it around… but the longer they wait the more difficult it will be.”
Myriam Robin is a journalist with LeadingCompany. You can follow her on Twitter at @myriamrobin This article first appeared on Leading Company.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
