Yellow Pages Advertising During Regulation

by Colin Berkshire

The closest thing to Google in the 1960s and 1970s was the phone book. You could look up any topic and get a listing of those who provided services. Need a plumber? The Yellow Pages book was your go-to. And, the Yellow Pages went out of its way to assist you. So if you looked up an incorrect term such as “Divorce” it would advise you to look up “Attorneys, Divorce” and even give you the page number to turn to.

Now that I think about it, I don’t know the last time I saw or touched a Yellow Pages book. It’s been a decade or more.

So how was advertising under the regulated era of the Yellow Pages and monopoly Bell System?

It surprises most to learn that the Yellow Pages was a wholly Unregulated part of the Bell System. The Yellow Pages reps worked side-by-side with the monopoly marketing people, and they used the same systems and sometimes even worked for the same bosses. But they were very different.

For one thing, they got commissions. Nobody else in Bell System marketing got commissions or bonuses.

For another thing, you could negotiate with them on price. They would never bring it up, but they had some latitude to strike deals. So they were very different people in that sales group. They were aggressive and out to take as much money as possible from the customer. (Our job in the monopoly side was to provide the best possible fit with our services.) Sometimes customers wouldn’t know they were being up-sold and that the salesman didn’t care about anything after the contract was signed.

Yellow Pages ads were also expensive. I mean, they were very, very, very expensive for the time. Every business got a free listing in small type in the Yellow Pages. But anything more cost extra. If you wanted your name to be in bold print it would be just $20 (per month.) If you wanted a ½” tall ad with some sales words (no artwork) it would be $200 a month. If you wanted a full page ad with artwork it could be $20,000 a month or more. I have heard some full-age ads in some cities could top $100,000 a month.

The phone company did an interesting thing with display ads. They would NOT be listed alphabetically. The biggest ads would be listed first, and so the smaller ads would always be towards the back, all clustered and cluttered together.

And, while you would sign a 12-month contract for advertising, there was a provision that if the phone book life lasted greater than 12 months, you would pay for the extra months. A 14 month real-life of phone books was pretty typical.

If you moved and your phone number was intercepted (“The number you dialed, 2-0-6-5-5-5-1-2-1-2 has been changed. The new number is 2-1-2-5-5-5-1-2-1-2”) then you still had to pay for your ad. The only way out of a contract was to give up the number that was advertised.

In the early 1980s some entrepreneurs argued that the Yellow Pages was not regulated, and the Yellow Pages groups had an unfair benefit of having the names and address of every business customer and all of those basic listings to start the book with. They argued they should be allowed to compete on a level playing field.

At first the phone companies fought Yellow Pages competition. Then, they got smart. They charged the independent Yellow Pages publishers a fee of about $1 (and later it would be increasingly large amounts) for every name provided. They charged their own Yellow Pages division the same price…it was money out of one pocket and into the other. Eventually, those fees would be so great that the phone company’s Yellow Pages groups would hardly be profitable and competition had all but vanished.

But when I look at advertising on Google today and Yellow Pages advertising in the 1970s, I see one absolute pattern: Advertising is very very expensive. It’s the nature of advertising to cost right up to the point to where it is no longer cost effective. The seller of ads has every reason to raise the prices up to where they are minimally profitable.

Google does this “marginal value” through their bidding and auction process. But Yellow Pages companies did the same thing through adjusting the rates in each category and by pricing their product so that few industries could afford the largest display ads.

So things have changed. But they really haven’t.