A SuperPrediction on the Future of SuperMedia and Dex One – Merger?

update on the Merger click below:

SuperMedia merges with Dex One

According to Media Post, for the first time in history digital ad revenues is set to top print in 2010.

The long-predicted tipping point has arrived, with total U.S. digital advertising and marketing revenues set to surpass print revenues in 2010, according to a new study from Outsell, a consulting and research group serving the information industry.

This prediction, based on Outsell’s annual survey of over 1,000 U.S. advertisers and marketers in December 2009, heralds one of the most important symbolic milestones in the history of online advertising.

Altogether, U.S. advertisers and marketers plan to spend $368 billion in 2010, Outsell found — up 1.2% from about $364 billion in 2009. Within the 2010 figure, 32.5% ($119.6 billion) will go to digital, versus 30.3% ($111.5 billion) for print.

Savvy investors might have noticed that SuperMedia is now reporting all revenues lumped together for the companies print and electronic product., something that competitors are not doing. This is believed to be a plan by CEO Scott Klein to cover-up the fact that electronic revenues are not growing as they believed they would and the company no longer has a shining star among the 20%+ year over year declines in total revenues. In my opinion it is a sinking ship destined to end up at the bottom of the sea. Online revenue growth was previously something the company wanted to show off, so now they are only reporting overall revenues to Wall Street investors so they cannot determine that their .com product offering (or lackthereof) is suffering. Do you think they are hiding something? As an insider to both SuperMedia and Local Search Marketing, I can attest that this rumor is most likely true.

All Hands Abandon Ship.......

I am going to go out on a limb and predict folks start jumping ship…. I wonder if the CEO will be the last guy on board? Likely not! He and “his executive team” are probably down in the treasury looking for every last dime they can pocket before the big sell-off.

-Rod Diedendorf, the next in line behind Briggs Ferguson (former President of Internet who left the company recently) SuperMedia’s other senior internet guy, the companies VP of Internet Consumer Products is going to leave the company soon.

– New registrations for the SuperGuarantee Program are not what the company expected. It is very low and these numbers are being ignored by a few senior management folks. I am sure that SuperMedia CEO Scott Klein knows nothing about this.

– The attempt to convert the Super Guarantee shield into the BBB logo are also failing. Contrary to the companies propaganda and lip service, they are not slowing the revenue decline, partially due to the decline of traditional media amongst a shift to digital.

– The offering of “Integrated Advertising Solutions” to local SMBs is challenging since SuperMedia’s direct mail products are overpriced, print is rapidly declining with mobile search and search growth, internet products are marked up and resold from Google’s huge volume of traffic, and web-based products are worst in class. The only positive offering is the fact that the company will extend credit to anyone regardless of the clients ability to handle the calls or pay the bills. Sales results are like counting chickens before they hatch. While competitors like AT&T do not report earnings or operate with such trickery, Idearc/SuperMedia has been doing this for YEARS!

– Paulson, the hedge fund that purchased 17+% of SuperMedia, is working on a deal with Dex One, the post bankrupt R.H. Donnelley, to purchase SuperMedia and considering that the companies executives pocketed much of the company’s stock they are set to walk away from this with millions and the company will be gone.

– SuperMedia has hired yet another consulting group, likely Alexander Proudfoot, to strategize for sales improvements or due diligence. I am sure they are looking at the business to find the best means of integrating Dex One and Super Media.

Does the potential merger with Dex One mean that the stock is a good buy, likely not. In my opinion traditional media companies like SuperMedia have a horrible product offering compared to leading edge local search companies like Yelp and even Briggs Ferguson’s former company CitySearch.

I remember when CEO Scott Klein came to the Texas local sales offices to do a “State of the Business” address. Apparently he had little clue as to the true state of the business after taking the companies helm. Instead of relieving the concerns of tenured employees (like myself) and new hires, Klein proceeded to pander employees with his “7 Keys to Success.” At the time the companies stock was dropping like a rock (partially due to naked short sellers and Wall Street’s inability to understand the cyclical nature of the Yellow Page industry.) I am sure that the mood and sentiment of sales reps is at an all time low. The reason being is Klein came in and took a very basic fundamental business and added more hurdles vs removing them. He forced all sales reps to adapt to a CRM, SalesForce.com, to record all “sales” actions by employees. Reps are required to navigate the CRM after each call to get credit for “activities.” Klein, who once promised not to micro-manage the sales divisions, has turned the company into a telemarketing call center vs local advertising consultancy. Sales reps are frustrated with the additional time-consuming activities and are also having problems selling the companies inferior offering. The real reason the challenge exist in sales is not because of the CRM or management, but due to the fact that in most cases the company is failing to deliver on the promises of sales. Traffic to SuperPages.com’s network is declining in a fragmented local search market. Sales reps have a conscience. They are unwilling to sell products to clients that they feel will not meet the needs of clients.

– Scott Klein will proceed to pad his personal pockets further.

– Klein’s henchman Jessie Vickers is no longer going after sales fraud.

All of this information is of course guesswork, rumor, and speculation.

In my personal opinion Scott Klein needs to be relieved of his duties. The company desperately needs new leadership. Employees need to strike and request a company take-over. If they fail to act, they will soon be working for a new employer or lose employment.

I have a few ideas that I would love to present to a company like SuperMedia who wants to offer the best in local search marketing. I also have a few ideas to really distinguish a print product from the other in the marketplace, and it does not require millions of dollars worth of TV advertising.

Grab your life vests, hold on tight, and stay tuned folks! It is going to be a quick ride down, just don’t abandon ship too late or you will also drown with the company.

16 Responses to A SuperPrediction on the Future of SuperMedia and Dex One – Merger?

  1. right now supermedia is corupted by sales reps managers and executives who are content with keeping a lid on fraud. Many accts that were delinquent (crappy clients) were lumped with fraudulent accts associated with the major ids investigation. the accts were validated as legitimate business entities that owed us money but leadership decided that it looked better on the books if they were coded as fraudulent as opposed to delinquent. by the way, in doing so it had a positive impact on the compensation of some people.

    how does a major sales ring operate in todays world with an internal audit group. this is the same internal audit group that was created after the manhattan sales fraud investigation. wtf are they doing and where were they when this fraud was taking place? the ids divisions never had to abide by the same policies that we in the print world had to abide by.

    • Mike Stewart says:

      The only folks that were unaware of the massive amounts of fraud (in an organization that will extend $9,600.00 per year to anyone who has a pulse) were likely Ivan Seidenburg. I am sure he discovered it along the way and it was a reason he wanted out. This business has been declining since 2002. The hayday of the business was from 1995-2002… after that point the competition and aggressive rate increases and horrible customer service put a bad taste in clients mouths. Now the sales results are full of fraud.

  2. Mitch Ripke says:

    The statisitcs show that the online advertising world will soon outnumber the marketing spent on local type advertising in the USA in the near future. Hard to believe that so much money can be spent on advertising dollars online. However, if you really think about it, in relation to the economy, more people are at home now, than since the days of the great depression. This means more people trying to make it online, and therefore more advertisng exposure around the globe.

  3. Companies and people like this actually make me sick! I agree with you that the employees should strike while they have the chance!

  4. Sandy says:

    Strike what?? As a former employee whose department was closed with no regard for the hard working employees some of whom were loyal workers since the days of Ma Bell I can tell you “the union” CWA did little if nothing to fight. Those days are gone. The company manipulates everyone to their advantage with no regards or dignity. As for Klein, well he stated he has no use for retirees, the people who gave their all and who were unjustly divested from the Verizon without say or vote in the matter. I’m sure he has his retirement secured.

  5. havoc says:

    nice Post

  6. Chad says:

    I couldn’t agree with you more. Thank you for your hard work to maintain this blog, and alert potential small business owners about the SuperMedia fraud.

    Another way they defraud their clients is lying by omission. They provide reports of their PPC programs that show the clients what they need to see in order to justify continuing to spend money with them, while not sharing information that is readily available and could help business owners make informed decisions of which keywords to bid on etc. It appears as if they simply load as many keywords as possible, and “Broad” match them in an effort to spend the budget every month and inflate their revenues.

    They also profess to have bid management software that adjusts the bids on an hourly basis. I sat in a meeting with a middle manager from Dallas who said that this software was designed to spend the money “where it could.” This explained why my clients were having 80% of their budget spent on Superpages.com, and not Google or Yahoo. Another way to squeeze profits out of unsuspecting small business owners. Of course if a rep, or the client caught this error, SuperMedias CSS agents would apologize and change the budget allocation.

    Thanks again for helping to expose these guys. I love the way you write.

  7. New Hire says:

    What would you tell a new hire that is to start with SuperMedia in August?

    • old hire says:

      if u would like to work 80 plus hours a week, micro managed starting at 7:30 AM, under so much pressure to sell there products you start taking anti depressants to cope, in constant fear of losing your job due to your hourly performance expectations, have no life of your own, making sure what you do sell you get paid for, constant changing pay plans, being a honest rep is out the window in order to meet there request for sales, just to mention a few it’s a great job good luck……..

      • Mike Stewart says:

        Start your own search marketing agency, and as you learn from the best begin servicing and increasing your margins…. but the commission is honest, results measured, and no corporate bullshit to stomach!

        If you are seriously interested…. email me: dallasSEOguru@gmail.com

  8. NinjaGeek says:

    To answer the newbie…run as fast as you can!This has been a sinking ship for a long time. My Mom always said you can’t keep sweeping that dust under the rug without choking you one day and that’s just what has happened.

    Has anyone figured out why Verizon told them to kick rocks? I too am a former employee and saw it coming a long time ago; say like back in 2004 before Idearc was birthed.

    Bad paper from way back during the GTE era.

  9. TATA2MyJob says:

    50 Supermedia IT jobs are going TATA in two months from Dallas. This is the beginning of the TATA plan for the IT employees. All hands abandon ship !

  10. James says:

    To the new hire….get ready to be pressured, lied to and asked to lie. Get ready to be screamed at and threatened. Remember if the clients wants to cancel… forget advertising ethics and give the client what he wants and a cheaper cost; but don’t make to much commission you become a target for the hinchman. Do enough to stay under the radar.

  11. […] A SuperPrediction on the Future of SuperMedia and Dex One – Merger? March 201015 comments 4 […]

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