Market Analysis – 55101502 – Directories

Market Analysis Brief: Directories (UNSPSC 55101502)

Executive Summary

The global Directories market is in a state of terminal decline for print and intense competition for digital formats, with a current estimated total addressable market (TAM) of $18.2B. The market is projected to contract at a 3-year CAGR of -4.5% as digital alternatives cannibalize legacy print revenue. The single greatest threat to this commodity is technology obsolescence, as search engines (e.g., Google) and AI-powered discovery tools render traditional directory structures redundant. The primary opportunity lies in pivoting spend from pure listings to integrated SaaS platforms that offer SMBs a suite of digital marketing and business management tools.

Market Size & Growth

The global market for directories is undergoing a significant structural shift from print to digital. While digital listing management shows modest growth, it is insufficient to offset the rapid collapse of the high-margin print advertising segment. The overall market is therefore projected to contract over the next five years. The largest geographic markets are those with large, fragmented small-and-medium-business (SMB) economies.

• Projected 5-Year CAGR: est. -5.2%
• Largest Geographic Markets: 1. United States, 2. China, 3. Japan

Key Drivers & Constraints

1. Demand Shift to Digital Discovery (Constraint/Driver): Consumer and B2B buyers now overwhelmingly use search engines, social media, and review-based apps for discovery, rendering print directories obsolete. This drives demand for digital listing management but commoditizes the service.
2. Technology Obsolescence (Constraint): The core function of a directory is being absorbed by superior technology. Google's Local Pack, Google Maps, and voice search (e.g., Alexa, Siri) provide more dynamic, context-aware results, representing a critical threat to even digital-native directories.
3. SMB Inertia & Digitization (Driver): Legacy directory providers' primary remaining asset is their large, long-standing SMB customer base. These suppliers are leveraging this relationship to upsell customers from simple listings to a full suite of digital marketing and business management SaaS tools.
4. Input Cost Volatility (Constraint): For the remaining print segment, paper pulp and distribution costs remain highly volatile. For digital players, the cost of customer acquisition (CAC) through performance marketing on platforms like Google and Facebook is a significant and rising operational expense.
5. Data Privacy Regulation (Constraint): Regulations like GDPR and CCPA increase compliance costs and create legal risks associated with collecting, storing, and sharing personal and business data, a core function of any directory.

Competitive Landscape

Barriers to entry in the legacy print market were high (printing presses, distribution logistics, brand recognition). In the modern digital market, barriers are network effects (attracting a critical mass of users and businesses) and the high cost of customer acquisition and technology development.

⮕ Tier 1 Leaders * Thryv Holdings, Inc.: Dominant US player (legacy DexYP/Yellow Pages) pivoting aggressively from directories to a comprehensive SMB SaaS platform. * Yell Limited: UK-based legacy leader (formerly Yellow Pages) focused on digital marketing services for SMBs. * Yelp Inc.: Digital-native leader differentiated by its massive volume of crowd-sourced reviews and strong consumer brand recognition.

⮕ Emerging/Niche Players * Angi Inc.: Focuses on the home services vertical, connecting homeowners with trade professionals. * Thumbtack, Inc.: A project-based lead generation platform for a wide range of local professional services. * Dun & Bradstreet: B2B-focused data provider, functioning as a global business directory and data source for commercial risk assessment.

Pricing Mechanics

The pricing model for this category has bifurcated completely. The legacy print model, now a negligible portion of the market, was based on physical ad characteristics: size, color, and placement (e.g., inside front cover), with prices ranging from hundreds to tens of thousands of dollars annually.

The dominant digital model is more complex, typically operating on a freemium basis. A basic listing is often free, with revenue generated from premium subscriptions that offer enhanced profiles, removal of competitor ads, better placement, and analytics. A growing model is pay-per-lead (PPL) or selling bundled SaaS subscriptions that include listing management alongside CRM, payment processing, and marketing automation tools for a monthly fee ($200-$500/mo).

The three most volatile cost elements for suppliers are: 1. Paper Pulp (NBSK): +12% over the last 12 months, impacting the profitability of remaining print operations. [Source - Natural Resources Canada, 2024] 2. Digital Advertising (CAC): Cost-per-click on major ad networks has increased est. 15-20% YoY, pressuring margins for digital players acquiring new SMB customers. 3. Technical & Sales Labor: Wage inflation for software developers and high-turnover sales staff has increased operating costs by est. 5-8% in major markets.

Recent Trends & Innovation

• Pivot to SaaS (Q4 2022 - Present): Legacy players like Thryv have accelerated their transformation into software companies. Thryv's SaaS revenue now accounts for a significant and growing portion of its total revenue, signaling a definitive shift away from the advertising model.
• AI Integration (Q2 2023): Digital directories like Yelp have begun integrating generative AI to summarize reviews and enhance the user search experience, an attempt to compete with the conversational search capabilities of major tech players.
• Verticalization & Specialization (2023-2024): The market has seen a rise in highly specialized directories for niche professional verticals (e.g., legal, medical, industrial parts) that can offer more domain-specific value than a generalist directory.
• Legacy Consolidation (Ongoing): The declining print market continues to see consolidation. For example, the 2017 merger of Dex Media and YP Holdings to form DexYP (now Thryv) was a key event that consolidated the majority of the US print directory market under one entity.

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina's demand outlook for directory services is reflective of the national trend: print is virtually non-existent, while demand for digital listing management remains steady. The state's robust and growing SMB sector, particularly in the Research Triangle and Charlotte metro areas, provides a strong customer base. Local capacity is dominated by the national sales forces of Thryv, Yelp, and Angi, supplemented by hundreds of local digital marketing agencies that offer directory listing management as part of a broader service package. The state's favorable business tax climate and strong net migration support continued SMB formation, ensuring a stable, albeit highly competitive, addressable market for digital providers.

Risk Outlook

Actionable Sourcing Recommendations

1. Eliminate Print & Consolidate Digital. Immediately cease all residual spend on print directories. Consolidate digital listing management under a single provider that offers a centralized dashboard for ensuring data accuracy (name, address, phone) across all relevant online directories. This will improve brand consistency and reduce administrative overhead by est. 25-40%.
2. Mandate Performance Metrics & Shift to ROI-Positive Channels. Require all directory spend to be tracked with unique phone numbers and campaign URLs to measure lead generation. Re-allocate budget from low-performing listings to direct channels like Search Engine Marketing (SEM), where cost-per-acquisition (CPA) can be directly measured and optimized, typically yielding a 15-50% improvement in marketing ROI.