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Coming seemingly on the heels of AT&T’s directory business acquisition by YP Holdings, DexOne and SuperMedia today announced a company merger expected to be complete by the end of 2012.  The newly merged company will become known as DexMedia.

It is expected that the media properties that each company owns (i.e. supermedia.com; dexknows.com; switchboard, etc) will remain intact for the time being as details are worked out and branding implications are considered.  Both companies have made large strides with respect to branding and as such brand equity will be integral to this merger process.

So, what does it all mean?

At the end of the day, it means that upon approval of the merger, there will remain in the US, 3 large media solution providers – YP (formerly AT&T’s directory business); the newly formed DexMedia and YellowBook (owned by Hibu in the UK).

Is this a good thing?

In a word – Yes.  This type of merger is long in the making as directory publishers and publications in the US had proliferated throughout the 1990’s and into the early 2000s, due to the breaking up of Ma Bell in 1984 by an antitrust court.  The problem always was that most of them were never competitive in the marketplace.  As such, since 2004/2005, many companies have either been merging or going out of business.

For years, YP (AT&T), DexOne, SuperMedia and YellowBook have been the dominant players.  That’s four companies out of over 200+ directory publishers just in the US.  So, again, this merger is a good thing.

Why is it a good thing?

The merged company DexMedia will continue to normalize the directory publishing in the marketplace. Redundancy will be eliminated and best practices will be established in order to continue to maximize advertisers return on investment (ROI).  This merger will continue the transformation of the traditional directory marketplace.  No longer are these companies like DexMedia and YP Holdings focused solely on Print Yellow Pages.  They have worked to transform their offering to one that helps local advertisers have real-time solutions in this highly fragmented media landscape.  DexMedia’s mission is to become “*the* trusted marketing consultant to local businesses”.  As DexMedia will be a provider of multi-media services, they use the term media agnostic to describe the bundling opportunities that will be available for advertisers and further describe themselves as the local advertisers ‘outsourced marketing department’.

Looking to provide value, DexMedia promises to focus on relationships, solutions, results and service.  These are all great things for both the advertiser and for an agency like DAC Group.  Under these circumstances, true partnerships can develop all with the interest of the advertiser forefront in maximizing investment and ROI.  Additionally, advertisers still have a choice as the market is not dominated by one single player.  This definitely leads to creative solutions and outside the box thinking – all good things for our advertisers.

The bottom line is that this merger comes in proactive reaction to the marketplace.  The only thing constant about the media landscape that we all operate in is that it will change.  Consumers have been and are in charge of how and when they use media and they are willing to experiment with any new media source/device that crosses their path.  Media is trying to keep up with customers.  This is even more challenging given the multitude of platforms there are to cover now.  Local businesses remain confused and challenged to keep up the pace with all of this change.

With this merger, DexMedia seeks to stay ahead of the curve with this functional change as technology and demographics continue to change and intersect – further fragmenting media usage.  The newly merged company will be truly national in scope – with the ability to mobilize and penetrate the market locally.  Synergies and best practices will be realized and at the end of the day, there is still healthy competition in the market for local marketing solutions for advertisers that span the range – websites, mobile, directory, internet, social, etc.  We will continue to monitor as this unfolds over the coming months.

We’ve given you an idea of what we think.  How about you? What do you think of this merger?

Lynn Duffy, Senior Research Manager

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