Influences on the purchase of Yellow Page display advertisements.

We look at the frequency of display yellow page advertising purchases in 49 major U.S. cities for three different professional services. Unlike most other services marketing and Yellow Pages studies, we examine cross-sectional results across cities and service providers in an attempt to determine the strategic influences on purchases of Yellow Page display advertisements. We find that the proportion of service providers purchasing display advertisements falls for larger cities, suggesting that the advertising clutter effect found for other media may also hold for yellow-page advertising. Higher prices for display advertisements across cities and in bigger cities may also result in fewer display advertising purchases by professional service providers. We also find that cities with higher proportions of new residents have higher rates of Yellow Page display advertising purchases.

**********

ADVERTISING SPENDING DECISIONS do not occur in a vacuum. A variety of competitive and customer forces help shape advertising strategy. The advertising literature has many examples of differences in advertising spending among industries (Advertising Age, 1995; Ailawadi, Farris, and Barry, 1994; Zinkhan and Cheng, 1992) and the relative importance of advertising in the marketing strategies of different industry groups (Ailawadi et al., 1994; Patti and Blasko, 1981).

However, few researchers have examined how differences among competitive and customer environments can influence media strategies employed by service providers. In particular, Yellow Pages advertising strategy has received scant attention despite considerable differences between the Yellow Pages and other advertising options.

In this exploratory paper, we seek to partially fill this void by examining the Yellow Pages advertising of service providers in 49 major U.S. cities. Specifically, we focus on the critical decision to purchase or not purchase a display advertisement in three service industries. Our analysis of over 16,000 Yellow Pages advertisements from 49 cities placed by service providers in the pest control, plumbing, and roofing industries reveals evidence that the decision to purchase display advertisements is influenced significantly by advertising cost, city size/advertising clutter, and the proportion of new residents in a city.

SERVICES ADVERTISING

Over 50 percent of personal consumption expenditures are for services. Employment growth and new-business formation are also much higher for services than for other U.S. industries (Statistical Abstract of the United States, 1995). In light of the increasing prominence of services in the U.S. economy, it is hardly surprising that services marketing has begun to attract increased attention from marketing researchers. For example, it has been suggested that offerings at opposite ends of the product/service continuum are distinct and may require different marketing and advertising strategies (for a review, see Zeithaml et al., 1985). Following that theoretical distinction, several researchers have found significant differences in the amount and type of advertising information between product, product/service combination, and service brands (Abernethy and Butler, 1992; Cutler and Javalgi, 1993; Grove, Pickett, and Laband, 1995).

Since nearly half of all advertising spending is from local businesses and retailers, one can make a good case that the determinants and consequences of local advertising constitutes an important research area (Jugenheimer, Barban, and Turk, 1992). Yet, with some notable exceptions (King, Reid, Tinkham, and Pokrywczynski, 1987; Nowak, Cameron, and Krugman, 1993), advertising research has tended to focus on the advertising strategies employed by major companies. Otnes and Faber (1989) found that fewer than 4 percent of articles in two major advertising journals directly considered local advertising spending or decision making.

Moreover, many, if not most, service firms are relatively small businesses competing in relatively small retail areas. Small businesses generally have lower advertising budgets, fewer media options, and less marketing expertise than bigger firms. Thus, the advertising decisions of small firms operating in retail markets differs from those of national firms, a proposition which has received some recent empirical support (Laband, 1989; Nowak, Cameron, and Krugman, 1993).

YELLOW PAGES ADVERTISING ENVIRONMENT

Many small service businesses spend the majority of their advertising dollars on the yellow pages, a medium with unique opportunities and constraints. The yellow pages are a $9.4 billion dollar market with total expenditures roughly equal to radio (Mangel, 1992). The average person uses phone directories almost twice per week with more than 46 million references to the yellow pages every day (Yellow Pages Publishers Association, 1992). Sixty percent of those referring to the yellow pages make an immediate purchase decision (Mangel, 1992).

Despite the importance of yellow page advertising, relatively little attention has been paid to the yellow pages by marketing researchers. A few published studies have examined the specific copy points contained in yellow pages advertisements for different industries such as accountants (Abernethy and Butler, 1998) and hospitals (Smith, 1985). More limited work has been done on the information consumers want to see in yellow page advertisements (Butler and Abernethy, 1994; Chan and Misra, 1991).

Similar to other print media such as magazines, bigger yellow page advertisements get noticed and read more often than smaller advertisements. Display, color, and bold advertisements also get more reader notice than plain yellow page listings. Exploratory eye camera research indicates that 93 percent of quarter-page display advertisements get scanned by consumers (Lohse, 1997). Large in-column display advertisements get noticed by 84 percent of readers, bold is noticed by 37 percent, and plain listings by only 26 percent. Lohse also found that consumers spend 54 percent more tune viewing yellow page advertisements for businesses they ended up selecting. Cobb-Walgren and Dabholkar (1992) found that physician display yellow page advertisements with more useful information were preferred by consumers in an experimental context, again highlighting the importance of display advertisements since regular listings (free with a business phone) only include the business name, address, and phone number.

Lohse's (1997) findings for yellow page advertising and the wealth of research showing that larger magazine advertisements tend to get read and noticed more than smaller advertisements all suggest that the decision to purchase or not purchase a display yellow page advertisement is a critical advertising strategy decision for …