YP CEO David Krantz wanted to dispel a widely held notion when we spoke with him late last week about the company he now runs, newly acquired from AT&T by the private equity firm Cerberus Capital Management.

“This is not a cash-flow, harvest the business approach,” he said, perhaps referring to the reputation of YP’s new owner as a hard-nosed operator. He insists that Cerberus sees its latest acquisition not as an old line business with cash to extract, but as a billion dollar digital platform with lots of upside.

Krantz was very direct in saying that the YP business was starved for investment under AT&T, which has other investment priorities like its wireless network, among others.

Now, he has money set aside for investment, and plenty of financial maneuverability, despite a debt load of about $1 billion, which he describes as very light for a company with $3.3 billion in revenue. The company’s debt works out to roughly 1X EBITDA, which is low compared with most of YP’s peer companies.

We will share more from our conversation next week in a The Kelsey Report Advisory.

Take a look at our previous blog coverage of this deal:

AT&T Completes YP Sale

For Better or Worse, AT&T Deal Sets Bar for Yellow Pages

Is It a Done Deal for AT&T?s YP Business?

London-based Telnic is carving out an interesting role for itself as an online enabler of small businesses. Telnic is the organization that offers the .tel top level domain, which for GBP 14.95 per year provides a simple Web presence that enables individuals and businesses to store all their contact information (email, Web address, social presence) in a single, searchable profile.

The company has developed this into an online presence product (branded Telnames) that is optimized for smartphones and is targeting (among others) the small-office, home office business.

Imagine the office manager by day, licensed hypnotherapist by evening and weekend, and there lies the SoHo opportunity. There are millions of these micro businesses around the world and they share some common traits. Most have only a crude Web presence, which is likely not mobile optimized. Many operate their businesses without a dedicated landline, and most are accustomed to using self-service, since they are too small or too hard to find to gain the additional of a live sales force. This is an area where Telnic is focused, for now in the U.K. Telnic has formed marketing partnerships, for example, with various small-business and professional societies in Britain in order to reach more of these small, independent businesses.

We recently caught up with Telnic CMO Ian Bowen-Morris. He believes the big shift to smartphone usage bodes well for a mobile-ready micro-presence product like .tel.

“Our view is that the huge growth in smartphone penetration and mobile searching presents an excellent opportunity for businesses to generate leads. What all businesses need is a simple place that they can point people to so they can be reached quickly from any device.

“A .tel name is very low cost. It’s easy to use and can be updated with a few clicks at any time. It is valuable as a stand-alone Web presence or a mobile-friendly enhancement to an existing Web presence,” Bowen-Morris said.

Bowen-Morris said he is in discussions with directory publishers in the U.K., and elsewhere, about using the Telnic API to build a custom branded environment for offering .tel as part of a presence bundle, or as part of a managed service, which could command a much higher price point for resellers. Through the API, publishers can register the .tel names and upload merchant business profile info. Bowen-Morris says next on the list for Telnic are apps that allow registry and management of .tel names via iPhone or Android.

Mobile ad network Millennial Media is out with its Q1 mobile mix report, showing that tablets were among the top 20 across all mobile devices. The Apple iPad, Samsung Galaxy Tab and Amazon Kindle Fire are the top three tablets on its platform. Non-phone connected device impressions, including tablets, made up 20 percent of the device mix, up from 15 percent last quarter.

Although smartphone ad impressions saw growth from last quarter, the percent of overall impressions is somewhat flat quarter over quarter. This demonstrates a disproportionate growth of non-phone connected device impressions in comparison to smartphones and feature phones. Other findings include gaming as the top category for mobile apps, with music & entertainment and mobile social media rounding out the top three.

This week, we released our top 10 mobile local media trends. You can view the presentation slides or watch the video here. And if you’re looking for ideas on how to monetize the intersection of mobile, local and social, then join us for our MLM conference in San Francisco next month.

ScoutMob, the two-and-a-half-year-old mobile-centric deals company, has landed a new $3.25 million round to develop its technology base and add more markets. It is currently in 13 cities and has more than 1 million subscribers. The company, which had previously raised $1.2 million, also announced a partnership with First Data and will work to implement its payments technologies, which serve more than 50 percent of U.S. retail establishments.

Investors include AOL Ventures, Capitol Broadcasting (which has been very aggressive online), Cox Enterprises, Ben Lerer of Thrillist and New Atlantic Ventures. At this point, these are purely investments and do not imply integration into Capitol, AOL, Thrillist and the various Cox properties, which include newspapers, TV stations, radio stations, cable systems, Kudzu and AutoTrader.

The company stands out from the pack in many ways. Mobile is becoming more important in deals — Groupon says that 40 percent of its deals are now viewed on mobile devices — but ScoutMob also leverages the geolocation technology found in mobile phones to “check in” when deals are redeemed. With this capability, it has built a merchant-friendly model charging a flat fee for leads of $3 or $4 per lead, instead of taking commissions, which may be 30 percent to 50 percent of voucher prices.

Cofounder Michael Tavani tells us that that he sees the ad hoc investment group as “pretty good validation of the media and payment space. We’ve always considered ourselves a mobile media company, but payment is the future of this space in a lot of ways.”

Tavani says the deal with First Data is not exclusive — “no payment solution gets you all the way there,” he says. But ScoutMob intends to build on top of First Data’s payment products, including the new First Data/CardSpring collaboration on an API that would enable merchants to easily add promotions and rewards to cards with a single swipe.

Some of the more advanced concepts implicit in that technology, however, may be “three to five years away,” Tavani says. Within 60 days, ScoutMob hopes to add more immediate capabilities, including a “post-payment personalization network” that would enable rewards points for meals or miles for every purchase made within the network, he says.

Tavani also chides industry investors who are primarily West Coast based — his investors are East Coast based. “They refuse to believe that local scales,” he says. “They want to see tens of millions (of users) and this isn’t tens of millions. But local decisions are made impulsively,” adds Tavani. “And having just 13 cities lets us be super-curated at the local level. We literally have an editor in each market. Building a brand is the big thing for us.”

Following last week’s post detailing our webcast, we held it yesterday with lots of discussion around the trends driving mobile innovation and investment. This comes in the midst of preparation, programming and speaker recruiting for our upcoming MLM San Francisco.

You can download the slides or watch the streaming webinar replay here. As a bonus, the webinar had a discount code for conference registration, which can be seen in the replay. You can also see summary points below (and more after the page break) for the “10 Trends” from the webcast.

And we’re close to announcing a new batch of conference speakers, which should really round out the program (a great lot so far). Stay tuned for that, and we hope to see you at the conference.

Trend 1: Mobile Ad Revenues Take Off
We see ad revenues growing a great deal, partly driven by evolving mobile usage patterns and smartphone penetration. The latter just surpassed 50 percent of all U.S. mobile subscribers according to Nielsen.

Meanwhile, our forecast indicates that U.S. mobile ad spending will go from 1.7 billion last year to about 7.7 billion in 2015, which is a CAGR of about 39 percent (and affirmed recently by the the IAB).

There are also some interesting dynamics unfolding with the economics of mobile ad rates. Mobile usage is outpacing advertiser demand, so you see greater supply of ad inventory than ad spend.

So ad rates such as CPMs and CPCs are going down. We believe that trend will continue, but will normalize at a certain point over the next couple of years as advertiser demand picks up.

MLM Session Tie-in: Mobilizing Commerce: A BIA/Kelsey Perspective

Trend 2: Local Dominates Mobile
Breaking down the top-line mobile ad revenues mentioned above, the dollars going toward location targeted ads will be a major driver. They will go from just under half of mobile ad spend to almost two-thirds by 2016.

This will result foremost from usage: Google reports that 40 percent of searches on the mobile device have local intent, and that compares with only 20 percent on the desktop.

The second reason is Madison Avenue’s evolution to come around to that reality and start to build campaigns that are more geo-centric. We’re already seeing that happen with evidence such as Millenial Media, which reports a 50 percent increase year over year in the campaigns on its network that are geotargeted.

And the third reason is the premium ad rates we are going to start to see develop for location targeted mobile advertising. Those premiums will develop from the higher performance of location targeted mobile ads that are already making themselves apparent.

MLM Session Tie-in: Mobile Ads and Ad Networks: Where’s the Beef?

Trend 3: Action! Mobile Ads Come Into Their Own
That leads directly into the third trend, which is mobile ad evolution. We see data from xAd and others that mobile local ad performance (both search and display) outshines non-location targeted advertising.

Search CTRs for example are about 8 percent on average. But more important than the click is what is happening after the click. This is what we like to call secondary actions, which are things like phone calls and local directions.

So after the 8 percent CTR, 37 percent of those clicks are resulting these secondary actions. This is important because these are very tangible actions that get further down the path to a clearer sense of ROI for merchants.

Going further down that road, we’ll see lots of development around transactions and payments because that really closes the loop on a discernible ROI, and conversions tracked all the way down to the cash register (see trend 6).

MLM Session Tie-in: Mobile Ads and Ad Networks: Where’s the Beef?

Trend 4: Yelp, Foursquare & Facebook: The Mobile Leaders Monetize
Much of the above leads into trend 4, which is the more defined mobile monetization among some of the leaders in the mobile local space. Companies like Foursquare, Yelp, some YPs and Facebook all have varying levels of success building usage in mobile, but they haven’t yet directly monetized it.

We believe that will change over the next 18 months, and involve a few monetization models. These include pay-per-call, management of local deals and loyalty program (similar to what Foursquare now provides for free), and the creation, hosting and management of mobile landing pages.

This is becoming more imperative for companies like Yelp which has 10 percent of its monthly users access the service from mobile. But those same users account for a disproportionately high 40 percent of searches. That says a lot about the engagement levels of those mobile users.

But more important, this means more and more Yelp users are engaging the service from an access point that isn’t monetized. That means its ARPU goes down. This is a similar challenge facing Facebook, which has been given a great deal of attention over the past few weeks.

Speaking of Facebook, its moves in mobile will be a big wild card, and an influential factor on how this all evolves, given the company’s sheer size and influence. So what it does in mobile monetization is worth watching very closely.

In other words, its ability to educate users and advertisers about different forms of mobile ads will shape their view and comfort levels. That will signal where this market is heading and what types of mobile ad units, delivery, targeting, calls to action will become industry standard.

So far for Facebook that’s involved sponsored stories in the mobile news feed. This will develop a great deal involving payments/transactions and the development of an ad network. The latter will be huge, for mobile and online publishers that want to place targeted ads on their sites.

The targeting enabled by Facebook Connect and Open Graph will be the backbone for what will be a powerful competitor to Adsense, both on desktop and mobile (the subject of an entirely different post!).

MLM Session Tie-in: Monetizing Mobile: Who’s Making Money and How?

Trend 5: Native Content Will Win the Day
This trend has a lot to do with an evolving mind-set to build things “mobile first.” In other words, utilize the unique aspects of the native form factor rather than porting over desktop product models and mindsets.

The aforementioned sponsored stories is a good example, as is Apple’s iAd (though it might be a bit before its time). The latter builds advertising features that reside fully within expandable ad units.

For example, tapping into the phone’s acceleration, compass or GPS chip to launch a map right within the ad. This is important because it doesn’t send users outside the app — a gating factor to publisher adoption of mobile ads.

So we’re seeing more interactive ad units develop from not only Apple but ad networks like Greystripe. These will be important to watch and keep track of and it’s happening both in-app and also in the mobile browser, using HTML 5.

The native development concept also takes form in utilizing what I like to call the eyes and ears of the device. Audible input (i.e., voice search) and visual search (i.e., augmented reality, barcode scanning, etc.) are good examples of this.

MLM Session Tie-in: The Starting Line: Best Practices in Product Development

Trend 6: Mobile Shopping & Payments Close the Loop
Barcodes are a good segue to the next trend, which is mobile shopping and transactions. The “showrooming” phenomenon is forcing lots of retailers (and the vendors that emerge to serve them) into being innovative with mobile apps that help them maintain ownership of their customers.

EBay is an example of a company doing this right, bringing together lots of acquired companies and feature sets to be present throughout the stages of the purchase funnel (or as Walt Doyle calls it, the “Purchase Pretzel”). That’s then tied together with a transaction through PayPal.

Where this is all heading is providing a software layer for businesses to better track purchase behavior as a foundation for loyalty programs. A big part of this is analytics that allow merchants to iterate on what’s working and what’s not working, in terms of transparency of what’s making the cash register ring.

This is pretty powerful and is the very reason Google is pushing so hard on Google Wallet; it similarly wants to provide analytics of what advertising presence on Google resulted in conversions. This is the holy grail of advertising.

As such we’re seeing lots of companies chase this market and lots of competing standards such as card linked offers; NFC; barcode-driven solutions like LevelUp and Starbuck’s Card Mobile; and SMB-geared solutions like Square.

MLM Session Tie-in: Mobile Shopping and Payments: Closing the Local Loop

Trend 7: Mobile & Social Collide
Social media is now the category with the greatest time share of mobile usage. It just surpassed gaming, which says a lot. The biggest reason is that social media has found a natural home in mobile.

One way this has played out is through sharing media that’s natural to the mobile use case and form factor. This includes songs (Soundtracking), Pictures (Instagram), Location (Highlight), and status (Twitter and Facebook).

These are the foundation for lots of monetizable moments when users are raising their hand to indicate where they are and what they’re doing, things they are liking.

And this will continue to develop through more ambient location services. Look out especially for Facebook’s monetization (as previewed above) in combination with the assets acquired from location tracking app Glancee.

MLM Session Tie-in: Mobile and Social: Where’s the Sweet Spot?

Trend 8: The Mobile Web Enters Adolescence
As mentioned earlier, the mobile Web is woefully under-optimized, which is out of whack with user behavior and growing levels of mobile search. Duda Mobile reports that less than 2 percent of overall websites are optimized for mobile screens.

Some examples of bad behavior are when mobile banner ads lead to a sub-optimized corporate home page instead of a deep link that pertains to the ad content. Or when the layout isn’t optimized and contains tiny links that you can hardly see, much less click on. Or when there are flash components that don’t play on iOS.

Basically it’s a mess out there, so the opportunity lies in providing services to optimize and host mobile Web pages for small businesses (and some large businesses for that matter). This involves design and calls to action that apply advertisers’ goals for the actions they want to drive (calls, commerce, foot traffic, etc.).

In other words, these are not only the design principles that will keep users engaged, but the very positioning of calls to action that are the basis for monetizable events for merchants.

MLM Session Tie-in: The Starting Line: Best Practices in Product Development

Trend 9: Investment in Mobile Ratchets up
We’re seeing an uptick in the investment in mobile companies as sector is moving into adolescence with discernible business models and (some) real revenue.

So far, we’ve seen high multiples in not only funding rounds but exits such as Instagram. There’s much to discuss here with regard to not only early stage funding but also strategic investments made by traditional media companies to help them better navigate a transformative time in media consumption.

We’re also seeing a lot of talent acquisitions or aquihires, in this environment where there is a serious shortage of top-notch programming and developer talent. These investment criteria are often leading indicators of the marketplace innovation we can expect to see in the coming months.

MLM Session Tie-in: The VC Take on Mobile, Local and Social

Trend 10: What’s Next in Mobile Local Media?
Speaking of which, a view to the future is always good to maintain. All of the above trends have been under way for the past few years and the most successful mobile strategies have moved quickly to get out in front rather than play catch-up.

That probably sounds obvious, but it’s still not happening. The mobile marketplace is so nascent and fast moving that large companies with debilitating layers of compliance will get left behind. The Facebook motto of “move fast and break things” will be a winning formula.

That goes for both experimenting with product design, user proclivity and advertiser demand, as well as gaining an early mover advantage in terms of product positioning. You want to always be thinking about next year in addition to what’s going to happen tomorrow.

Google’s Project Glass is a good example — it’s a few years out but useful to examine. Mobile won’t always mean the 4-inch screen in our hands but will evolve into a wearable and biometric technology of various forms. That’s what Steve Jobs really meant by “Post PC era,” and it will develop rapidly.

MLM Session Tie-in: Cutting-Edge Demos

Again, you can check out the webinar replay for more color on all of the above and to get a sneak peek at our MLM San Francisco conference. I can be reached for any questions at mbolandATbiakelsey.com.

Target, one of the largest discount retailers in the U.S., announced today that it will now offer its guests the Shopkick app for their smartphones. When customers walk into their local Target store, they receive points known as “kicks.” As they shop, customers can also scan products for additional kicks. Kicks can be redeemed for Target gift cards, Facebook credits, dining gift certificates, iTunes downloads and charity donations to name a few.

In addition to Target, Shopkick also has a partnership with Old Navy. Earlier this year, the company announced that its app was available in more than 4,000 individual stores across multiple retailers. With smartphone penetration at nearly 50 percent, it’s a smart idea for retailers to adopt mobile tools to keep users engaged in-store. You can also engage with us in California for our MLM San Francisco conference. We’ll be talking about mobile commerce with Shopkick Chief Revenue Officer Doug Galen.

The global directories company Yell Group, which is fighting a rapidly declining core business as it shifts to new digital products, has announced it will be changing its name to Hibu, pending the approval of its shareholders in July.

The name change is in keeping with the recent practice in Yellow Pages of changing the corporate brand in order to enable the company to pivot into new product areas without the “baggage” of the Yellow Pages label. From this logic was born Sensis, Truvo, Eniro and Idearc, among others. Most of these players used brand consulting firms to create the names, while another company following the trend, Israel’s Golden Pages, adopted its new Zap brand from a comparison shopping engine that it acquired.

A common feature of these new corporate names is that they are essentially meaningless, so that with effective marketing, a company can apply meaning to them. In general, however, transforming the name has been easier than transforming the business.

Idearc is no longer used; it’s now called SuperMedia. Eniro was successful in building brand awareness for its name in the Nordic markets, but the company recently adopted one of its regional brands, Kvasir, as its brand for new digital products, suggesting Eniro has become associated with the business’ legacy products. Hibu’s success depends on Yell effectively and authentically transforming its business and associating the new brand with a company that is fully digital, not one that is straddling traditional and new media.

Yell has been undergoing a radical transformation since its leadership changed with the 2011 retirement of John Condron. Current CEO Mike Pocock is trying to shift the business from a directory publisher to a provider of local e-marketplaces.

The financial results announced Tuesday underscore the company’s urgency of finding new revenue streams. The company’s situation is made worse by a nagging debt load, which has prompted Yell to retain Goldman Sachs and Greenhill to help it build a new capital structure. Further, Yell wrote down the value of its main assets, which contributed to a GBP 1.4 billion loss for the year.

For the year ended March 31, 2012, Yell Group reported total revenues of GBP 1.61 billion, down 14 percent from GBP 1.88 billion in FY20112. The company’s core revenues, which it defines as print and online directories across all its markets, are falling at an accelerating pace, while its new digital products are growing nicely, but from a small base. Unless Yell can stabilize its core, it is going to need a lot more revenues from new products to turn things around, which helps explain the company’s urgent pace of new partnerships and acquisitions to add new products to the sales bag.

We will offer a more detailed analysis of Yell’s results in an upcoming brief for clients of The Kelsey Report.

Local display doesn’t get as much attention as search for SMBs, but we know that in many situations, it can complement search campaigns, or even produce better results. No one pushes harder on this than PaperG, which has developed a network of local media sites for its automated display solutions, and is now working with 20,000 SMBs. It has put together a great infographic based on its research, coming up with some striking data.

Supporting the sense that display and search are complementary, PaperG notes that 35 percent of people who see a display ad will later search for the business. It also notes that display is cheaper on a cost-per-click basis that using radio or direct mail. The average CPM cost is $1.50, compared with $4.50 for radio and $350 for direct mail.

The cost of a display ad for key verticals also runs substantially less than desktop or mobile search. Dentists, for instance, will pay a CPM of $2.58, compared with $6.13 for desktop search and $3.55 for mobile search.

“We’ve seen display work well when positioned as creating ‘brand awareness with performance upside,’ ” said CEO Victor Wong in an email. “Certainly advertisers with multiple locations or that spend $1,000+ a month on print advertising benefit from greater brand awareness from online display at far cheaper costs than traditional channels. That said, we’ve now gotten targeted display to start working for single location businesses spending $500/month and with re-targeting, we can get results for as low as $100/month.”

Are deals still being driven by shares, posts, likes and other social media features in an era of Groupon and LivingSocial Super Bowl ads? Yes, definitely, according to Second Street Media, which held a webinar with The Washington Post last week to discuss social media and deals strategies.

Referrals, “like-gating” and brand building via social media are key to building up customer lists and pumping up sales volume, noted Second Street Director of Affiliate Success Matt Chaney. Social media has been an inherent part of deals success from the beginning,” he said. Getting consumers to “like” a deals site and follow them on Facebook helps work around email fatigue — or at least reinforces email offers.

Deal sites, however, need to follow up and provide something in return for the likes. Chaney cites Edison/Arbitron research showing that 58 percent of consumers expect something in return for a “like.”

NBC 7 in San Diego boosted its likes by 60 percent with a contest around “San Diego’s Favorite Voice.” The St. Louis Post-Dispatch boosted its signups by 36 percent with a “Name the Rally Squirrel” contest. ABC 15 in Phoenix boosted its likes from 8,000 to 88,000 with a giveaway of guitars featured on the CMA Awards.

Webinar special guest Molly Urciolo, marketing manager from The Washington Post, said The Post’s Capitol Deal site adds 1,000 likes each week. The Capitol Deal has done especially well with “Get Yours Free” deals in which customers are incented to push a certain number of sales by their friends — typically three — so they get a free one. Twelve percent of The Capitol Deal’s revenues come from “Get Yours Free.”

Urciolo likes to post deals on Facebook the night before emails are sent out or post exclusive deals for the Facebook audience. She also takes the page seriously as a community, posting topical subjects on local sports teams or events and running contests or sweepstakes. She recommends adding new posts two times a day.

“Yes!” say University of Virginia’s Darden Business School professors Rajkumar Venkatesan and Paul Farris. The 99 percenters who fail to redeem coupons they receive in fact do matter. Their new  research to this point is summarized in this month’s Harvard Business Review.

In 2010, U.S. consumers redeemed 3.3 billion coupons for $3.7 billion worth of savings, but that represents only 1 percent of all coupons. What about the other 99 percent, do they matter and if so, how?

Venkatesan and Farris performed an interesting field experiment with eight national retailers to analyze campaigns issuing over 500,000 targeted coupons for 300 brands  mailed out over 16 months. By tracking whom coupons went to, both redeemers and non-redeemers were analyzed in terms of subsequent sales lift (defined as the subsequent amount spent on promoted and non-promoted items). The control group consisted of those not receiving coupons.

What happened? Actually, the non-redeemers accounted for 60 percent of the sales lift.

Coupons often get tagged as “bottom of the funnel” tools but clearly they also drive brand awareness and sales lift. Redemption rates, while important, are not the only success metric. Venkatesan and Farris conclude that new media players such as Groupon and Living Social are best evaluated not just in terms of list building and redemption but also in terms of long term sales lift even from non-redeemers and presumably even those on the list but who never bought the coupons.

Our take on this is that all those semi-annoying one-time, bargain hunting buyers SMBs see after a Groupon or Living Social campaign may in fact just be the tip of the iceberg. Their social media campaigns may actually be far more successful than they’re able to recognize given current tracking systems.

For more on the authors and the Darden School, see http://www.darden.virginia.edu/web/Media/Darden-News-Articles/2012/In-the-Trash-or-in-Hand-Coupons-Make-Money/.