Tamedia and Swisscom vie for Local.ch

"Directory search services are one of the areas where advertising can hold its own," said Daniel Bürki, an analyst at Zürcher Kantonalbank (ZKB). This distinguishes these services from print advertising, which has been under pressure for years. Tamedia already owns 75 percent of directory service Search.ch and is willing to dig deep into its pockets to expand in the online business: The Zurich-based media company wants to pay CHF 350 million for the entire Publigroupe and thus also grab the 50 percent stake that Publigroupe holds in Local.ch. Swisscom already owns 50 percent of Local.ch. But the telecom market leader would prefer to have the profitable web service all to itself and is prepared to put 230 million francs on the table for the other half. The business is personnel-intensive, but very profitable, analyst Bürki told the news agency sda. The entire business jointly operated by Publigroupe and Swisscom, which includes Local.ch, achieved an operating profit of 50 million francs on sales of around 200 million francs: "That's an operating margin of 25 percent," Bürki said. Other directory services are also expected to bring in a lot.

Young and with tradition

Local.ch is a business for Publigroupe - or a possible new owner - not so much because of the banner ads on the site, but because the companies and service providers that can be found pay for the display of additional information and the better visibility of their entry. In the advertising market, the service is a permanent fixture. SMEs, for example, with or without their own marketing department, use it to place offers, photos and other additional information alongside their addresses and reach a larger potential customer base. Local.ch was created in parallel with Directories.ch, but started a little later. In 2010, Directories.ch was completely redirected to Local.ch. Basically, Local.ch thus goes back to the good old telephone book: "We are a young brand with a long tradition," says Christian Weber, Local.ch spokesman. Today, Local.ch sees itself primarily as a local search engine. Whereas people used to search for a telephone number, they now surf the web with a computer, tablet or smartphone to find the nearest pharmacy or a particular restaurant, and may even make a reservation at the same time. "This no longer has much to do with a mere directory," says Weber.

"Real money machines"

Despite limited growth opportunities, services like Local.ch fulfill an important function, according to analyst Bürki: "They compensate for the loss of importance of telephone directories and are gradually replacing them online." Local.ch counted hits from 4.4 million devices (unique clients) in March and is the most-used Swiss directory service. Search.ch comes to 3.7 million unique clients. The founder of Search.ch, Reto Hartinger, recently said in an interview with Tagesanzeiger/Newsnetz that the business is lucrative. These websites are "real money machines," he said. He estimates that Local.ch is even slightly more efficient than Search.ch. Other industry experts also think that Local.ch is even more profitable than Search.ch, which should make the purchase all the more interesting for Tamedia.

Market also under pressure

But the market is also under pressure, mainly because of Google, Hartinger said: "Google is sucking more and more users away because they search directly in the search engine and don't switch to a specialized directory." If Google+ becomes even more of a people directory, the search engine will have an even easier time. One disadvantage for Local.ch and Search.ch, he said, is that you can't search for cell phone numbers. For the two companies, the opportunity lies primarily in innovation, for example with search engines that work in a more targeted manner and link more information. The two Swiss providers are also lagging behind in offers for cell phones, he said, and they could still develop there. (SDA)