The Hyperlocal Advertising Business Model – an Illusion?

Fast Company’s Michael Gluckstadt’s article “Can Anyone Tap the $100 Billion Potential of Hyperlocal News?” points out the problems when a national advertiser like the New York Times, or local news aggregators like CitySearch, Topix or Outside.In developing “community” try to build a sticky hyperlocal website. Answer: there is little incentive for anybody in the local community to take the lead in building some corporate hyperlocal site. They would rather build their own.

Hyperlocal seems like a can’t-miss proposition. “There is real demand for good information about our neighborhoods, our children’s schools, our streets, our blocks,” says Jay Rosen, an NYU journalism professor and media blogger. Except for one thing: Success remains perpetually around the corner, constantly predicted yet never fulfilled. While different people have named hyperlocal as a trend to watch every year since 2004, “everybody’s groping for a business model,” says Gordon Joseloff, who fits the all-too-typical norm for this space with his popular, distinguished, and unprofitable site in Westport, Connecticut.

The business model problem is twofold:

1) National advertisers ignore the hyperlocal markets because they are too sales labor intensive in their focus on mom & pop SMEs

“Advertisers have no interest in community Web sites,” says Gordon Borrell, CEO of the analyst firm whose statistics are routinely cited as evidence of hyperlocal’s bright future. “They don’t have the type of material advertisers want to be around,” referring to archetypal hyperlocal stories about high school basketball and drug arrests. “Sites are connecting the dots inappropriately.”

2) Hyperlocal networks are much more intimate and require buy-in participation from on-the-ground players within the community. Although national hyperlocal community sites try to attract community conversation, there is no real incentive for somebody in the community to create a stake in the site without any kind of ownership or compensation.

For example, Outside.In showcases BackBay in Boston on their home page:

Outside.in home page

Outside.In, Topix, etc. are great for aggregating news from local publishers, but they lack community participation, as evidenced by the Back Bay Discussion Board (three entries for 2009):

Outside.in Back Bay Boston discussion board

What Outside.In needs is an About.com-like local monitor to engage the community, but this can become a financial albatross by introducing training and possible compensation of these monitors.

The Hyperlocal Business Model – an Illusion?

A hyperlocal business model requires community participation. The one-way broadcast “newspaper” model of Topix local news + advertising is just a variation on the old Web 1.0 model. ONE THING IS NOT EVEN BEING MENTIONED IN THIS CONVERSATION ABOUT HYPERLOCAL ADVERTISING –  Local advertising revenue models may not even be viable once local merchants discover that they can reach and market to their community through Twitter. Free. Of course, this is based on the assumption that Twitter continues its rapid adoption by the masses, which in one form or the other (see Facebook/Friendfeed) should happen.

The Breaking News Network has the ingredients to address the needs of the hyperlocal community – simple WordPress based sites constructed in a matter of hours and customized to the city or community, and anchored by hubs of the community to market and promote the Breaking News City site.

Related articles:

What’s Missing from Today’s Hyperlocal Sites – Community Leadership May 7, 2009

The Local Merchant’s Guide to Twitter June 16, 2009

Twitter is Destined to Become a Local Advertising Media Platform May 12, 2009


About Pat Kitano

Patrick Kitano works with brands in developing hyperlocal engagement solutions and is administrator of the Breaking News Network, a national hyperlocal network devoted to community service. He is the author of The Local Network on Street Fight, and is reachable via Twitter @pkitano and email pkitano@gmail.com.

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