“The best minds of my generation are thinking about how to make people click ads. That sucks.” – Jeff Hammerbacher, fmr. Manager of Facebook Data Team, founder of Cloudera (h/t to Dalton Caldwell)
Local advertising is not a beloved art form these days. On a national level, at least, media campaigns can make quality compelling content (i.e. Superbowl commercials) that scale across TV networks. On the hyperlocal level, the resources associated with creating attractive local advertising — campaign development, sales and client support — are prohibitively limited (Merchant Circle claims 1/2 of local merchants allot less than $2,500 annually on marketing). Online, the result of this low investment is usually simple, intrusive banners ads that have become the bane of the Internet’s user experience.
But how can local media systems develop without the burdens of bad advertising? On July 9, I posited that Twitter could be the local media utility that serves as the messaging infrastructure for communities and their business ecosystems. Although it would make a perfect community service media, Twitter has chosen to develop an advertising business model and has taken steps to control their channel. Last Friday, entrepreneur Dalton Caldwell fueled the simmering backlash against Twitter’s focus on pushing ads through their “utility” by proposing to build out an alternative Twitter clone called App.net that would not support advertising, but rely on crowdfunding and paid subscriptions to build and maintain the network.
Also last Friday, Nieman Lab reports the launch of a community-owned news system called Haverhill Matters being developed by journalist Tom Stites. “This is different from a hyperlocal news site,” Stites told Nieman Lab. “This is a community institution owned by a widely distributed, large number of community members. It has to be owned by members of the community, and they’ve got to support or it doesn’t happen.” Haverhill Matters plans to entice the residents of Haverhill, Mass., to pay a $36-per-year subscription and provide sophisticated community tools that will hopefully engage users.
Both proposed models shift the responsibility for funding operations from advertisers to users. This certainly isn’t new, the user subscription model is similar to the New York Times paywall or the NPR station pledge drive. The challenge for both Caldwell’s App.net and Haverhill Matters is simply getting users to pay for the service. Over the weekend, Union Square Ventures’ Fred Wilson cautioned against the building of paid services in his article In Defense of Free:
I understand the frustration of certain folks about the commercialization of Twitter, Facebook, Tumblr, and a host of other services. I understand the frustration over the increasing lockdown of the APIs and the control these platforms are exercising on their ecosystems. I would encourage folks to compete with them to keep the web, the mobile web, and the Internet free and open. But I would not encourage those same folks to build paid services. I think their goals will be undermined by that choice.
I think Fred is correct. Getting users to pay for services over the long run requires tangible incentives that endure beyond supporting the altruistic vision of zero ads. In any case, the future of local advertising will likely be the gradual discontinuation of blatant or intrusive media ads, replaced by social media and business generated content marketing. The argument about what constitutes bad advertising will slowly become moot. Even the community-owned news model being developed in Haverhill will be chock full of brand marketing as Haverhill SMBs publish content, like recipes for a restaurant’s prix fixe dinner, that reflect their business goals. And there’s a growing cottage industry of content marketing to help businesses do this.