Here are six trends in 2012 that will impact hyperlocal media and business models. This was originally published at Street Fight last week.

1. Cross platform conversations

Livefyre and Disqus show glimpses of how conversations can move from Facebook and Twitter to online media and blog commentary. Local conversations happening on social media, especially Facebook, simply aren’t crossing over onto local media. Note the interaction on a city community page like San Francisco; it’s huge, but random in topic.

The big opportunity is to organize local conversations that are now happening on, say, the community page above, into topics like sports, culture, movies, things to do, business, family, etc. In 2012, cross platform systems that facilitate community engagement across all social media along these topics will develop. The current best example of local topical engagement is sports media like SBNation and Bleacher Report that encourage sports blogging and fan interaction at the local team level.

2. Influence peddling at a local level

The advent of Klout and other new forms of social influence tabulation mirrors the slow power shift of media influence from traditional to social channels. Anybody with a voice can build a following, and the new business models evolving around influence metrics allow businesses to reward influencers with the hopes of converting them into advocates.

On a national level, social influence has naturally followed the celebrities; Britney, basketball players and Obama come to mind. On a local level, social influence is still up for grabs. Many sports bloggers became part of the SBNation empire simply by being bloggers for their local team. The implied business model is local influencers will attract rewarding opportunities, whether it’s in the form of a media job or simply a perk from a local business wanting to engage them.

The recognition of consumer generated revenue opportunities

A candid consumer recommendation, or a compilation of great Yelp reviews, is far more credible for a business than an advertisement. Local businesses will be able mine and filter local conversations across the social media, and participate in social marketing their services to elicit favorable reactions and revenue opportunities. For example, high school and college students often use Facebook to set Friday night plans. The most influential of them will move crowds, and local businesses, like pizza restaurants and movie theaters, will build relationships with influencers using rewards, loyalty programs, or simply a friendly dialogue.

example: using Needium to create business building dialogue

Startups are developing to provide localized services to filter, monitor and engage consumers on behalf of small business. For example, Needium monitors Twitter for specific keywords and phrases such as “looking for a lunch spot in Union Square”, that signal consumer demand for their local business client, and then converses with Tweeters on behalf of their client. They are basically building a personalized geolocated mobile response system for local marketing.

Local brands move to app development

The rapid adoption to mobile platforms impels brands like Walgreens and Starbucks to create apps specific to the needs of their mobile consumer. Local brands are headed down the same path. Yes, being on Yelp, Foursquare and Google Places provides social visibility but it limits the consumer interaction to just a check-in deal. A local merchant should have its own app complete with loyalty program, special deals, inventory search and topical information that its customers need. Building a mobile app is still beyond the pale of 99.9% of local merchants, and it’s surprising I haven’t seen a startup financed to create turnkey mobile apps for small business.

Emergence of the local social media marketing agencies

The dearth of startups serving local business with mobile app development is indicative of a larger hole to fill: there are still few turnkey social marketing agencies serving the over 4 million small businesses in America. Local business needs turnkey solutions because the resources required to learn, implement and execute a comprehensive social marketing are daunting. 2012 will bring scalable turnkey service companies like Main Street Hub devoted to managing local social marketing for SMBs.

The New Role for Bricks and Mortar

Retailers can’t escape the impact of Amazon Price Checker and Groupon on their business. In-store price checking and daily deals threaten customer retention and profit margins respectively, and they certainly aren’t going away. So how will bricks and mortar remain relevant to, and more importantly, build loyalty from local consumers?

Before social media, the decision to visit a local business was based on personal need. Now, more decisions are based on serendipitous search for things to do, what to eat, where their friends are, and special deals. Bricks and mortar can position themselves to be destinations simply by making sure they are visible, preferably with attractive offers sprinkled here and there, in all the media consumer use to find them. They remain relevant because there are potentially more tangible reasons for people to go out! Foursquare and Yelp check-ins, events planning services like Meetup and Plancast, and mobile location services will be the currency that supplements local traffic to business.

Twylah is a service that aggregates a Twitter feed and compiles the articles they link into a Flipboard like display.   Many reviewers have explained the mechanics of Twylah in far more detail than I can:

• Robert Scoble: “Twylah lets media brands and celebrities monetize their Twitter stream”
• Neal Schaffer: “Twitter SEO? Think Twylah“

We’ve been working together with Eric Kim, CEO, and Twylah to create “breaking news” Twylah pages for the Twitter feeds across our 300+ city Breaking News Network. These Twylah rendered pages are subdomains of our Breaking News cities, and can be viewed on many of our Breaking News cities by including the subdomain title “news” preceding the Breaking News URL, such as news.breakingsfnews.com.

The current iteration of Twylah pages sit separately from our Breaking News websites and don’t have a direct link to the website itself, only the Twitter feed. We’ve been waiting for Twylah to unveil their embed system so we can embed the page directly to the site itself. Thus, all of these subdomain pages are completely hidden, findable right now only through search engines.

So our experiment simply measures how Twylah performs to drive search engine traffic based on breaking news to hidden Twylah pages. Here are the results:

Approaching 900 uniques per day

Number of Google indexes over span of 3 months for selected news sites:

CONCLUSIONS:

1. It’s well documented that Twitter has become the leading social media for broadcasting “breaking news” nationally and locally. People constantly search for breaking news about a city. Twylah’s service allows breaking news tweets to be indexed and discoverable persistently, not forgotten as most tweets are (according to bit.ly, the average half life of a link on Twitter is 2.8 hours). Simply put, Twylah delivers organic traffic from sets of older tweets even when the pages it directs to are hidden (and therefore not discoverable by any other means).
2. Twylah automatically facilitates conversations around brands. Through Twitter, we can curate the key influencers associated with a brand and, through Twylah, deliver their commentary to an audience who wants this information in a coherent published format. For example, a well curated Twylah page can deliver real time information about specific movie openings by aggregating content from the media, arts and events publishers on Twitter whose use Twitter to monitor movies. Moreover, on the Breaking News Network, every city already has a set of curated local influencers across a variety of topics, so it’s possible now to develop hyperlocal Twylah channels devoted to movies, the arts, sports, or any other topic. This approach to hyperlocal branding is still in its infancy, and we’ll be focusing on this subject extensively over the next few articles.
3. Twylah, via Twitter, delivers a broadcast solution to brands that other social networks can’t. Eric Kim states: “We are targeting Twitter publishers (brands and personal brands), who consistently create and curate valuable content on any topic.” This type of “broadcast” branding is where Twitter excels over Facebook, which seems to moving towards developing its news feeds favoring personal transparency over commercial branding. It is especially powerful for delivering ticker tapes of breaking news and media feeds that wouldn’t be as effectively distributed across platforms like Facebook where such news might be perceived as excessive.

Journalists continue to search for a viable business model that supports online hyperlocal publications, but they won’t ever reach the threshold of revenues to maintain operations if they rely solely on traditional advertising fees from local merchants. That doesn’t mean local advertising is also poised to fall off a cliff. On the contrary, BIA/Kelsey states the prospects for online local advertising will double by 2015, but much of that growth will come from new mobile applications and daily deals category vendors. Here are five reasons why hyperlocal news faces hurdles to profitability:

1) Hyperlocal audiences are too granular to support traditional revenue models. Local banner ads aren’t economically viable. Traffic to online hyperlocal publications is inherently small due to geography, and total ad revenue based on CPM (cost per thousand views) won’t even cover the costs of the ad sales force.

Report on AOL’s hyperlocal network Patch.com’s traffic sourced from Business Insider “Leaked Reports on Patch traffic”

Article comment:

Chris L on Jun 24, 1:18 PM said:

If their page views really are only 783K for a month in So Cal, that translates to less than $5K in revenue for a month. I doubt they can build a sustainable business on that. Revenue = (783,000/1000)*3*$2 Assumptions: $2 CPM (generous) and 3 ad slots per page.

2. Local advertising alternatives are proliferating. Newspapers lost their classifieds revenue to Craigslist. The growing number of pay for performance business models including paid search, daily deals and the new mobile ad applications are cannibalizing media spending. Advertising options will continue to expand for local merchants, leaving a smaller piece of the pie to hyperlocal news.

3. Hyperlocal media resources are proliferating. Traditional media has relegated the business community to being simply the “advertisers” and not involving them in content sourcing. Yet on the local social media, many committed bloggers are the business owners who want to discuss their industry and community, and by extension market themselves. Traditional media needs to incorporate the business community as journalistic partners instead of trying to sell to them all the time.

New community service business models are developing that focus on engaging the community around local news and providing free advertising to businesses, adding further pressure on traditional ad sales. Facebook and other social networks may also evolve into hyperlocal community platforms that center on community sourced and shared news. In sum, hyperlocal news resources will proliferate as alternatives to traditional local media, simply because it’s easier to build these properties now.

4.  Local merchants are learning how to self market using the social media. Roost reports merchants believing it is four times more effective than paid search. Those merchants that can’t do it will be taught or be serviced by local social media / ad agencies, or even the traditional media publishers themselves. Gannett wisely set up GannettLocal.com to engage with local businesses as their social media marketing educator and partner.

5. There is a visible example of an unworkable local media model. Patch.com, AOL’s effort to build a hyperlocal news network from scratch even when local news revenues were falling, demonstrates and even confirms the high hurdles in building a profitable local ad model.

After a year and $150 million, Patch doesn’t seem to be gaining the revenue traction it needs to warrant further investment, and AOL is working with investment bankers on restructuring. The Patch exercise may shut the door on the idea of building a scalable hyperlocal network based on paid content.

The classic, and perhaps only business model supporting hyperlocal journalistic efforts like Patch.com and other local media is local advertising. On StreetFightMag.com last week, Ted Mann, Digital Development Director for Gannett NJ, discusses why Gannett’s hyperlocal experiment InJersey.com failed. The main and obvious reason is simply local advertising cannot adequately cover expenses. So…

What if local media were positioned as a community service without the advertising model?

Can hyperlocal media thrive and engage the community as a good will service?

1. The value of hyperlocal is in the information

I paraphrase from Alex Salkever’s June 24 article Hyperlocal’s Automated Future. The website platform and curation tools now exist for any individual or business to develop local media cheaply. A WordPress blog is an easily customized platform for anchoring the news system. Curation and aggregation tools, plus hyperlocal social applications like See Click Fix can provide a panoply of local interest content.

Although still an immature technology, an automated news aggregation and publication service like paper.li or Twylah can be embedded to display in newsprint “Flipboard” format.

2. It’s not just the website… hyperlocal spans across social and mobile media

A community media service must now span across all social media for hyperlocal engagement. Twitter, a perfect media for broadcasting real time local news, can be used to curate the best local Twitter feeds into lists.

Facebook is becoming the arena where the locals will gather to discuss local news, events, even the Daily Deals around town. (Ted Mann’s point #9 – use Facebook as the local watering hole). The social “metrics” for engagement are high for local news:

3. Partner with everyone

Ted Mann’s #4 recommendation for developing hyperlocal content. Companies developing applications serving hyperlocal audiences, like SeeClickFix above, want to partner with local publishers to gain traction. Local publishers want to partner with new application developers to deliver unique local content to their audience. It’s mutually beneficial to overlay new social content, even social commerce applications across national hyperlocal networks. Even better if there is a business model associated with the application for revenue share opportunities between publisher and application provider. One long term mission of a national community service network is to create exposure for a variety of social hyperlocal applications that would not normally get exposure from traditional media.

4. Support the business community

Local businesses are integral to engaging the community because they have the commercial incentive to create content that helps to publicize their business, directly or indirectly. Local food critics own restaurants, real estate columnists are Realtors. Yet, the classic advertising model forces them on the sidelines because that kind of publicity has tangible dollar value that traditional publishers need to extract. So why not support the business community by embedding the most compelling websites and blogs of local merchants into hyperlocal media as content free of charge?

A full website presence has far greater utility for the featured businesses and for the reader than a tiny banner ad selling at $500-1,000 per month. Engage the business community, and they will make the effort to engage locals because 1) it’s free to them, and 2) it’s their marketing vehicle.

5. What is the business model anyway?

Hyperlocal media systems like Breaking News are easy and cheap (often less than the cost of a one-month banner ad) to develop for individuals and groups wanting to create a community media presence in their city. The business model for the owner is not to make money, but to serve the community and be positioned as a local media star in order to enhance the business development prospects of their “day job”.  It’s the same rationale for serving as a Chamber of Commerce president, or even 50 years ago, starting your own local newspaper; it just helps your career. The owner of the community media service pays it forward.

6. What is the impact of hyperlocal media as community service?

The greater impact of the community media service model may be disruptive. The perpetual discussions revolving around how to monetize local journalism have yet to point to a cashflow positive solution. An automated media model that requires few resources and supports the local business community can put pressure on traditional local publishing models. Yes, the content is curated, aggregated and automated, but it’s real time local information that readers want. In time, the new social local applications now being developed can be easily added to supplement the information stream and generate the local engagement needed to survive, even prosper within the hyperlocal media landscape.

Reference:

Groupon-like deals can work for real estate, but not as a typical $10 for $20 worth of product purchase. Real estate can’t be sold as a 30% off purchase price item (although they certainly tried variations of this at California real estate investment clubs in 2005). Real estate marketing has generally relied on variations of online lead generation, like providing real estate listings, in order to capture contact information. A real estate Groupon would essentially have the same mission of driving the active client out of the woodwork by providing a saving incentive.

Real estate marketing and the need to draw active clients out of the woodwork

The real estate industry is a peculiar local business for couponing because real estate transactions are solitary, even once in a lifetime events, compared to every day activities like eating out. In a nutshell, real estate marketing has been based on community networking and leveraging referrals to build Realtor brand recognition. The big hurdle is building community visibility to achieve that branding. Marketing then became a shotgun numbers game that spawned the traditional pushy  techniques that make consumers cringe. To avoid this spam stream, active home buyers and sellers now try to control who can contact them, and it makes them harder to find.

What will a Groupon for real estate look like?

One major coupon difference is that a consumer can’t assess the market value of a real estate service like a restaurant coupon. Couponing real estate services will likely require either pre-transaction interaction (“feel free to call me to discuss the details before you purchase the coupon”), and/or lead qualification processing.

I see two consumer models for real estate coupon services: 1) Nominal consumer payment upfront for redemption rights of a discounted service, and 2) No consumer payment upfront, but registered leads are qualified by the Realtor, chosen and purchased from the coupon provider. We’re using some examples below from Housetipper.com, one of the first coupon services for real estate.

1) Payment for discounted services model

from Housetipper.com

At first blush, the $25 purchase fee in this ad acts like an option that locks the 4% commission offer for a specified window, say one year. However, no consumer would purchase this kind of offer without due diligence of both the Realty and their standard pricing policy (maybe they always charge 4% commission rate). The deal terms will add language to solicit the potential buyer to “contact” them with details, or to join an on-site discussion thread.

This offer works because it accomplishes two things a Realtor wants: 1) pulls a potential client into a conversation, and 2) qualified client commitment when they actually pay $25.

The business concept works because the Realtor receives leads with no out of pocket fees, and the deals provider receives the full fee revenue from the consumer. However, the business model will be inherently limited due to the small number of coupons that can be sold in a locality (more on this later).

2) Free but transparent lead generation model

The coupon purchase price may dissuade many potential clients from inquiry if they have to actually pay. One way to bring more leads to the table would be to create a free offer, say, a free home inspection if a client signs a listing agreement (note the fine print can cover the Realtor’s out of pocket risk by stipulating that the rebate for home inspection be paid at closing). More potential clients will sign up for the deal without financial commitment.

The transparent lead generation system is a new concept in delivering leads. Once a lead registers, their name, email address and phone #, and if applicable, their social media profiles like Linkedin are presented to the Realtor. The Realtor can choose to either green light or red light the lead, and will pay a specified green light fee, like $25, to activate contact.

The traditional intermediary based lead generation systems that harvest email addresses from website inquiries and sold blind in bulk, are generally stale and poor quality; a 3% hit rate is doing well. Transparent lead generation systems reveal potential clients to due diligence and assure qualification, even to the point of Realtor contact with the lead before green lighting. Coupon providers can work on an honor system because any Realtor who would try to side deal with a client to avoid paying a fee would make an immediate unethical impression.

Final hurdle – distribution and scale

The biggest hurdle with real estate couponing is building an effective subscriber base for deals.

1) In today’s economy, the number of people in the market for real estate is small

2) Subscribers only subscribe when they are in the market, a very short window. And how will they find the real estate coupon, when limited deal revenue won’t support supplemental marketing campaigns?

3) Real estate is inherently local, the coupon provider can’t market locally in every city (unless they are Groupon) so the marketing effort will fall on the Realtor and local media. This is a lot of resource coordination, and Realtor “sharing” the deal through Facebook won’t likely tip a deal into significant numbers.

Solution to Scale

Coupon providers will need to augment their distribution through affiliate relationships. For example, deal syndication networks can be developed with real estate listings sites like Trulia or Zillow, brokerages, and hyperlocal networks like Patch and the Breaking News Network that can distribute deals locally. Scaling will require a coupon provider to collect in aggregate enough small fees (much smaller than traditional Groupon yields) to cover centralized operating expenses. Building national client offerings from housing related retailers like Home Depot will also support scale.

Based on my work with the real estate industry, I see enthusiastic demand for real estate Groupons from Realtors, as well as mortgage brokers, insurance and other real estate related services. And why not? Realtors will try any free or cheap marketing opportunities that enhance their lead quality.

On Media Transparent last October, I explored the idea of real time deals, which requires consumption of a daily deal within a limited time frame. Merchants with perishable products – seats at a restaurant, theaters, hotel rooms, airlines – want a deals system that quickly and efficiently fills excess inventory, especially at a moment’s notice. Both Groupon and Living Social introduced their versions of real time deals this week with Groupon Now and Instant Deals. It’s the next bold iteration of how online deals will transform the way consumers shop.

Restaurants can obviously use these deals to fill their slower Monday through Wednesday dinner slots. I list other types of businesses that would benefit most from real time deals:

High margin real time deals that can be sold nationally or regionally

• Last minute airline tickets for specific destinations flying from a preferred airport(s)
• Last minute hotel rooms – redeemable within 24-48 hours. Hopefully every city in a network will have at least one deal.
• Ski lift tickets. Resorts projecting poor skiing conditions over the weekend can run campaigns to fill their chairs with real time deals throughout the week.
• Cruises, vacation packages, hotel packages preceding long weekends and vacation periods.

Services and products based on seasonal demand

• Golf course fees. Nobody golfs in February, even in California. But if the weather is projected to be fair over the next week, half price greens fees will get the duffers out.
• End of season sports equipment based on season.
• End of season amusement and water park admission

What are the implications of real time deals?

1) Real time deals encourage last minute buying.

Now, consumers will “game” the real time deal system to extract savings. Wednesdays may replace Friday nights as restaurant night. People will wait to buy tickets to concerts, sports events or theater if they know the program doesn’t have popular appeal, and set up alerts so they’re notified of the opportunities. Groupon (and inevitably other deals systems) uses a simple method to deliver deals by having the user click on the “I’m hungry” or “I’m bored” button to check on real time deals geolocated near where they are. Spontaneous purchasing is exciting; everybody loves the feeling of instant gratification of a bargain and doing something fun at a moment’s notice.

Just as Groupon has instilled the “never pay retail” consumer culture that merchants hate, real time deals will instill a “never buy early” mindset that merchants will hate more. Yet, our society is adapting to real time and I expect the new consumer behavior will embrace late buying because advanced planning is such a hassle with cancellation and substitution (discovering there’s something better to do at the scheduled time) risks. It’s simply much more efficient to, say, confirm your travel plan a day or two before a planned event than to confirm the plan a month ahead only, particularly if pricing is essentially the same.

2) Paradoxically, real time deals can also encourage advance buying for seasonal services.

Tax accountants are far less busy in January than April. Consumers purchasing cars and other large ticket items will often spend weeks or months to make a decision. Christmas trees can be enjoyed longer if offered as a deal during Thanksgiving weekend. Time limited deals can force consumers to stop procrastinating and get things done while pricing is cheap during merchant off times.

Local community news has always been hard to produce profitably with scale. Local news is only relevant to those who live within the community, and it makes cost per thousand based advertising models untenable when readership may log in the hundreds. Without a revenue model to hire editors and writers, the cheapest way to source local news content is either through volunteer reporters, or aggregation of local media by engines .

Problems with Local News Aggregation Technologies

ReadWriteWeb’s Marshall Kirkpatrick recently posed the question “Why haven’t neighborhood news technologies worked out?”

I sure hope someone can nail it. Give me the news about my neighborhood, please... I care about what’s happening in the neighborhood around me and I want to see the fabulous new technologies of open government data, online news syndication, social networking and data mining all put to service to fulfill hyperlocal news wishes and dreams I didn’t even know I had yet.

From the article’s comment stream, it seems news aggregators like Outside.in, Fwix, and EveryBlock have three problems:

1) Local news presented by algorithm isn’t customized to the needs of the reader and therefore, sterile and/or irrelevant.

2) Most local news is inherently uninteresting. Ever watch a local TV station and care about anything about the car wrecks, murders or city council meetings covered? It’s lower grade information that doesn’t enrich or improve our lives as much as the content we generally seek on the web.

3) Aggregated local news lacks the social element, whether it be real reporters or people in the community engaged in local discussions.

1. Local News needs manual curation

The news needs to be right. Fwix often reports irrelevant news; Rocklin is 80 miles north of Modesto, CA (see image)

Engines query for local articles via RSS but they require a human team to identify the best feeds in every city and continually update these feeds. Feeds can be sourced not only from mainstream media, but also blogs, Twitter and other social media links, and eventually Facebook, Yelp, Foursquare and other geo-localized media sources as they attain credibility by reaching critical mass of local participants.

2. Local News needs more content

Again, it’s hard to produce content without somebody paying for it. However, there are new producers of local content that haven’t yet made an imprint as local media sources. Civic organizations, local companies and merchants like Whole Foods have websites and blogs that broadcast timely information people want to know about, but may not have RSS feeds for simple aggregation. Companies like Nozzl Media and DataSift are developing ways to aggregate and filter this kind of content. Finally, locals using Facebook groups, Yelp and Foursquare are documenting what’s happening in their city, and their reviews are starting to be included in sites like EveryBlock. People will eventually find where their friends are congregating and which stores are popular through the aggregation of these geolocational systems (see Checkinmedia image)

3. Local news needs personalization

Although some people may like crime reports for their city, all I really want to know about the 1/2 mile radius around where I live is 1) all the daily deals merchants in my neighborhood are offering, 2) what’s playing at the theaters, 3) the Whole Foods, Trader Joe’s and Safeway circulars, and 4) where all my friends are congregating around San Francisco. That’s it, at least for today. Once the content sources from deals services, supermarket chains and theaters, and geomedia are aggregated, this kind of personalized local portal becomes relevant to daily life.

4. Local News needs to be social

Readers are motivated to participate in social news for two reasons: visibility and content ownership. Just like yesteryear’s “Letters to the Editor”, readers comment frequently on mainstream media news sites like Huffington Post or LATimes simply because they know their input will get read by thousands. News aggregators (like EveryBlock, right image) have a hard time pulling in conversations simply because there is nobody to converse with!

To succeed in gaining participation, hyperlocal news sites need on-the-ground ringleaders in each city to engage their communities and promote participation. But ringleaders need compensation. Fwix and other news aggregators own every city and provide little incentive for others to own and grow content for them. We modeled The Breaking News Network as a kind of franchise that facilitates the creation of a local media resource by individuals and groups in a city, and gives them city/community ownership so they have vested interest to grow their properties.

Patch hires editors for each city who can spur participation in their community, but is currently burdened with a high expense / small revenue model that is under scrutiny by Business Insider among others.

5. Local News needs to be easy to read and digest

The  popular Flipboard for iPad validates the concept that people like reading aggregated and personalized news in a newspaper format. Reading within familiar typeset frames is easier than perusing streams of news that characterize news aggregators like Topix or EveryBlock. There’s opportunities for aggregation and presentation technologies like paper.li to make it easier for news to be curated and read in this more reader-friendly format. For example, BreakingSFNews.com (image below) embeds paper.li as another way to read about SF news.

AOL’s acquisition of the Huffington Post firmly entrenches AOL as a journalistic media endeavor eye-to-eye with Gannett, Murdoch and, gasp, the other newspapers. What is strikingly different about Huffington Post is that content is sourced from celebrities – politicians, actors, college professors, locals – and not from the ivory news desks that still embody the fifth estates of NY Times and WSJ. It’s a schizoid tabloid, with entrepreneurs reporting about Davos right next to a photo of Lady Gaga. The articles are compelling because they are sourced socially from people you may know or want to know, not reporters. They’re like Arianna’s friends.

Reshaping AOL’s local initiative Patch.com

AOL makes a smart move by placing Arianna as head of content to reshape the culture of its local publishing initiative Patch.com. AOL has come under fire for lacking a scalable business model where sparse online traffic for each Patch city are limited by the size of each community. Its critics see Patch as replicating the tired local publishing model by hiring editors, and more difficult, building a local ad revenue base from scratch. HuffPo made content social, and Arianna’s challenge is to re-engineer Patch.com so they are mini-HuffPo’s with news sourced by locals known to the community.

Up to now, deals sites have been strictly deals sites. Patch has the opportunity to create social local news vehicles that engage the community in a way the staid newspaper hasn’t done. Deals via AOL’s deals engine Wow can be integrated as part of this social fabric that will make venturing to a local “deals site”, or even an online newspaper’s coupon zone redundant. This is the best case scenario for AOL’s local play; I frankly think the runway for AOL’s local expansion is too ambitious and capital intensive to see the immediate returns that shareholders wants. There’s already a precedent to locally crowd sourced news in Examiner.com that highlights the problem with sourcing consistent good content at the local level.

Can Quora go mainstream to the masses? Can Quora be used effectively as a local media resource and social network for communities that have local questions?

The Problem with Local Topics

Topics are the defining feature of Quora that allows users to filter their Q&A stream. To filter local Q&A, users will follow local geographical names like “Palo Alto”. Non-geographical name topics are generic but specific topics, i.e. “Real Estate”, “Shopping”, “Shopping Mall”, “Daily Deals”, “Walmart”, “Pet Services”, “Nonprofits” will have local connotations. For example, a Quora user posing a question about the Palo Alto Real Estate market may add them to both the “Palo Alto” and “Real Estate” categories. You can imagine the deluge on the topic “Real Estate” when Realtors are mobilized on Quora to discuss their individual markets.

To avoid the problem of topic deluge, Quora’s users will need to define their questions by long tail methods. Here is how the local topic Palo Alto is currently sorted into subtopics (or child topics):

There are huge curation problems as topics multiply granularly, and create clutter that Quora monitors simply wouldn’t be able to organize in a timely manner.

Possible Quora solution – Categorical Curation

Now, all Quora users are displayed one stream of all topics they follow. The next major feature is to allow Quora users to create “buckets” or “lists” that curates topics into categories. Then the Quora user can aggregate all social media topics (“Facebook”, “Twitter”, etc.), geographical topics (“Palo Alto”, “Real Estate in Palo Alto”), and people they know or follow (“Robert Scoble”, “Steve Case”, “Barack Obama”) into separate, segregated streams.

The recent mainstream media articles demonstrating evidence of Groupon’s shortcomings (including last week’s article)  are focused on the consequences of its massive distribution capabilities and non-local presence.

First there was the dodgy fake deals in Brazil, then there was a business owner saying offering a Groupon deal was the worst business decision she ever made, then there was the sketchy photography offer.

One Hyperlocal Solution

Local women’s groups have always had a commercial or community support function in society, and they could easily form group buying engines if they have a ringleader(s) and access to a couponing system. These local buying groups can mitigate the risks that Groupon has been dealing with.

• Deals can be sourced with local businesses from within a women’s network, much more easy now that everybody seems to be on Facebook. Local businesses will appreciate on-the-ground servicing from within their community as opposed to dealing with a Groupon tele-rep based in Chicago.
• Local businesses doing a coupon campaign with a local buying group limits the risk of an oversold offering that Groupon poses. A local buying group will also be more accommodating and flexible, allowing clients to experiment with their ads or run offers on a weekly or monthly basis. Getting on Groupon’s overbooked schedule can be a challenge.
• Fraudulent or unethical businesses can be weeded out simply because everybody in the local business community will know each other.
• The fees paid to a local buying group will likely be less than 50% of coupon face value fees that are generally paid to Groupon. Remember that coupons always reach the same local consumer, so in the long run it’s more economical to pay fewer fees.

Case study: JuiceintheCity.com

JuiceintheCity.com is a great example of a couponing system run by mothers in the Peninsula and South Bay areas of the SF Bay Area. Here is the story from co-founder and CMO Sarah Eisner:

Juice in the City is, in a nutshell, the softer side of Groupon meets Avon. We offer daily deals sourced for moms by moms. Our Avon-like sales force of moms possess local knowledge and are trusted sources for recommending local businesses. We tend to get the deals other deal a day sites don’t (like Cafe Borrone and Kepler’s Books in Menlo Park) because the moms representing JITC are actual loyal customers of local businesses, and potentially already know the owners of these businesses. They care about the businesses and about the experience they recommend to other moms.

Each deal is found and developed by one of Juice’s “Local Business Consultant” moms who creates “homey” ad copy that sells the deal through personal testimonial:

Juice in the City recruits their peers to act as their sales team to source deals.

It’s a grass roots employment opportunity that reflects how the recession changes the nature of work; we’re not working for a company any more, but a group, a cooperative. I found out about Juice in the City simply because a restaurant owner I know related the story of all these couponing services now going door-to-door for sales.

Future of Local Group Buying

The key to developing local group buying systems today is simply access to a group buying application system. This system includes:

1. the group buying application that processes the deals by credit card, fulfills coupon delivery and provides after market support.
2. Tutorials on how to market online coupons to the community (it’s much more effective if one already has a community media presence such as Breaking News)
3. Tutorials on how to sell deals to the community
4. Tutorials on how to create effective advertising

Item #1 is key because it’s the executing technology. The current phase of the group buying industry is surprisingly less than a year old, and there are very few plug and play applications for small business. The solutions can be expensive because more focus is being put on developing enterprise coupon platforms for media and media networks. Items #2, #3 and #4 might draw on the expertise and experiences of a solid management team. Although it seems that the future of local advertising might be every townie offering a coupon deal, I believe those who establish a community media presence will win out.

Related articles:

The problems with Groupon culture

The new hyperlocal opportunities that Groupon spawns