Hyperlocal: Good For Readers, Advertisers

As traditionalists readily blast the Internet for journalism’s supposed demise, a panel of industry experts said Monday they believe that hyperlocal news websites not only are economically feasible -- but could deliver a better product for both content and advertisers to boot.

“We could end up with better journalism,” said Jeff Jarvis, director of the City University of New York’s interactive media program. By tapping reporters and contributors who are more integrally involved with -- and accountable to -- the communities they cover, hyperlocal sites could raise the bar for the kind of news content -- and news sources -- people care about, Jarvis said.

Hyperlocal sites also are particular draws for advertisers that would not normally buy pricey media spots, as well as those more interested in building relationships with customers than getting them in the door, he said. The key, he said, is that creating advertising revenue is no longer about making simple sales, but creating opportunities for consumers and local businesses to engage on a more meaningful level.

“It’s not about selling inventory anymore,” Jarvis said. “It’s about building a relationship with the community.” Journalists also would have a role in adding value to their content, he said.

Jarvis’s comments -- made at the “Turning Hyperlocal into Hyperprofit” panel at Borrell Associates’ Local Online Advertising Conference in New York -- reflect his ongoing research into hyperlocal sites business models, which he says shows the concept’s profitability.

Under Jarvis’ models -- which tout creating networks of hyperlocal sites as well as a new incarnation of news organization that encourages cross-promotion and content sharing -- the payoff could be relatively big.

A hyperlocal site serving a community of 60,000, for example, could bring in about $200,000 a year, he said.

The real future of the business, though, he added, is in creating networks of hyperlocal sites, which give sites the ability to share content, ads and distribution. A network of 94, for instance, could become a $20 million business in just three years, he said.

While Jarvis was the panel’s keynote speaker, he was not alone in his role as a proponent of going hyperlocal.

A panel of four interactive media executives, all involved in the creation and promotion of hyperlocal sites, also said they are firm believers in the ultimate profitability of going local based on the concept that such sites are not as much properties but platforms for content and opportunity.

The McClatchy Co., for example, already is bringing in about $200 million a year in interactive revenue, about 16% of the newspaper company’s overall ad dollars, said Chris Hendricks, McClatchy’s VP of interactive media.

The growing success of McClatchy’s 12 hyperlocal sites, which are in places like Miami and Charlotte, is based on a model that uses both professional and amateur content providers, meaning professional news coverage could appear on-line alongside bloggers’ and vice versa.

Raleigh, N.C.’s share.triangle.com shows how successful such a concept can be in creating a lively on-line community of content and exchange. About 12,000 photos alone have been posted on the site, Hendricks said.

U.S. Local News Network is plowing new ground with "curious, optimistic & independent" news sites in three California markets, said Chris Jennewein, USLNN president. His sites are not only politically independent, but independent of legacy media in several ways:

• With a small staff of professional journalists (one editor, seven reporters), the San Diego Local News Network does not aspire to be the "journal of record," and instead focuses on the three brand attributes of "curious, optimistic and independent."
• "It seems to me billing, strategic marketing, ad trafficking, technology and even SEO seo can be done centrally," said Jennewein, "not replicated in every market like newspapers." He believes 50 U.S. markets could support similar operations.
• Sales compensation is also opposite of many papers, he said. Instead of high base pay and low commission, "we pay 15% on the first dollar sold, 20% at quota, and more at 15% or 20% over quota." Four sales reps are focused on "blue chip" regional advertisers and are achieving $10+ cpm, Jennewein said.

At GrowthSpur.com, CEO Mark Potts believes even the smallest operations can succeed with hyperlocal revenue. His company provides sales training to local operations, and he believes neighborhood bloggers are "extremely well-suited to sell. They know these businesses."

Fisher, the Seattle-based broadcasting company, also is having success with its 109 hyperlocal sites, claiming more than 1,000 advertisers that were not previously buying TV spots, said Troy McGuire, VP of news and GM of Fisher Interactive. “This is a totally new revenue stream for our company,” he said. Fisher leveraged a vendor’s telemarketing staff of 40 to achieve the 1,000-advertising milestone in less than six months.

The appeal of Fisher’s site, he said, stems from them providing important national and regional news down to the tidbits of neighborhood news of interest only to those affected by it.