4 lessons for hyperlocal media from inaugural Street Fight Summit

October 27, 2011
Category: Newsletters

Deals don’t mean dollars. That was a point of consensus at the inaugural Street Fight Summit in New York City Oct. 25 and 26. Over two days, the summit’s 60 presenters and panelists analyzed their adventures in the trenches of hyperlocal media. Some panels addressed the evolution of daily deals and the looming impact of location-based services. Other sessions focused on the economics of local publishing and lessons learned by successful and failed independent journalism ventures.

A key question threaded throughout the conference was how best to turn local consumers into reliable revenue streams. The most valuable insights for independent publishers in attendance centered around new opportunities for better serving local businesses. Over the course of 20 sessions packed into two days, four themes emerged.

1. Local businesses need hand-holding, full-service partners. Local news sites may have an opportunity to fill that function.

Faye Penn, the founding editor of Brokelyn.com, a blog based in Brooklyn, NY, came away from the conference with new interest in LocalVox.com, a platform publishers can use to help local businesses with everything from a landing page to social media and search engine optimization. She said it’s increasingly clear to her that the path forward for independent publishers is a challenging one.

“At all of these conferences, everyone is looking for an answer that no one really has,” she said. But for Penn, who says she has 60-70,000 unique visitors each month and has earned enough recently to hire an editor, the idea of selling a streamlined service to local businesses is promising.

Photos by Shana Wittenwyler Jeff Jarvis, BuzzMachine, interviews Foursquare’s Evan Cohen


David Pachter, CEO of LocalVox, said that local businesses suffer from an information and skills gap. “They’re looking for an easy, affordable, online marketing solution that lets them feel like they’re accomplishing the transition to online marketing without spending a fortune,” he said, during a panel about alternative revenue models for publishers. LocalVox enables businesses to buy a suite of services for $250 a month, an amount Pachter said they can more than earn back through better local search results and a stronger Web presence.

Patrick Boylan, editor of Chicago’s Welles Park Bulldog, told me he was intrigued by the partnership model presented by BlankSlate.com, which helped raise the advertiser count for its first partner, Brooklyn’s seven-year-old blog Brownstoner.com, up past 400. BlankSlate manages sales for Brownstoner, allowing the editors to focus on content while outsourcing the sales process and splitting the revenue. Blankslate developed a service for Brownstoner that enables local businesses to establish an initial Web presence through the directory at $25 a month. Revenue also flows in through real-estate ads and other services for local merchants.

2. Geo-tagging may soon be as important as SEO for local publishers.

Numerous presenters described the imminent impact of location-based services. Alistair Goodman, CEO of Placecast, said it’s a matter of months before businesses will be bidding for passer-by attention. “We’re approaching a time where you’re going to be able to bid on a user on a street corner at a particular point in time in real time,” Goodman said. Placecast already allows businesses to target customers with relevant mobile ads based on their location and the time of day, the weather, the traffic, and other factors.

Given the developing opportunities for targeting readers interested in particular local content, DNAInfo.com has already made a concerted effort to geo-tag every piece of content it produces. Leela de Kretser, DNAInfo’s editorial director and publisher, said the news startup is on track toward its business goals, and that its sole investor, Joe Ricketts, believes in the long-term profitability of the news business. She and numerous other panelists emphasized that local sales efforts require a major effort to educate merchants on their online marketing options. The influx of short-term daily deals opportunities has added a complication to a market where merchants were already struggling to grasp the available advertising channels.

Panelists described local merchants in major cities as generally bewildered by daily-deal merchants and their persistent sales calls. If you’re a small business getting called upon three to four times a day by a wide range of deals startups, you may struggle to figure out what’s truly in your best interest. To combat this confusion, panelists argued, merchants need the guiding hand of a trusted local publisher to help them cut through the clutter and develop a coherent marketing strategy, reaching their local public through a combination of search, mobile and social advertising.

3. The Daily Deals honeymoon is over.

Rather than just diving deeper into the deals game alongside the 800 deal sites that have launched over the past few years, Perry Evans, CEO of Closely.com, suggested that publishers and marketers adopt a new tact. Instead of focusing on dangling dangerously low-margin deals at new price-sensitive customers, why not reach out for repeat buyers by aiming special deals at those who have already bought something, to convert them into loyal buyers. Closely provides a customized dashboard for businesses. Evans likened it to a HootSuite for merchants. It allows them to vary the discounts they offer depending on their inventory or how busy they are, and to offer existing customers customized coupons.

The economics of daily deals have changed, said Yipit co-founder Vinicius Vacanti. Whereas Groupon could spend just $2 in marketing costs to acquire its early customers, it now has to spend between $8 and $12, given the changing dynamics of online advertising, Vacanti said. And given that only a quarter of those on its email list buy something, that signifies a cost of $40 per paying customer.

Groupon can’t make enough on the one or two deals that the average customer buys into, given that it splits revenue with merchants, who have already marked the price down by 50 percent. To compound the problem, merchants are finding that, as one panelist put it, signing up for a deal is like taking a high-interest loan. You get lots of money up front for the advance purchases, but then you have to deliver a significant amount of service/product to a subset of customers who are price-sensitive and historically less brand loyal than others who find the merchant through other channels. This rationale is what has led some, including Seth Priebatsch, of the mobile gaming service Scvngr.com, to criticize what they call the “Grouponzi” phenomenon.

4. Hyperlocal publishing is as much about sales as about content.

Carll Tucker, CEO of Main Street Connect, said he sees great potential in mid-size, non-urban markets where 150 million Americans live. The 52 sites in his network of local news outlets now work with about 400 advertisers who spend an average of $8,000 a year on advertising with his sites. His sales team aims at hospitals, realtors, and car dealerships, among others, all of which need brand advertising.

For Shawn McGinness, the business manager for St. Louis Beacon, the key lesson from the site’s early progress has been to focus on a few goals and capitalize on internal strengths. The Beacon, which was founded in 2008 and now has 20 employees, including five on the business side, has a $1.5 million budget. McGinness says the Beacon made the mistake of diluting its early focus among too many projects and has since refocused its efforts around a few profitable efforts, including offline events. His three primary tips for independent news organizations were:

  • Ignore everyone else, because what works (or fails) in one place may not in another.
  • Focus on a unique value — what your organization does well.
  • Start out with small projects and gradually improve and expand upon them.

Click here to see his slides. If you’d like to read more about the Street Fight Summit, I curated 300+ Tweets, photos, slides and other materials from the conference.

Correction: An earlier version of this story misspelled Joe Ricketts.


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