Feb 8, 2011

Things done and not done

A wise man (Larry the Cable Guy, actually) once said, “Git ‘r done.” Well, I’m proud to announce: it’s done. I gave birth to a healthy baby in October, and now that the kid is mostly sleeping through the night, I can get back to debunking the business of hyperlocal news.

One thing that didn’t get past my sleep-deprived eyes during my maternity leave was news that TBD.com was ending advertising sales for its affiliates. Launched last summer, TBD reports local news in and around Washington, DC, and serves as a portal to more than 200 hyperlocal news sites and blogs. The idea behind its affiliate network was to build sales strength in numbers: TBD would act as an ad server, and participating websites would get a cut of the advertising revenue.

Everyone and their brother watched closely to see whether this model would finally turn a buck on online local and hyperlocal news. But by the end of November, TBD announced it was pulling the plug on this program. “Unfortunately, the advertising aspect of the network has not taken off as effectively as the traffic and linking relationship,” Steve Buttry, TBD’s director of community engagement, wrote.

I’m not privy to exactly what went wrong, but here are some things an ad network might do to get things right:

Start small. According to TBD, one quarter — about 50 — of its affiliates participated in the ad network. But that number might have diluted its value. It’s the danger of doing a volume business: If demand can’t move all that ad-space inventory, then the ad server and its affiliates are shit out of luck.

Instead, a network of ten or fewer websites might offer advertisers a more targeted audience and, therefore, a more valuable piece of advertising real estate. The network might not sell as many ads, but it won’t have to if it can charge a premium for its space.

Love thy neighbor. Offering advertisers a targeted audience means limiting network affiliates to a specific geographic area, maybe a single county or city. In a large market like New York, a successful network might represent just two or three adjacent neighborhoods.

A network that stretches across several counties or states (as TBD’s network does) can actually lock out advertisers who draw on sizable yet geographically focused markets. The chain-restaurant operator knows whether her food is worth a 30-minute car ride across state lines, or just a stumble across the street. She won’t spend money to advertise with a large network if her only interest is in a local or hyperlocal market.

Work it like Goldilocks. Sure, everyone wants loving from big advertisers and their big ad budgets, and no one wants to hustle for ad revenue from mom-and-pop shops. But an ad network might succeed in courting regional sponsors who have modest ad budgets and value the opportunity to speak and sell directly to core markets. It’s an approach that’s not too big, not too small, but just right.

I don’t know how much (if any) of this advice addresses TBD’s specific woes, but I do hope they find the right fit for their business structure. Git ‘r done.

Illustration of Larry the Cable Guy courtesy of Joe Bluhm.

Feb 19, 2010

The farm report

I love following the news business as much as the next guy, but sometimes it’s nice to catch up on other industries such as — oh, I don’t know — organic dairy farming.

In Dutchess County, NY, small-scale organic dairy farmers have formed a nonprofit cooperative that allows them to bypass the middle man and market their goods directly to retailers in New York City. So far, the arrangement has allowed eight family-owned farms to earn more than the going rate while staying competitive with industrial farms, The New York Times reported earlier this month.

That got me thinking: If a hard-hit industry like family farming can make money through a cooperative, then why can’t hyperlocal news outlets do the same?

For example, several extremely good hyperlocal sites dot the Washington, DC region. As independent operations, they would probably do alright in terms of advertising sales, assuming they have the sales staff and the interest to follow that revenue stream. (Some of them do not host ads. Whether that’s by choice is not known.)

But if these organizations were to form a collective advertising venue, they could probably draw large sponsors — regional chains come to mind — and charge higher ad rates for the wider distribution. The effort required to sign those sponsors can be shared, with a finder’s fee going to whomever seals the deal and a standardized rate for those who host the ad.

At the same time, the individual outlets can avail themselves to neighborhood mom-and-pop shops and charge a lower rate for hyperlocal distribution. In this case, there would be no profit sharing among members of the cooperative.

Of course, advertising networks catering to hyperlocal outlets are already out there. At least three of them contacted me yesterday after CUNY J-school’s Jeff Jarvis retweeted a link to this blog. I don’t know how these networks operate, though I’m sure they’d be happy to explain. But if hyperlocalists can cut out the middle man, then why not snip away.

Photo courtesy of Flickr user scpgt.