hyperlocal

Putting the business model first: Why making money should be the lifeblood of local

Digital revenue growth for news and information publishers is going in the right direction in the UK. But is it rising fast enough in regional news?

Thinking big but not acting locally

For example, Daily Mail & General Trust (DMGT) is making serious money online from Mail Online – £8 million in the six months to April 3 – and pushed past the Huffington Post to become the world’s second largest news site with 60 million unique visitors a month. But at the same time digital revenue from its regional Northcliffe division actually dipped two percent.

Guardian.co.uk has more than 50 million users but it stopped its Guardian Local experiment because it was commercially “unsustainable”. TheMediaBriefing’s contributor Ed Oldfield suggested that the scheme may spark other local startups to follow in its wake, but they will need to avoid the same mistakes of failing to innovate enough commercially.

Self-serve ad managing tool Addiply generated only £500 for the three sites over the past year, although there were local advertising opportunities for Guardian Local, including its highly profitable Soulmates dating service and Google Adsense revenue, but not enough. (Read Addiply founder Rick Waghorn’s comment clarifying that £500 figure here)

Could a start-up prevail in local ads?

Are established newspaper publishers putting the content first and the business model second when it comes to online media?

This is where a smaller operator could make a big impact. Media Street Apps, which launched with Kingsroad.co.uk in 2009, was founded by online marketer Jack Rutter and tech specialist Jonathan Lloyd. Their approach was to generate revenue first.

“We’ve started backwards,” says Lloyd “By that I mean we started with the local business owner first and then have added local news content last. I know that seems crazy but it’s enabled us to shape both the Media Street software and our products.”

Focusing on the London street which stretches from Chelsea to Fulham, King’s Road is a community site and carries local news like many other “hyperlocal” start-ups. By choosing a street renowned for clothing boutiques and other independent outlets there was a clear opportunity for person-to-person ad sales. Local businesses that advertise or are listed on the site range from the independent FiFi Wilson boutique to the established King’s Road Sporting Club.

In May, King’s Road joined the Glam Media network – the American digital female-focused ad network. Major brands such as Boots and Net-A-Porter have appeared on the website. However the buck doesn’t just stop at placement ads.

“Our business model is not just built on online advertising; we do video, online marketing, competitions and paid content. Hyperlocal sites should look at these other revenue streams too,” says Lloyd.

Marketing as a service

This is wider trend on small scale. Publishers are beginning to offer more than just simple advertising: trade publisher UBM is offering varied and interesting packages in B2B, and magazine publisher Condé Nast launching its Ideactive client services division, as my colleague Patrick Smith detailed here.

Media Street also has plans to increase SEO for clients and online and affiliate revenues as well as paid events. This will be the first full financial year for the company but and it has a modest target of £60,000 revenues for its financial year end on December 31 2011.

By this time Lloyd hopes to transfer the Media Street model and software across several streets in London starting with Fulham Road.

Herein lies a digital media business model for our times: keep the content local but the operating system universal.

Originally published on TheMediaBriefing

by dandavies23