Does size really matter in hyperlocal?  Publishers debated the point on a panel during the first day of the Street Fight Summit. Patch CEO Warren Webster, naturally, said yes: “2010 was all about scaling up. We do believe that size is important.” Main Street Connect CEO Carll Tucker disagreed, saying that his publication started small and built outward, not wanting to “mass produce and see the wheels fall off.”

Patch (now up to 870 sites across 24 states) uses its national reach to sell to bigger advertisers while also targeting local merchants. The company is talking to big brands that are “absolutely blown away that they could have locally customized branding,” Webster said.

Main Street on the other hand, did not expand until the first 10 sites were profitable. The company is now at 52 (or three pods, as the company calls them) in the Northeast. Unlike Patch, Tucker said the sweet spot for Main Street is with regional advertisers (e.g. hospitals and realtors). “Our core advertiser is right in the middle: large regional accounts trying to brand themselves.”

Although Patch may be the national chain and Main Street, the local dealership, both see an opportunity in helping local businesses go beyond banner advertising in thinking about digital marketing. For example, Main Street Connect sells “annual visibility packages” instead of advertising, which Tucker said is meant to create a broder marketing relationship with clients.

Tucker is confident that he’s discovered the model for hyperlocal media that works – and one that will presumably take the place of newspapers, which he believes will eventually fade out. Main Street’s pods – clusters of sites – are typically profitable in 18 months; he expects the next pod to be profitable in six months.

Patch is never far from criticism about if and how its model will be profitable, but Webster was optimistic in his talking points. Webster said that at launch, he thought success would be more variable, with some succeeding and others failing, but inversely “we’re finding that they are all following the same sort of trajectory toward profitability.”

According to Webster, 50 percent of the businesses in communities covered by Patch do not have websites. “We want to be the ones that can guide them through that,” he said about the transition to digital. Regardless of what model “works” in hyperlocal media, Webster’s approach to profitability is likely shared by many in the space: The focus is not to sell advertising, but to build customers.

Photo credit: Shana Wittenwyler