‘Hyperlocal’ – Everyone’s Sold Except Advertisers?

This guest post, originally here, is from BRANDWEEK writer Elena Malykhina

Hyperlocal is not all it’s hyped up to be as an ad medium – but such venues are making efforts to juice up their offerings and turn the focus on targeted consumer-centric content and experiences into increasingly compelling opportunities for advertisers.

ZipLocal, a firm specializing in local search, this week unveiled a platform called LocaLeads, a digital ad system that distributes hyperlocal advertising content from SMBs to the Web and mobile publishers—and it charges advertisers only if they get actual leads. Here’s what’s good about it: With LocaLeads, businesses get a dashboard where they can track consumer intent and check off a quality lead.

Overall, the hyperlocal model continues to evolve and expand, becoming increasingly portable and pliant in the process. And the big guys are getting into the act. AOL and Yahoo are sharpening their focus on local content. AOL’s homepage redesign this week and the Yahoo Local portalare key examples, providing tailored content for users and targeted ad opportunities for marketers.

Those opportunities, however, remain to be fully exploited—with the ultimate success (or failure) of the hyperlocal model still a big question.

While many in the blogosphere and the media have dubbed it a “multibillion dollar business opportunity,” hyperlocal is in fact a grey area for advertisers who, as ever, want sure-fire bangs for their bucks.

“Here’s the problem: The hyperlocal content everyone focuses on is news. But advertisers are not looking for content; they’re looking for an audience and certain [consumer] characteristics,” said Gordon Borrell, CEO of BorrellAssociates, a research firm that specializes in local advertising. “I still have worries about sites like Patch.com or other hyperlocal news sites attracting much less valuable audiences [for advertisers].”

Not surprisingly, Patch president Warren Webster disagrees. He argues Patch – founded in 2007 by Tim Armstrong, now CEO of AOL – allows national advertisers to play in local markets, and local advertisers to get the exposure they wouldn’t otherwise get. (Armstrong didn’t forget his roots. AOL acquired Patch last year, investing even more money in the hyperlocal space.)

In addition to events and business listings, Patch serves up daily neighborhood news-produced locally by professional reporters-which the service has been intensely hiring since it launched. With AOL’s investment, Patch plans to debut its 500th site by the end of this year.

That’s all great for luring local dollars, but what about national advertisers?

“The demand has been incredible. We’ve run some successful campaigns for national brands,” said Webster. When DreamWorks was releasing a children’s movie, for example, Patch organized a crafts day in different communities and promoted the event in its calendar, instead of running banner ads. The event was, of course, tied to the movie, and the turnout was overwhelming, Webster said.

But hyperlocal sites can extend reach well beyond banners with their notoriously low click-through rates and low consumer appeal. In the next several years, SMB local interactive ad spending is forecasted to grow by almost 10 percent, from $6.9 billion to $7.5 billion, according to a study by Borrell Associates. The culprit affecting these forecasts is the change in “standard format” or banner-type ad spending. If this format is removed from the equation, SMB spending is expected to almost double by 2013, the research firm found.

“Hyperlocal works well if you’re in the search mode or call to action,” said Olivier Vincent, president and CEO of ZipLocal.

“‘Experts may say that news is wrong way to do it, but you must think about it from the consumers’ perspective—they want to know what is happening close to them and the biz model is finally arriving for publishers (with our help) to provide that service,” said Mark Josephson, CEO of Outside.in, a provider of hyperlocal news and information similar to Patch.

A pattern emerges. Venues attempt to fuse advertiser needs with user interests by providing readers extra and often novel services, like Patch did with the DreamWorks campaign.

It’s an example of acting locally, but with the needs of a big national marketer in mind.

So what’s the consensus on hyperlocal? Let’s summarize in Josephson’s words: Hyperlocal is real. Consumers and advertisers care and publishers are serving that need.” There’s a share of skepticism too, which is a good thing, because it pushes people further to refine the model.

This post originally appeared on Locl.ly.