Backfence Founder Mark Potts: Hyperlocal Takes Patience

News veteran Mark Potts is best known in the industry for his (failed) site Backfence, which pioneered a hyperlocal model that leveraged user-generated content. When Backfence folded in 2007, Potts wrote at length about some key lessons he learned about hyperlocal, including the need for “conversation” in local journalism, the size of monetizable communities, and the how the cost equation for hyperlocal might work in the future.

Here Potts speaks with Street Fight about which companies are closest to solving the hyperlocal conundrum, how daily deals companies are changing the equation, and whether it’s really viable to do small-scale news with professional journalists.

What does “hyperlocal” mean to you to you today, as opposed to when you started Backfence?
I still think it means a land of great opportunity, and an unproven business model. It has huge potential.

What’s your sense of what businesses want from hyperlocal sites today?
I know they want to reach customers. I think hyperlocal sites are a vehicle to help local businesses reach local customers.

How do you see coupon sites like Groupon, and other mobile applications fitting into the hyperlocal mix?
I think there’s huge potential in mobile. I don’t think anything’s proved. I think Groupon’s proving something that a lot of people didn’t want to believe: that’s there’s local dollars that wanted to reach local audiences online. Groupon is a very, very successful local online advertising medium.

What are some of the lessons that have been learned in terms of things that haven’t worked for hyperlocal?
I think the number one thing has been that it takes patience. These things do not happen overnight. It’s a long, patient runway to get one going. You have to keep costs absolutely minimal. That there’s definitely an appetite for local news and information, and I think you’ve got to find a way to deliver it in the lowest-cost-possible way. You cannot recreate giant local newsrooms.

Do you think it can be done with professional, full-time journalists?
On a very, very limited amount. I think what we’re seeing is a fantastic explosion of what I would call, “passionate, accomplished amateurs.” Amateur in the sense that they’re not being paid. I think the single biggest change has been the explosion of the local blogosphere. There are now tens of thousands of local sites, local blogs — mostly run by people because they love their community, not because they’re trying to make a buck — that are doing really good coverage of local issues, local sports, local entertainment and local food.

I think the interesting question is, how do you capitalize on that? How do find a business model for them, how do you find ways that what they’re doing for a very different motivation — because they’re passionate about their community — can be pulled together somehow and be a money-maker for someone else?

Which companies do you think are getting close to a viable strategy? Or who do you think is “winning” out of the big companies trying to do hyperlocal?
I don’t think anybody. I think TBD came closest with their model, but got screwed up by corporate politics. I think a couple of the local ad networks are worth watching, but that mostly from an ad network standpoint rather than from a product standpoint. I’m not sure if they’re aggregating as much as they should be, but I think that what Fisher [Communications] is doing in the Pacific Northwest, and what TribLocal is doing outside Chicago is fairly interesting. They’re low cost, but I’m sure that they’re taking advantage of what happening in the community.

Do you think hyperlocal sites should aggregate more, generally?
I think it’s a gigantic missed opportunity, and it’s one of the things that drives me nuts about Patch. Patch is trying to build something that is already there, which is fantastic local blogging resources. They’re scaring all these bloggers by coming into these communities. The bloggers are already doing it, and I’m not sure why you have to replicate what they’re doing. Why can’t you just partner with them?  Which is why I thought TBD’s approach was so good.

What are you working on now?
A bunch of little projects and consulting. Continuing to look at the hyperlocal space, and I’re having dinner with someone tonight to talk about an idea we’ve got at taking another crack at it.

It’s just that there’s something there. The local advertising business, all in, is $130 billion a year, and everyone who’s in it is sort of falling apart — the Yellow Pages, newspapers, and everybody else. And that money is going to have to fall somewhere.  I think that if you can figure out a low-cost way of connecting local audiences to local advertisers, there’s money there to be had.

Are there any other lessons you learned about hyperlocal sites from your experience at Backfence?
Well, two things. One is I think you need to tap into community passion. The passion that people have about their community. They want a contributor who’s passionate about the community covering the community.  The other thing that everyone underestimates is how hard it is to market these things. How hard it is to get the word out that you exist. I think there’s a real, “If you build it, they will come” mentality, and it doesn’t work that way. Letting the community know that you’re there for them is a long, patient, and somewhat-expensive process.

It’s glad-handing people in front of the supermarket, and putting leaflets in their car windshield wipers; and hanging door hangers; and being at the Starbucks for a couple of hours a day, holding office hours; being in every single community meeting that you can find so that people find out who you are. It’s a really patient process. The sites we’ve seen that have really done well, like Baristanet in New Jersey and WestSeattleBlog, have done this. I’d say the two things they had in common, as well as the other successful sites we’ve looked at, is they had really great marketing, and they’ve put their nose to the grindstone about advertising sales.

That’s another thing: I’ve found that people start these things and figure that advertisers will just come flooding in, and it doesn’t work that way. They think that money’s going to grow on trees somehow. You’ve got to go out and sell advertising.

You’ve got to go out to businesses, and you’ve got to say, “Look, you’re in our community. You know who we are. You read out site. Your customers read our site. You should be on our site, because we connect you with your customers.” It’s a traditional community newspaper sell. It’s a very, very similar model. But you’ve got to go out and do it. I think that’s the thing I run into all the time, and something that we ran into all the time when we trying to do GrowthSpur. It’s that people think: “I’d really rather write a story to the town council meeting than make 10 or 100 ad sales calls this morning.” You’ve got to make the 100 ad sales calls.

I think a lot of people just come into this as journalists, and don’t understand how hard it is to do the business side of it.