In 2012: Local Loyalty Flameout, 2nd Wave of Hyperlocal News Sites

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Last column, I wrote a quick end-of-year wish list for hyperlocal advertising and related matters. This column, since it’s already far too late to make predictions, I am going to go ahead and make some. Because, I think, 2012 will be a year of many changes for hyperlocal. Post-haste, here are my three predictions.

The Great Local Loyalty Consolidation and Flameout
I have an envelope that sits in my car. It has loyalty cards for dozens of small businesses (and some big businesses). From Whole Foods to the local burrito joint to our favorite ice cream parlor to batting cages, the cards are a graveyard of frugal intentions. I put them in the envelope to make sure that I would remember them when I was out and about. Of course, most of them have only one square punched. And I know exactly why.  There are too many cards to keep track of. Such is life in the still confusing and wildly overpopulated local loyalty market.

From Stampt to Punchd to Foursquare to Square to Shopkick, it seems like everyone has a loyalty play aimed at luring customers back and compensating them with special offers for their check-ins. Such fragmentation leads to market confusion and makes achievement of critical mass impossible. And so the coming year will see a great winnowing, either as Google and Facebook and other incumbents scoop up the engineering teams of these players and shut down their products, or as those startups begin to run out of money towards the end of the year when it becomes clear they do not have any real traction. Training local customers is hard enough even when you are a ubiquitous and wildly popular brand like Starbucks. When you are an Internet startup and a new kid on the block, well — good luck.

The Second Wave of Hyperlocal News Sites
Patch and a few other networks of hyperlocal news sites have hogged the podium in the local new sector. And with good reason. They were, by and large, the largest players in the increasingly vacant (yet extremely relevant) sector between metro dailies, alternative weeklies, Facebook and the neighborhood email list. At the same time, we saw the emergence of rockstar mom-and-pop hyperlocal news blogs like West Seattle Blog, which boasts over 1 million page views per month and a skeleton staff of less than five people.

While Patch has spent a lot of money building a custom integrated technology platform for its network, the reality is that putting together a similarly feature-rich network for far less money (and probably with greater capabilities) with different components now available in open source or cheap content management systems (such as Drupal, WordPress, and ExpressionEngine) is not trivial but eminently doable. Blog networks like GigaOm and VentureBeat are already doing some of this type of integration. While the market will remain crowded and muddled, expect for some more ambitious souls to launch hyperlocal news sites based on these types of technology offerings and designed to run at an extremely low technical overhead while delivering 95% of the functionality. And this will be a good thing that could make hyperlocal networks more affordable to build and manage while delivering enough reach to cross the heft threshold required for larger ad buyers.

Flipboard, the iPad and the Local Magazine Market Explosion
An area of publishing that has somewhat escaped the wrath of the Internet is the local magazine market. Local business and lifestyle publications have not closed down at nearly the rate as local newspapers. That’s because those publications are a lot more about curation and storytelling and less about news. True, the Sunday and lifestyle sections of the good local papers remain chock full of nifty curation. Which is why the Sunday paper and the lifestyle sections are two of the few remaining strong profit centers for dailies.

The arrival of the iPad and viewing tools such as Flipboard set a completely new paradigm for consuming well-curated local content. User engagement and shopping for readers using these apps is considerably higher than what we see with the standard Internet or mobile. What’s more, good local content — particularly in high-demographic areas — is a gaping hole that was formerly filled by the city mags and other quasi-literary outlets, which have largely abandoned most of that work to lists of Top Doctors and the like in order to ensure they can get advertising. But the new capabilities of tablets and new presentation layers like FlipBoard make it much easier to tell stories richly and cheaply — and to take it easily (via Kindle Singles or other such venues) to a wider audience. And for the first time this can make it very easy for large national lux brands to grab pieces of these smaller pies by advertising in, say, a Palo Alto-focused magazine via an add network that formerly would never have existed. Granted, I am a content-centric guy and love good content probably to a fault. But I see this in conversations all over the place, although it hasn’t yet crossed over.

And that’s my three. What are yours? I’d love to hear them.

Alex Salkever’s Personal Fight column appears every Friday on Street Fight.