3 Ways to Reinvigorate Patch’s Business Model

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Although Patch is growing its reader base, the company still seems to be struggling with the traditional banner ad based business model for three simple reasons: 1) lower local demand for banner ads due to new marketing options like daily deals, social media and SEO marketing, 2) limited readership for publications serving small local markets, and 3) outsize editorial expenses.

Here are three new ways Patch can reinvigorate its business model and bring value to local merchants:

— Generate new revenue by bringing small businesses into the social marketing age.
Although local businesses’ interest in banner ads is dwindling, there is a tremendous demand among SMBs for social media marketing services. Borrell Associates predicts that local spend on social media marketing will increase seven-fold by 2016. However, social marketing (running the gamut from daily deals and Yelp to Facebook and Foursquare), has become too arcane and complex for most local businesses to deal with. As a result, turnkey solutions are being developed to take the burden off of these businesses.

Patch has the corporate resources to either build their own turnkey offering for local merchants, or package best-of-breed solutions with service partners. Instead of charging $500 monthly for a banner ad, Patch could offer merchants a subscription fee of $500 to manage their social networks and social marketing campaigns. Yes, profits from a service offering are lower than a transactional model, but Patch’s expenses can be lowered as well.

— Facilitate local production of content instead of paying  journalists in each city.
Employing a professional journalist in each town to write daily content is costly. Patch seems to be streamlining editorial now, but journalists should pivot from writing local articles to becoming editorial support for local bloggers — particularly those who write articles about their work or industry. Patch currently has over 13,000 local bloggers, but this can be expanded further.

Local content about food, sports, real estate and kids activities can be produced by business owners like restauranteurs, realtors, and summer camp operators, as a means to indirectly promote their businesses. By showing small businesses how to use blog writing and social media for marketing purposes, Patch would further invite the business community into the editorial process rather than shunting it aside as a cash cow to be milked. The tradeoff of content-for-marketing will be perceived as goodwill by the business community. Nurturing small businesses into participating in social media is also a natural lead into selling them the social marketing services referred to above.

Integrate national brands more deeply into the local marketing space.
National retail brands — like Home Depot, AMC Theaters and the Gap — don’t have brand presence at the hyperlocal level that Patch covers. Patch may carry banner ads from national brands, but it could create local “Home and Garden” sections that source content about home repair and related issues, and bring in national partners like Home Depot to build social bridges between their local store managers and consumers. The social media advisory model from above then kicks in, as local Patch managers assist sponsors’ store managers in developing conversations with the community.

Dialogues develop personalized business relationships that are akin to in-store customer support, a distinct competitive advantage for any national brand because very few are capturing these conversations at a granular level. Bringing on national partners and advising them on local social marketing scales the revenue base far more easily than engaging small businesses one by one. National retailers are not the only target; sponsors can range from recruitment firms developing “career” sections to motion picture studios for entertainment.

Patrick Kitano is founding Principal of Brand into Media, a strategy group for social brand management solutions, and administrator of the Breaking News Network, a national hyperlocal network devoted to community service. He is the author of Media Transparent, and contributor to Social Media Today, Daily Deal Media, and The Customer Collective.