3 Ways to Reinvigorate Patch’s Business Model

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.

  1. January 12, 2012

    Excellent points.  One concern is that local bloggers, whether they are covering local food or high school sports, need editing, for which you have to pay someone. 

    If they are blogging for free, they can’t be relied upon to produce regular content.  And if you pay them to blog regularly, plus pay someone to edit it, now you’re approaching what you pay a journalist.  Good content costs money, period. 

    What about providing web design and other Internet marketing services to local businesses, in addition to advertising?  That’s what I do in my business.  If you have a system in place, it is profitable.   Maybe not as profitable and running some banners and a calling it a day, but hey…welcome to the new normal.

    1. January 12, 2012

      You’re on the right track… I think editors need to function as editors and bring out the best in content from community bloggers. That means keeping them from spamming but allowing them to get their community message across. It seems almost every local blogger with a local business, from foodies to real estate, are sharing community knowledge revolving around their business while indirectly nurturing a local marketing presence. And there are good bloggers everywhere, the editor just needs to maintain content quality.

      In your case, in the context of this Patch model, the Patch editor would encourage you to write good content about web design and tech, even promote you as the Mashable of your city. Today, if you tried to do this with your local publication, they may want you to become an advertiser first before they give you a column because they need to uphold the advertising model (and that means not playing favorites by giving editorial access to only certain businesses and being perceived as a “nepotistic”). I’m thinking the best model for developing good local content is to integrate the business community into the editorial process, not keep them segregated with an “ad wall”.

      Engage the business community and the consumers will follow! Then Patch gets the traffic and, more importantly, good will it needs to build their local business model.

  2. gary
    January 12, 2012

    Patrick, I’m just an ol’ lunkhead … what do you mean by “turnkey solutions?” You mean automated? Can you explain, please? Also, you’re saying Patch, which is supposed to be a journalistic enterprise, should turn over the content keys to local businesses so they can do self promotion? And big stores like Home Depot, Gap, etc., don’t have “brand presence at the hyperlocal level?” Really? Who are all those people crowding the stores then? The folks who don’t have “brand presence at the hyperlocal level” are the independent business owners who have to try to battle those big box behemoths for marketing and reach. Guess I just don’t get it.

    1. January 12, 2012

      So far, SMBs have been manually developing and maintaining their Yelp, Twitter, Facebook, Linkedin, Foursquare accounts (and whatever comes down the social media pike). The simplest turnkey solution would be for a social media marketing “ad agency” to manage the build and maintenance of this kind of marketing because most small businesses don’t have the skills, resources and time to do this.

      For big chains, I clarify that I meant local online brand presence. For example, there are few corporate brands that have built online systems to facilitate online conversation between local store management and consumers in a city; it’s just the main website. An example of corporate extension down to the local level is Walmart building out Facebook pages for all their stores – http://streetfightmag.com/2011/10/13/big-brands-go-hyperlocal/.

      I’m positing that Patch has the same ability to work with brands to bring their message to the local consumer in the towns they cover. This is potentially a brand consulting revenue model on a national level.

  3. John
    January 12, 2012

    Patrick, two out of three ain’t bad, but have you taken the time to read many Patch sites? If so, you wouldn’t be singing the praises of bloggers. If you want to use the comments section or FB recommends and/or Twitter tweets are a guide, the blogs and fluff pieces on food and kids activities don’t get any traction. A professionally written article on the city council meeting, school board or a crime story, on the other hand, routinely gets 50 or more comments and tons of FB shares. At least this is true in my part of the country.

    1. January 13, 2012

      Supporting bloggers is where editorial can help. And I’m not saying the Patch editor doesn’t write, the professionally written articles still need to be done, but not to the extent of covering everything comprehensively.

  4. January 13, 2012

    Ah yes, the city council meeting question.  Who attends it, writes an article, and how much do you pay them?  Do you charge people to read the article? That’s one way to cover your costs.  You don’t want to charge people?

    Okay, let’s sell some ads! You can’t sell ads because half of the businesses in your area don’t even have websites, and the ones that do, don’t want to pay $300/month for what amounts to just a branding campaign, because no one even clicks on the ad, because people didn’t come to the site to find a plumber but to read the news? 

    Okay, how about daily deals?  You’re telling me that none of the businesses you signed up want to run another one because they lost money on the first one? 

    Okay, what about Google AdSense or affiliate banners?  You’re telling me that you can’t run a news website on the $100/month you’re getting from this?

    Welcome to my nightmare.

    1. January 13, 2012

      I’m assuming you’re referring to the current state of local advertising? What you seem to be implying is there aren’t any good revenue models – banner ads, deals or Adsense – that cover the costs of reporting.

  5. Anonymous
    January 13, 2012

    Been there done that. YourHub.com has already tried your suggested method of facilitating local content. That site went from 500K monthly uniques and a staff of 50 in 2007 to a fraction of those numbers in 2012. An army of local editors facilitated local bloggers, but readers grew tired of the proliferation of press releases – er, marketing – from a limited circle of Realtors and high-paid city flaks. 

    I’d be interested in Patch’s blogger turnover rate. Gotta figure out a way to keep the good ones.

    1. January 16, 2012

      in 2007, no local businesses even knew about social marketing. In 2012, social marketing is more accepted. Editors just need to keep the spam down.

  6. Fundweb
    May 1, 2012

    See Scrollable smart phone info strip at recface.com/mobile.
    For recreation and travel.  A simple ap for local info on the fly.

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