NPR’s Bob Garfield: Hyperlocal News Ventures Doomed

Media analyst Bob Garfield has put a voice behind the industry rumblings about hyperlocal news ventures. As standalone business operations, hyperlocal news “just doesn’t make for a sustainable financial model,” Garfield said in a recent video interview with Borrell Associates.

Garfield, author and host of NPR’s “On the Media,” thinks hyperlocal news coverage is doomed because of the incredible fragmentation and its downward pressure on advertising prices. The YouTube video interview was with Borrell Associates executive vice president Peter Conti. In it, Garfield says he thinks that the winner in every market will likely be the entity that forms strategic relationships for content and revenue in its market. Garfield stresses that, paradoxically, this vast fragmentation we see, could lead into consolidation in order to achieve success.

Garfield will be the keynote speaker at the Borrell Associates’ Third Annual Local Online Advertising Conference, March 21-22, in NYC at the Grand Hyatt. The conference is the largest gathering of local online media professionals in the country.  It focuses on the revenue aspects of local media sites and has almost 50 speakers sharing their stories of what works and what does not at the local level. The majority of speakers have been selected from local digital operations that are beginning to show significant revenue. Past keynote speakers at Borrell Associates’ conferences have included some of the leading minds in technology disruption and its effects on media, such as Jeff Jarvis, Clay Christensen, Clark Gilbert, Chuck Martin and Dave Morgan. Borrell Associates is offering $175 off of the price of admission to Street Fight readers who use this code: BASFM12.

Garfield is adamant that no one outlet can attain the critical mass necessary to deliver the local news professionally and profitably in the future. It appears Garfield believes that the monkey-wrench in the local market revenue gearbox will be the pressure from unprofitable hyperlocal fragmentation. With Borrell Associates forecasting more than $18 billion to be spent this year in local digital advertising, the disruption, innovation and chaos still unfolding in the hyperlocal space could make for some strange bedfellows. Garfield expands on this even more in upcoming videos and of course at the conference in March.

Peter Conti is the executive vice president of Borrell Associates.

  1. February 13, 2012

    let’s prove he’s wrong 🙂

  2. February 13, 2012

    Frankly, I think what Bob says doesn’t make a lot of sense.  Firstly, disruption in any industry never comes from vested interest and therefore, I doubt that media is going to pioneer hyperlocal.  Secondly, to think that a strategic relationship with sources and revenue is the key is just wrong.  It is no longer about scarcity but about curration.  Thirdly, local advertising is X billion dollar market that no one has done right.  Sure the amounts per account in advertising may be small but if you can repeated tap many local sources of revenue and deliver performance with low, no cost tools the potential is there.

    In my opinion, a bottom up, crowd sourced solution where one or more players provide the tools to produce and currate local news will probably win.  Sure, it hasn’t yet been done right but the key is harnassing local individual and organizations that want to participate by giving them the tools to produce and currate local content.

  3. February 13, 2012

    I’m always amazed by these pundits who have no qualifications making such pronouncements.  What has Garfield ever done in business? As best I can tell, he’s never been anything but a pundit.  He’s never owned a business. He’s never had budget and strategic responsibility  in a company.  What does he really know about this topic?

  4. Mark
    February 13, 2012

    Lots of good, old-fashioned print community newspapers are doing just fine and still making money with display advertising, subscriptions and other revenue streams. How do they do that, digital guys, huh? Maybe the problem is that you just can’t give it away for free online and expect to make money? Shhhh.

    1. Mudvillemayor
      February 24, 2012

      You have a point there Mark, but given a little time I’m sure the hyperlocals will figure it out. A little food for thought:

  5. Timmywvillag
    February 13, 2012

    While I agree that Hyperlocal has it’s revenue challenges, I am a bit dubious of Mr Garfield being the person to put “the fianal nail in the coffin”. Hyperlocals will find appropriate revenue streams that are ignored by larger sites. Social Commerce, Merchant Services, Directories, not typical CPM based thinking. Ad Networks can be formed with forward thinking Hyperlocals who share a common psychographic profile. For Mr Garfield to make such outlandishly bold statements regarding the demise of Hyperlocal’s business prospects is nothing short of foolishness. Mr Garfield, how many sales calls have you attended in your lifetime at OTM?

    Tim Schreier
    New York City

  6. John Baronian
    February 13, 2012

    Howard you should be happy at what Bob Garfield is saying. He’s telling you there is hope that The Batavian won’t be crushed by the likes of Patch or your true nemesis an online Rupert Murdoch version of all the local newspapers he has bought up.  You’ve built quite a following. Keep it up man… But his prediction doesn’t bode well for the thousands of kids in journalism school nor the regional ad buyer who wants to easily purchace local ads in a given region .

  7. Gborrell
    February 13, 2012

    A pundit here who has a lot of qualifications…having been a newspaper reporter and editor, having started quite a few online news ventures in the late 1990s, and who tracks revenues for more than 5,200 local websites across the U.S. and Canada.  I’m not seeing enough dollars in hyperlocal news sites to support a few small salaries.  On average, individual sites are making $150,000 to $250,000 each.  Some make more, many less.  The problem is simply with the business model.  Advertisers aren’t asking to be around local news.  The Internet is a lean-forward medium (like the yellow pages), where consumers really don’t see the ads unless they’re intertwined with — or actually are — the content.  I’m glad to see such passion for hyperlocal news sites and I really would like to see them survive.  But unless you find a different business model — something other than selling display ads around news content — I’m afraid that Mr. Garfield is correct.

  8. Nametocomment
    February 14, 2012

    Who said selling display ads was the model? It may be one of the more visible things some hyperlocal sites do, but it isn’t necessarily the most important.

  9. Nametocomment
    February 14, 2012

    This is just a trolling paid advertisement for a conference (though not particularly well labeled). We can all go back to what we were doing.

  10. February 16, 2012

    There seems to be a bit of shooting the messenger going on here.  Gborrell is supplying some interesting information to back up his arguments. However, the points that he is making are slightly lost in some confusing terminology.

    Presumably the local sites initially referred to are the digital operations of existing print operations. The next sentence refers to hyperlocal news sites which could mean independents as distinct to ‘local’ websites of established media. There are quite a large number of salaries paid to people in the local digital operations of media groups and they are comfortably covered by digital revenues. The phrase ‘On average, individual sites are making $150,000 to $250,000 each’ is internally contradictory – presumably what is meant is that the local sites of established media typically make something in this range.

    From a UK perspective local digital operations of the larger newspaper groups are seeing respectable revenue from sources such as
    property listings and car sales confirming the ad as content idea but there
    also seems to be very strong growth in the small and medium sized business
    market. I suspect Gborrell is talking about larger scale advertisers for whom
    local is a whole city and who are never going to be interested in sites
    covering individual districts. Just because his client base isn’t interested
    doesn’t mean there are no customers for such operations.

    If he does mean that the independent sites are making $150,000 to $250,000 that is incredibly encouraging for the industry. I know there are some that do fall into that category in the US but believed you could count them on one hand. As far as I’m aware there is only one such site in the UK.

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