For Hyperlocals, How Long the Roller-Coaster Ride?

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Last week Borrell Associates delivered an upbeat 2013 projection for a 31% increase in ad spending in the local digital space — from $18.7 million to $24.5 million, led by more small and medium-sized businesses moving a bigger share of dollars from traditional media to digital.

rollercoasterBut even as the outlook seems brighter for local online, last week highly regarded hyperlocal editor and publisher Mike Fourcher announced he would transition from his role at the helm of his two neighborhood sites in Chicago:

“As 2012 came to a close, it became clear to me that there’s no way I could build my hyperlocal news sites, Center Square Journal and Roscoe View Journal, into something that could support me and my family. I love them, and I think our team has done some important things for the community. But honestly, I feel like I’ve learned all I can from the experience, and I need to move on.”

The next day, Fourcher had more blunt things to say — about the nature of competition in the highly desirable local market in the Web-saturated neighborhoods covered by his two independent sites:

“Center Square Journal’s strongest ad competition did not come from other digital news sites. … An example: Belly, which is founded by former Grouponers and funded by the Groupon founders’ investment fund, showed up at a local merchant group meeting unannounced. They brought a pile of iPads for businesses that sign up, and thus signed up everyone in the room in a flash. Now Belly is a major competitor for neighborhood marketing dollars.”

What Fourcher said shook me up. If his highly regarded community publications can’t achieve sustainability, what does that portend for other “indie” hyperlocals?

I emailed Tracy Record, editor of West Seattle Blog (which Fourcher has described as one of the “progenitors that have thrived and survived so long because they are great products with deep community roots.”) She wrote back the following:

“You can’t judge any industry by what one person decides to do. Everyone has to try what they think is right for their community. I could point out 100 differences between how we operate, for example, and some who have decided it’s not for them — including some very major components that I personally think are essential to appropriately serving communities. Including aggressively covering breaking news, and publishing 24/7.

“It’s not to say Mike did anything wrong. He did what he thought was right for his community and his personal business style — and he’s now deciding that it’s not working the way he wants/needs it to, and he needs to move on, so he’s hoping someone else can take the ball and run with it.

“But that doesn’t remotely portend ANYTHING for anyone else who decides to get into this business. As we’ve said when deriding the corporate fake-neighborhood-news efforts, it’s not one-size-fits-all and never will be.”

Record’s assessment led me to take a wider-angle look at hyperlocal news. Fourcher’s predicament is real, and leaders of other hyperlocal sites are feeling his pain, too. But at the same time, other indies, along with corporate pure plays and print and broadcast legacy media properties, are steadily inching their way to sustainability. In the past year, indie ARLNow expanded from Arlington, Va., to suburban Maryland. Well-funded corporate pure play DNAinfo added coverage of other New York City boroughs to its Manhattan reporting and then leaped to Chicago. And even AOL says that 100 of its Patches are now making money and promises the network will achieve “run-rate profitability” by the end of the year.

The industry, as Adweek recently noted, is in a “period of adjustment” — perhaps a too-polite phrase for what, to me, feels like a roller-coaster ride. The flow of ad dollars, as Borrell keeps chronicling, is growing in double digits. But it’s being spread among more types of hyperlocal companies as small and medium sized businesses continue their restless quest for new customers.

But roller-coaster rides, as memorable as they may be, last two or three minutes. At some point, the  local digital market will reach equilibrium as hyperlocal editors and publishers, backed by advanced but reasonably priced analytics, will figure out how to deliver high-value content at an affordable cost and demonstrate to advertisers that their engaged users include many of those sought-after new customers.

When that happens, hyperlocals won’t have to give away iPads in their quest for sustainability.

Tom Grubisich authors The New News column for Street Fight. He is editorial director of LocalAmerica, which is partnering with InstantAtlas to develop sites presenting how communities rate in livability. Local America is featured on the Reynolds Journalism Institute’s Pivot Point site.

Image courtesy of Flickr user AJU_photography.