Customization Failure: Why Hyperlocal Hasn’t Scaled (Yet)

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local12The way [the Nutri-Matic] functioned was very interesting. When the Drink button was pressed it made an instant but highly detailed examination of the subject’s taste buds, a spectroscopic examination of the subject’s metabolism and then sent tiny experimental signals down the neural pathways to the taste centers of the subject’s brain to see what was likely to go down well. However, no one knew quite why it did this because it invariably delivered a cupful of liquid that was almost, but not quite, entirely unlike tea. — Douglas Adams,  “The Hitchhiker’s Guide to the Galaxy”

In March of 2007, I flew to Santa Clara for a Kelsey Group conference with terrible knots in my stomach. My staff didn’t know it, but I’d decided that if I didn’t come back with a serious candidate for investment in Pegasus News, I was going to shut it down. While we had the biggest audience of any so-called “hyperlocal” news site, we hadn’t gotten advertising traction and we were almost out of cash. Investment prospects were dim: Most media companies didn’t understand that much of our value lay in a content and advertising customization engine that could be re-sold. Venture capitalists didn’t like that we had to feed that engine with lots of original content to ensure that the user got something of value at the other end. We were caught between a rock and a hard place, branded as an un-scalable technology play.

It strikes me that the whole local media industry is still stuck in that very place. While we survived long enough to be acquired, and two owners later, Pegasus News is still around, it’s safe to say that no one has definitively answered the problem that we set out to solve: How to best customize content to bring the right local advertising message to the right person at the right time.

I see hyperlocal as just an extension of the ongoing quest to customize media. It’s one very important dimension of interest, and the toughest one to serve, as it is the most granular, with a lower reach but arguably a much higher yield. If you want to reach bluegrass music fans, it’s far easier to reach them everywhere than in East Dallas. But that’s where the concert is.

I’m not sure that hyperlocal is, in and of itself a business, at least in the way that investors look at businesses. That’s why we tried to merge both broadly local interests with neighborhood news and events in a mélange that we called “Panlocal.”

The problem is that now, as in 2007, most customization that attempts to deliver hyperlocal, or even just local results, falls short. Like Douglas Adams’ Nutri-Matic, it takes into account gazillions of personalization triggers and then delivers what it has in stock that is most like what the algorithm calls for, something that is almost always nearly the same for all users.

The problem isn’t in learning from the inputs — it’s in lacking the right outputs. At least monthly I catch a glowing article on some new app that purports to totally customize local news and event recommendations based on behaviors imputed from Facebook’s OpenGraph or some other source, cross-referenced with current location. Invariably, that recommendation nets out to catching the latest blockbuster film; the poppiest of pop concerts at the nearest mega-arena; or the front page story from the biggest local media company.

I’m enough of a geek to poke through these apps and see that they have the ability to process more meaningful inputs. The problem is that they (and we) don’t have much more or better local content and advertising to output than we did in the days before social media and smartphones. A tool is built to operate on a national scale, but the landscape of finding the local information is messy and chaotic, lacking structured data, or consistent geographic coverage.

There are certainly people creating great hyperlocal content. But I’m sure that even my friends at great sites like West Seattle Blog and The Batavian would agree that while they are viable businesses, they aren’t built “to scale.” In fact, I suspect they’d argue that the inability of hyperlocal to scale is one of their competitive advantages. And whether or not you see a trend in the dour reporting on the efforts of the likes of AOL’s Patch and Daily Voice (neé Main Street Connect), I certainly don’t think their leaders could claim with a straight face that they’ve found the Holy Grail.

But I do believe it’s a grail worth seeking. It’s a last-mile problem that too many minds are working on and too many local businesses are counting on having solved in order to compete. I marvel daily that the exact pair of shoes, down to color, that I looked at on Zappos starts appearing via retargeting on every website I visit. Surely the local shoestore should have access to the same tactics?

In 2010, I wrote to Steve Jobs (and yes, he responded) that Apple had a solution to this problem: Do you want to provide a marginally better experience for major brand advertising? Or do you (and your developer community) want a piece of 150 million cups of coffee, shirts, bowls of spaghetti, etc.?

Apple hasn’t moved much in this direction, and others haven’t moved far enough. We make the promise — a credible one based on technology — but we don’t deliver yet: The Zappos ad continues to chase me weeks after I bought the shoes. The local news screen in my New York cab today touts fortnight-old breaking news headlines. The Department of Transportation digital boards back home trying to scare with the number of year-to-date highway deaths just bug me because they don’t update in real-time.

I was excited when the folks here at Street Fight asked me to write periodically on these topics. These are the things that keep me up at night, and I’m glad to have a venue to share the advances and struggles that make true hyperlocal content and commerce a reality. Technology, content and customer relationships can, and must, come together to provide that tasty custom drink a reality.

Otherwise, we’ll all wind up eulogized like the makers of Adams’ Nutri-Matic: “A bunch of mindless jerks who were the first against the wall when the revolution came.”

Mike Orren is the president of Speakeasy, a content marketing and social media firm that is a joint venture between Slingshot and The Dallas Morning News (who is also a client). He is the founder of Pegasus News, which he sold to Fisher Communications (who resold it to what is now Townsquare Media, who resold it to The Dallas Morning News). He has served in senior leadership roles at American Lawyer Media and D Magazine and has consulted for many local media companies, including, CBS Local, and SourceMedia.