Yearly Archives: 2008

2008: The Year That Was


We’re out with our predictions for 2009. But what’s the final word for 2008? Truly, it was a very stimulating and thoughtful year for our local media and commerce industry. But speaking for myself, it’s hard to say whether it was a good year, especially with fresh layoffs that we are hearing about every day. In fact, the year was kind of Dickensian (“best of times, worst of times”).

On one hand, there has been an explosion in local content with YouTube, Twitter and Stumble Upon; and omnipresent local reviews with services such as Yelp and Angie’s List. Online video has become a real media, aided by $100 video cameras and the emergence of HD standards; and mobile has started to become a real channel, aided by GPS and iPhones.

On the small business front, search has become more widely accepted in key local segments, and has become mainstreamed in many ways, adding a useful channel to the ad mix. And the percentage of SMBs with websites or personal profile pages has crept up to 61 percent.

But what about the business? For traditional media, it was especially bad. In 2008, we had a perfect storm. Massive debt and declining circulation hit the newspapers hard – and the Yellow Pages in the same way. Sharp hits to retail, auto and real estate advertising sealed the deal. The decline in auto has not only hit traditional media. Online ad networks that aggregate local media, such as Centro, relied on auto for 30 percent of its revenue.

The result: Tribune stands bankrupt, McClatchy and Lee and others are near bankruptcy. It even appears possible that Idearc and RHD — the two public YP companies in the U.S. — could file for bankruptcy (although we are not betting on that).

At the same time, old line products such as ValPak coupons have been put up for sale, and we don’t see clear replacements for them yet. Vertical products remain compelling, but with the economic slump, haven’t proved to be the hedge that traditional media had hoped (at this point).

Moreover, third party auto sites such as AutoByTel have been put on the sales block. And vertical stars such as Zillow have begun to layoff workers, even as they form broad sales arrangements.

Local-oriented startups also got hit. Credit has tightened up. The only companies that are likely to get funding are those that can get to cash flow positive with as little money as possible. Social-oriented services seem especially poised to get hurt.

So – we have to change the conventional wisdom. The old CW: “if we just tweak things, and gradually switch advertisers over, everything should work itself out.” In fact, with the emergence of new, highly targeted ad products, we could see advertisers spending much more on marketing than in the past.

The new CW? It isn’t so simple.

We’ve learned that hyperlocal doesn’t live in a vacuum, and that there isn’t ready demand for block-by block coverage. But it is a useful add-on. Content platforms have become a commodity, but can be improved with navigation, tagging and geo-targeting.

We’ve also learned that mapping is a feature that can be greatly enhanced with personalization and advertising, and could be the basis for a new portal (but there are lots of new fronts for portals). And that mobile content shows real promise, but is still kept “closed” by the carriers, who manage 90 percent of it behind their firewalls (Although Google’s Android might begin to open things up).

Classifieds have taken a huge hit by free providers such as Craigslist, which continues to gather steam. But it is encouraging to see classifieds get extended by aggregators such as GoogleBase, Vast and Oodle, which actually started working with MySpace, Facebook and WalMart (a new local player?) – a truly interesting development.

On the “national-local” front, geo targeting has become so widespread that it actually has put a crimp into CPM rates for local publishers, which have come down from $10 to $6-7 in many cases. But we’re seeing organic adoption by regional advertisers such as supermarkets, banks, furniture store chains and lotteries. As Centro CEO Shawn Riegsecker has noted: “they’ve been spending 1 percent to 10 percent of their revenue on the Web, with no strategy.” In 2009, they’ll get one.

For “local-local,” the bottom line remains the engagement of the small business. It is greatly encouraging to see the wide adoption of free online tools by real estate agents, for instance, and ad building templates and planning by companies like AdReady, which has deals with companies such as The New York Times.

It is also encouraging to see the evolution of leads-based services, where ServiceMagic, for instance, has moved the continuum from simply providing leads to delivering jobs (i.e. installation of flat screen TVs bought at Target). Angie’s List’s “two-sided cash register” from premium subscriptions and advertising also represents a new model.

In the end, we are in an environment where we are absolutely climbing over bodies to get ahead. But the opportunities seem stronger than ever, as is the relevancy of the products to consumers. It is an important and meaningful thing for all of us to work on, isn’t it? Happy new year to all of our friends, and thanks for your support. We’ll see you in 2009.

Where.com: GPS is Trigger for Local-Social Mobile Portal


Local mobile portals make a lot of sense since most phones (even the iPhone 3G) don’t really lend themselves to much surfing. Another social/viral dimension is added via social networking enhancements via profile pages, Twitter and especially, GPS.

Two services seem to be leading the way for locally-based mobile social networking right now: Silicon Valley-based Loopt, which is backed by Sequoia Ventures, and Boston-based Where.com.

Where.com VP Michael Sullivan, an EnPocket vet, gave me the rundown on his service, which has about a million users activated. It is the first consumer facing product for parent company U-Locate.com, which started as fleet tracking business five years ago, and has a number of location based services (LBS).

The immediate opportunity for Where is for friends to see who is near them, and if they want to go out, what is near them – an application it has branded as “buddy beacon.” From a vertical advertising perspective, it’s highly appealing to brick and mortar type businesses, such as movie theaters, automotive and retail.

Longer term, Sullivan sees the service providing location based “find it and buy it” services for Yellow Pages companies. “You can order a pizza with short code without putting in an area,” he says. They will automatically know where you are based on network location (opted in). A current deal with Sprint already offers up that capability. Directory assistance is also greatly enhanced, he says.

The bigger value proposition is with a service similar to Goog411, which currently works on a zip code basis and narrows down searches to a radius of a few miles. But “when you are on the street, you want something sent to you that is a couple of hundred feet away,” says Sullivan.

Specifically referring to Google’s role in the space, Sullivan sees a “co-optition” kind of relationship developing. “They aren’t focused on the social local that we’re doing. We’re seeing the richest engagement with users.”

Where is currently aggregating a great deal of premium content as a key part of its engagement strategy. Partners include such providers as golf.com, eventful.com, state parks, movie theaters, weather, winery finder, brewery finder, Starbucks, cheap gas and ZipCar.

GateHouse Sues Boston.com’s HyperLocal Site for News Links


Hyperlocal sites aspire to grab headlines from everywhere and be a one stop for the neighborhood. That’s been accepted practice, providing the site links back to the origination site, and too much copy isn’t exposed. It tends to build traffic for everyone.

But GateHouse Media, which owns 125 newspapers across Massachusetts, doesn’t feel especially grateful about the linking that has been done by Boston.com’s prototype hyperlocal YourTown site for Newton, MA. In fact, GateHouse has filed a lawsuit in the U.S. District Court in Massachusetts.

The suit contends that Boston.com’s deep linking directly to the article bypasses WickedLocal’s homepage, and implies an endorsement by listing the title of the local papers next to articles. Gatehouse specifically complains of “unfair competition, false advertising, trademark dilution, unfair business practices and other misconduct.”

The suit hasn’t intimidated Boston.com from continuing its practice. Today’s website features several links. And no one is contending that linking is unprecedented. In fact, in a writeup of the lawsuit in The Boston Globe, it is pointed out that Gatehouse frequently links to The Globe’s articles, too. But the lawsuit might bear paying attention to, with possible implications not only for the turf war in Boston, but also for place blogging in general.

Boston.com’s hyperlocal sites in themselves feature local news and information, a local calendar, a local Wiki and real estate listings, focused on a particular community. While the lawsuit focuses on the Newton site, additional sites have since been launched in Needham and Waltham. Boston.com VP Bob Kempf, who has spearheaded the hyperlocal effort, previously served as a GateHouse executive, and is the originator of the WickedLocal site.

New Classifieds Aggregators: iList and Bamboo Ad Net


Local media is so fragmented that its becoming increasingly important to aggregate classifieds from several sources. GoogleBase and Oodle go a long way in this regard – the latter having recently signed Facebook and MySpace as partners for its growing network. But other classified aggregators are coming up the horizon, too.

One site that recently launched is iList, a San Francisco-based company that has received $1.5 million from Draper Fisher Jurvetson. It offers users the ability make their ads portable to all their friends who are tuned into them on all the social sites (among them, Facebook, MySpace, Twitter, Friend Feed, Gmail, Yahoo! Mail, and WindowsLive). Users can set up alerts and RSS feeds.

The authenticity of users is especially pushed – something that is coming up more and more. Users won’t see the site’s authenticity star until they verify their identity via cell phone SMS. That’s an option that has previously been available on Facebook and eBay (but may freeze out some people who aren’t very familiar with txt messaging).

Another site that aggregates listings is Bamboo Ad Network, which is powered by Travidia, a large newspaper tech vendor. Bamboo works with auto dealers to put their listings across a wide network, including GoogleBase, Craigslist, Vast, Oodle, Local.com, Info.com and some others. It also provides dealers with sophisticated reporting, and promotes the dealership itself with SEO-friendly microsites, that includes lead collection.

“Our internet advertising programs were designed to give dealers the best leads with virtually no effort on their part – just pick the leads you want from your inbox! You get to choose,” notes collateral on the side. “Don’t worry about placing your ads in the right places and keeping track of the results. Bamboo will do it for you.”

Move.com Alumni Launch Web 2.0 Coupon Site


Online coupons are getting more attention, and even adding mobile channels. But no single company has really broken through at the local level. They’re largely for national franchises.

Longtime Move.com execs Adam Leff and David Bay clearly recognize the challenge, and the major opportunity in the local merchant space. Since February, they formed a company named Reach Pros, and have been building BogoPod, a new online site.

The site went online in July, starting with their affluent and cyber-savvy San Fernando Valley community of Westlake (JD Power, CallSource, Move). They hope to use the prototype around the country.

Leff, a longtime local ad exec instrumental in the development of Realtor.com (and before that, AdStar, Ad One and The LA Times) says the name comes from “Bogo,” which women use as slang for “buy one, get one free.” (I didn’t know).

“It resonates with customers.” And the “pod” part of the name “just sounds techie.”

Key to the service is that businesses will promote the site for them – similar to what CityVoter is doing with its “best of” ratings and review service. Businesses have email sign up and collection boxes, and hand out flyers in bags.

So far, sign up efforts and deals with businesses to use pre-existing email lists have won them a list of 50,000 email addresses. One reason businesses are inclined to hand over emails is that BogoPod is spam compliant (i.e. the service knows not to use big pictures).

“Some customers have sent out emails on their own and gotten open rates of less than half of one percent,” reports Leff. So far, BogoPod is seeing open rates of four-to-six percent.

All in all, it’s a big improvement over typical direct mail efforts, argues Leff – for consumers and businesses alike. “DM gives them a bump,” but the same ad repeatedly goes to everyone, he says. Regulars can present the same ad to merchants for years, long after the acquisition cost has been leveraged. “It kills the profits.” He also asserts that DM is being hurt by increased paper and mailing costs.

The BogoPod system fights offer redundancy with an “offer lifecycle.” When consumers print an offer for a selected merchant, a different offer is presented the next time. The service also works with merchants to vary the content to make it more interesting. For instance, it works with a night club owner to provide free entry to coupon users. “It isn’t just category listings,” says Leff.

Leff also says the level of reporting is advanced. “We can report where people live, and what their built-in loyalty is.” The offering also has built in SEO built in for keywords. And the system also sends out “thank you” emails to users who redeem offers. That’s seen as a big part of the service’s appeal.

A year’s worth of promotions in “off week” emails and tracking is being priced at $200 per month. The service also has various upsells. For instance, it acquires the URL for businesses and redirects traffic for another $150. It adds customization for $300 and animated presentations for $500. The site is also in the process of enabling video for merchants and “solo emails” sent out specifically on behalf of a merchant.

(Move.com alum are all over the place. Several top execs are also manning Fidelity’s Cyberhomes.com).

Newspapers Going to Three Days a Week Delivery?


Increasingly, we’re seeing pressure on newspaper publishers to forgo seven day delivery. The idea is they’d refocus on the development of profitable niche sites and the Thursday, Friday and Sunday editions packed with retail advertising. Under this concept, the other days in the week would have online access to daily replica e-editions and/or smaller print editions for newsstands, with no home delivery.

This is exactly what they’re doing in Detroit, a Joint Operating Agreement town with titles owned by Gannett (The Detroit Free Press) and Media News Group (The Detroit News). The plan is to have The Free Press providing three day delivery (Thur., Friday and Sunday), while The News gets two day delivery (Thur. and Friday).

The niche sites that will get some of the papers’ leftover attention, all from Gannett, include MetroMix, MomsLikeMe and HighSchoolSports.net. There will also apparently be other products developed in partnership with Ideo, the design consultancy that has also done some work recently –never adopted—with a Yellow Pages company.

Former Knight Ridder exec Ken Doctor, in a great post, quotes Detroit Media partnership execs as contending that the current model is “unsustainable.” Apparently, they’d rather go cold turkey than face death by a thousand cuts.

There are pros and cons with the cuts, notes Doctor. There will be some savings in production costs, even with the sunk costs of producing a newspaper. And much of the advertising revenue might get retained, since advertisers are mostly attracted to the big retail days. Doctor cites estimates that papers will need to keep 75-90 percent of existing ad revenues to be sustainable.

But circulation, which account for 20 percent of revenues, will probably decrease. And subscriptions might take a hit as a partial week gives people less of a reason to subscribe.

What really won’t work are the Hail Mary hopes that the newspapers can save readership and add revenue with the daily electronic editions, predicts Doctor. “These editions, powered by companies like LibreDigital (nee Newsstand), Olive Software and NewspaperDirect, have had greater success in captive Newspapers in Education programs than in consumer acceptance. They are essentially counter-intuitive products: older readers who may like the idea of ‘reading the paper’ in its traditional format don’t like reading online; younger readers who like reading online find it nonsensical to read yesterday’s news — and pay for it — when they can news of the moment free online.”

Deutsche Bank Discontinues Local Media Coverage


In disappointing-but-not-unexpected news, Deutsche Bank has discontinued its coverage of local media (i.e. newspapers and television stations). Most of the companies in the space have lost 70-90 percent of their equity value over the past three months. Concurrent with the news was the layoff of a wave of analysts.

The first-rate reports from DB analysts like Paul Ginocchio, David Clark and Matt Chesler (the latter still working on Yellow Pages), have been an important part of the industry knowledge base for several years.

Basically, being a financial analyst means looking for growth opportunities (or bargain basement value). As Lauren Rich Fine demonstrated when she quit Merrill Lynch last year, if you don’t believe in a segment’s growth, you can’t really be working with a bank in assessing the segment, or the companies in it.