Let me Chime In on Hyperlocal

The same week I receive my Wired magazine in the mail with a great hyperlocal short story by Bruce Sterling, BackFence.com shuts down its network of sites… What a bad timing!

Rafat Ali in PaidContent.org asks: “Is there a real business in this kind of business?”

American Journalism Review answers: “ So far–and admittedly it’s still very early –the answer is no. A few of the estimated 500 or so “local-local” news sites claim to show a profit, but the overwhelming majority lose money, according to the first comprehensive survey of the field”

Jeff Jarvis says “Hyperlocal will not, I firmly believe, happen at one site. It will work only via networks: content, commercial, social. It will work by gathering, not producing.”

Greg Sterling continues: “no one should dismiss the underlying phenomenon that Backfence is a part of because it didn’t succeed financially.” and adds “Nobody thinking about or currently operating a local consumer site – unless you’ve already done it or have tons of cash – should be building a sales force, although a sales force is what it takes to sell successfully in local. (Telephone sales channels might be something of an exception.) Site owners should think about tapping into existing ad networks or sales channels as part of broader, geotargeted Internet distribution networks.”

My friend Perry chimes in: “is a hyper-local destination site the right model? The world of social networking, blogging, portals and news scanning are being thrown into the blender of web 2.0. I think too many venture-backed models are living in the comfort zone of a “destination site” strategy ALONE. I am not knocking it, I just view this as “necessary but not sufficient”. There is a new world being created where users roll their own internet, and the notion of having ONE PLACE for their neighborhood conversation feels increasingly contrived.”

What it means: lots of great insights from great minds. I don’t think there’s any doubt in my mind. Hyperlocal represents the future of the web. I know, I know, it’s almost counter-intuitive to the power of the WORLD wide web but here’s how I explain it. I remember when I first discovered e-mail on CompuServe back in 1993. I was e-mailing people I met in various newsgroups, people from all over the world! How exciting it was to “talk to strangers”! Then, my friends/family/co-workers started to get connected and got e-mail addresses. My volume of e-mail slowly went from people I did not know to people I knew. And a lot of these people lived close by as well!

Now, fast forward to 2007. I don’t know if you’ve had the chance to explore Facebook but it is a fascinating social experiment that resembles CompuServe. Lots of groups/communities are created and people join them if it fits their interest. One trend that I’ve seen is the creation of local groups of interest when it makes sense (i.e. when the equivalent global or national group becomes too big and loses its relevancy). There is a Montreal Tech Entrepreneurs group, a Montreal SEO group, etc. From a purely geographical point of view, I’ve already seen a group for my neighborhood and I’ve seen a group for a street (!?!) in my neighborhood. Now, are there many conversations in those groups? Not a ton, but there’s life out there. As more and more people get the tools to engage in hyperlocal conversations, it will happen. And it will happen in your neighborhood.

Citysearch buys InsiderPages for an Undisclosed Price

VentureBeat has the news:

Citysearch, the division of IAC focuses on local reviews of restaurants and other services, has acquired the struggling local review start-up, Insider Pages.

The purchase (amount undisclosed) comes at a time of increasing competition in the race to deliver a compelling local search services. Citysearch’s parent, IAC, has already bolstered its local search offerings, namely with Ask City, a property that packages everything from local search to local maps, reviews, and ticket services.

However, more entrants have arrived to nip traffic away from Citysearch, an early player that has seen its traffic stagnate in recent months. There’s Yelp, Judysbook and Backfence, for starters. Earlier today, we mentioned new competitor Outside.in, another company going after the local community news and events area. (…)

Insider Pages has about 600,000 user reviews, and they’ll be integrated into the Citysearch’s offering, she said. It has 2.5 million monthly unique readers, she said, based on Comscore and internal tracking numbers.

She would not say whether the purchase price was more than $10 million invested in the company by Sequoia Capital, Softbank and Idealab. She said there were multiple bidders, but that Insider Pages preferred Citysearch because it is complementary. Insider Pages is popular among suburban parents and homeowners, she said, giving it strength in the home, garden, health and plumber review areas. Citysearch is stronger in bars, arts and entertainment. Citysearch will absorb Insider Page employees in its San Francisco office.

Rev2 says it was sold for “for an estimated sum of $13 million.”

What it means: I’m surprised it was not acquired by a directory company as it would have been a great jumpstart for any user review strategy (becoming more and more important in any local search site). From the article above, it sounds like the acquisition will be complimentary based on different content & users. I know the Citysearch demographics well (Yellow Pages Group used to be the Citysearch licensee in Canada) but I don’t know enough about InsiderPages’ users to really comment on the complementarity.

Citysearch buys InsiderPages for an Undisclosed Price

VentureBeat has the news:

Citysearch, the division of IAC focuses on local reviews of restaurants and other services, has acquired the struggling local review start-up, Insider Pages.

The purchase (amount undisclosed) comes at a time of increasing competition in the race to deliver a compelling local search services. Citysearch’s parent, IAC, has already bolstered its local search offerings, namely with Ask City, a property that packages everything from local search to local maps, reviews, and ticket services.

However, more entrants have arrived to nip traffic away from Citysearch, an early player that has seen its traffic stagnate in recent months. There’s Yelp, Judysbook and Backfence, for starters. Earlier today, we mentioned new competitor Outside.in, another company going after the local community news and events area. (…)

Insider Pages has about 600,000 user reviews, and they’ll be integrated into the Citysearch’s offering, she said. It has 2.5 million monthly unique readers, she said, based on Comscore and internal tracking numbers.

She would not say whether the purchase price was more than $10 million invested in the company by Sequoia Capital, Softbank and Idealab. She said there were multiple bidders, but that Insider Pages preferred Citysearch because it is complementary. Insider Pages is popular among suburban parents and homeowners, she said, giving it strength in the home, garden, health and plumber review areas. Citysearch is stronger in bars, arts and entertainment. Citysearch will absorb Insider Page employees in its San Francisco office.

Rev2 says it was sold for “for an estimated sum of $13 million.”

What it means: I’m surprised it was not acquired by a directory company as it would have been a great jumpstart for any user review strategy (becoming more and more important in any local search site). From the article above, it sounds like the acquisition will be complimentary based on different content & users. I know the Citysearch demographics well (Yellow Pages Group used to be the Citysearch licensee in Canada) but I don’t know enough about InsiderPages’ users to really comment on the complementarity.

What’s More Important: Social Or Local?

The blogosphere has been abuzz in the last few weeks about the shake-up in local search sites.

  1. Major lay-offs and resignations at InsiderPages (via TechCrunch, Local Onliner, )
  2. Same at BackFence (via Greg Sterling, Local Onliner)
  3. Change of model at Judy’s book, moving away from merchant reviews (via Judy’s Book’s blog)
  4. Resignations at TrueLocal (via Local Onliner)

Consensus seems to be that Yelp is the one that’s running away from the pack in that start-up category (defined IMHO as Local Destination Sites start-ups).

I will note a couple of excellent comments amongst all the buzz:

  • Greg Sterling said: I told a reporter on Thursday that winning in local “is like climbing Mt. Everest.” We’re now seeing attrition (or something like it) in local because it’s much harder to monetize local consumer destinations with direct sales than people think when they start out. That’s not to say building a great consumer destination is easy, but in many respects that’s the easier part.”
  • Uri L. commented in Techcrunch: “In terms of community social reviews – Yelp had the most successful model, which put a focus on the community interactions (pictures, “i like” features), and build around it the local biz reviews. The site design reflected the warm and cozy attitude, and was to young people (who are probably the most contributing sector to ugc). Insider Pages took a more “directory” style, cloning traditional YP with the added value of community. (…) Judy’s Book is somewhere in between, focusing originally on parents and 30+ sector. (…) However, it seems that Yelp has managed to come with the best model for Karma – “You review, the community loves you back”. In none of the other sites you could really feel “loved” as in yelp. Maybe that’s a thing to remember…”

What it means: Two things:

  1. Local/Social sites should come up with an alternative business model that does not depend on having their own sales force and instead should try to partner with existing traditional local media companies.
  2. I believe the social aspect might be more important than the local aspect when dealing with a site that combines the two.