Jason E. Klein, Founder and CEO of On Grid Ventures, led a StreetFight Summit panel of investors exploring where the next billion dollar opportunities in hyperlocal might be. Joining Klein were Matt Turck, Managing Partner, First Mark Capital and Ben Siscovick, with IA Ventures.

Klein framed the discussion by calling Google’s June 2013 acquisition of Waze for $966 million and Foursquare’s valuation of $700+ million two of these billion dollar opportunities. Klein questioned whether any funds tracked the local space. Answering his own question, he said “none.” The reason Klein believes no funds cover the space is because it is not a defined investment universe. His firm targets “geo-disruptive” businesses, which On Grid defines as, “businesses that use GeoLocation as a disruptive force to influence consumer or business activity.” Klein shared several examples. (1) GeoSocial – consumer to consumer businesses like Foursquare; (2) GeoMarketing – business to consumer companies like Yelp; (3) GeoInfrastructure business to business firms like ReachLocal, Yext, PlaceIQ or xAd. We’d also point you to BIA/Kelsey’s own coverage of local also has put some definition into the “local” investment universe.

Turck observed that one thing driving so much change in local is that since software is so easy and cheap to build and offer SMBs at low cost, even very small  businesses are developing powerful new capabilities. Siscovick pointed to a company like Locu (now owned by GoDaddy) that offers SMBs the ability to personalize, contextualize and localize based on aggregating geo-signals that establish the context of the area; inferring your reason to be there. He argued that “local” is really becoming tied to “geo-personalizing” the experience at a user level.

Looking ahead to where the next billion dollar opportunities lie, the panel pointed to the business to business (B2B) companies are currently in the hot part of the market (versus C2C and B2C). Investors offering Series A, B or C rounds typically look for exits in the $20 million to $200 million range, Klein offered. But Silicon Valley needs the billion dollar exit he said. Within the B2B part of the local space, it will be those companies that are “mobile first” that will be the ones more likely to win.

Finally, the panel reframed the whole question of the billion dollar opportunities in local by essentially concurring that “local is dead.” Even as big data allow us to personalize based on transaction and other consumer profiling to enhance targeting, personalization and improve the user experience via social signals like check-ins, the whole notion of “local” is being co-opted by “mobile.” It will be the “mobile first” company who can be the geo-disruptive offer in the market by contextualizing, personalizing and targeting users with an enhanced experience driven by geo-signalling and user data ported through the mobile device and SaaS big data solutions that defines the winning landscape of the billion dollar opportunities in local. Nothing is more local than where I am now and why I am there. You get there by mobile. Local is dead, long live mobile.

The post Billion Dollar Opportunities in Hyperlocal appeared first on BIA/Kelsey - Local Media Watch.

No one talks much about certain topics after public crashes — even when the opportunity remains clear. Hyperlocal is one of these. TBD.com in Washington, D.C., crashed last February, and there is a lot of speculation that Patch.com has become a cash drain on AOL.com and is not sustainable (although CEO Tim Armstrong asserts that several of the largest Patch sites will be in the black in 2013 and that the site remains a definite “go”).

Meanwhile, the dream lives on, and lots of independent and regional hyperlocal initiatives, in addition to Patch, are still going at it — and should be. Main Street Connect, a Northeast site, has raised $7 million of new funding and added a new CEO. Many newspapers have launched various hyperlocal sections. The Boston Globe’s YourTown, for instance, has 50 town sites.

Local Thunder, ShopCity and American Towns also have hyperlocal products that emphasize hyperlocal commerce as much as hyperlocal journalism (arguably, an equally important part of a community buzz). A new venture is GoLocal24, which launched GoLocalProv in Providence in 2010 and is launching GoLocal Worcester.

As an article in today’s Boston Globe points out, GoLocalProv was founded by Josh Fenton, a former advertising executive who grew up in Providence. His cofounder was Paul Krasinski, a Newton native and executive with Arbitron (and brother of John Krasinski of “The Office”). The website employs 10 reporters, including a well-known local TV personality.

The article notes that the Providence site became profitable after seven months and closed a second round of financing in December from Angel Street Capital and local investors.

The post Hyperlocal Lives? GoLocal24 Preps Second Site appeared first on BIA/Kelsey - Local Media Watch.

I take great delight in the Carlsbad Patch updates on my smartphone every morning. And the Fwix local app on my iPad. But why do I feel they are my “guilty pleasures”? Because there is a rap out there that hyperlocal doesn’t scale and these are toys.

Is it still the case?

Patch now has a local presence in 600 communities, with editorial and sales “pods” of 12 each. Some are being run by longtime newspaper industry leaders (such as former SignOn San Diego leader Chris Jennewein and ex-NAA New Media Federation staffer Beth Lawton).

Last Sunday, LA Times media columnist James Rainey wrote that Patch is revitalizing local journalism and asserted that may have become THE place for journalists to go (aside from wages of $35k-$50k, or half the salary that big city journalists might have gotten from the big metro, if they were hiring).

That’s fine by Patch President Warren Webster. At ILM:10, Webster didn’t dispute my characterization of Patch as an experiment that wants to quickly get a national footprint to attract national, regional and local advertisers; create a business directory that goes beyond the Yellow Pages; and scale editorial and sales resources.

On a macro level, local ad revenues typically split 50/50 between targeted national and local. For Webster (and cohorts Jon Brod of AOL Ventures, and AOL Chief Tim Armstrong), the bet is that Patch is poised to do both. They’ve publicly said they were spending $50 million to ramp it up in 2010.

Sites such as Main Street Connect and Hello Metro are going down much the same path — although they likely aren’t as focused on winning national dollars as yet. Main Street Connect in the NY metro area has raised $4 million for its effort, and recently signed up Carl Lavin from The Philadelphia Inquirer (and more recently, Forbes) to run its own editorial pods. Many single city efforts have also launched, such as Allbritton’s TBD.com in the Washington metro area.

Sales aren’t guaranteed for any of these. It remains tough to get through to SMBs — note the partial retreat of The New York Times, which offloaded The Local, its hyperlocal effort.

But for the sites that green-light hyperlocal, the hypothesis is they’ll get to local advertisers with local sales forces, and advertisers will follow an audience — especially the affluent, suburban audience targeted in many of these sites. Which brings us to the biggest question for 2011. It isn’t about sales quotas. That’s premature. It’s the audience question.

The audience question is a big “if.” Some of the sites hope to differentiate themselves with audiences via higher quality, more targeted local content or better mapping. But they face super-fragmentation, with at least five or six sources of “good enough” local info, as well as possibly declining user interest in local news in an age of urban sprawl. It is an issue made even more complex by aggregators, where they all feature each other’s content.

Sites that are focused more on geographic aggregation for media partners, such as Topix, Outside.in. Fwix, DataSphere and Everyblock. Local event and news site such as AmericanTowns.com, Center’d and DiscoverOurTown are also part of the mix.

Some of the aggregators are also supported by unique user-generated content and pro/amateur content farms, such as Examiner.com, Associated Content, Demand Media, Helium, MerchantCircle Studios and others.

Examiner.com, by itself, may actually have many times the traffic of a Patch, as CEO Rick Blair notes. Yahoo’s $100 million acquisition of Associated Content this year may have similar implications.

So as we end 2010, and think about 2011, do we think that hyperlocal is going to begin to cut it? One assumes there will inevitably be a shakeout and shutdowns in the coming year. And there will also be smarter ways to economize via user-generated content and aggregation. The all-purpose use of the “hyperlocal” term will also fall by the wayside.

But if more of us find our guilty pleasures from checking out the hyperlocal news on our smartphones and our iPads, and sneaking peeks on our PCs during the day — there is simply no reason to think it will generally fail.

The post Hyperlocal in 2011: A Break in the Clouds? appeared first on BIA/Kelsey - Local Media Watch.

ZipLocal, the U.S. independent directory publisher, has launched a new “hyper local” leads-based advertising model called Local Leads that taps into a distribution network featuring 18 properties and 80 billion monthly impressions, according to ZipLocal execs who briefed us last week. The main players in the network are CityGrid, SuperMedia, Chitika and DiscoverOurTown.

ZipLocal is the publisher that comprises the former Phone Directories Corp. and DataNational. The two entities were combined earlier this year when Canada’s Yellow Pages Group acquired its rival Canpages.

According to ZipLocal execs Olivier Vincent and John Eliott, the model will be a pay-for-performance model with a cap, so local advertisers will only pay for qualified calls that their ads generate. The price per lead is segmented by category so an attorney pays more for a lead than a restaurant.

Vincent told us that ZipLocal itself has 700 sales reps and 200,000 advertisers. By tapping into its network of Immersifind (IYP platform) partners, Local Leads could potentially be represented by more than 1,700 reps and have access to 300,000 advertisers.

Clearly Local Leads represents an opportunity for distribution partners looking to monetize more local content.

Additionally, providing smaller publishers, those with just a few print books and a small sales force, with a viable online offering is another huge opportunity (one also being pursued by CityGrid). However, the challenge in training up small print-focused salespeople to sell a performance-based product cannot be underestimated. Given his background running independent directory publishing companies, Vincent understands this as well as anyone.

Interestingly, ZipLocal will use human operators, aided by technology, to provide call qualification. Increasingly, we are seeing call qualification as table stakes in leads-based models, either involving speech-to-text technology that produces transcripts that are mined for keywords or direct human intervention. This enables the provider to charge a premium for leads of certified quality while avoiding arguments about paying for worthless calls.

Before the Canpages acquisition in March, YPG owned DataNational, while Canpages and PDC (later renamed ZipLocal) were owned by the same private equity group (Hicks Capital). Immersifind, the platform provider developed by Canpages, was paired with ZipLocal as part of the deal.

The post ZipLocal Joins Leads Race appeared first on BIA/Kelsey - Local Media Watch.

As “the media capital of the world,” New York is rife with daily newspapers, high-culture magazines and lifestyle publications, yet Trevor Sumner says he had “no idea what was going on in my neighborhood. I couldn’t even keep up with restaurants in the East Village.” That lack of district-level information inspired NearSay, a start-up site whose stated goal is to create a “custom neighborhood paper” for readers.

NearSay, cofounded by Sumner and David Pachter eight months ago, is both local and vertical, an important first step in addressing the definitional concerns that bug many hyperlocals. Geographical lines are drawn by district (Downtown Manhattan, Chelsea), with tabbed content categories for each of the coverage areas (local news, restaurants, nightlife, family and more). Readers can opt in to specific content interests for their neighborhood.

The lean, seven-person staff includes no full-time writers. Instead, NearSay relies on an extensive network of bloggers and community activists (city council and community board members, for example) to do its heavy lifting. Bloggers are rewarded with promotion from the anchor site that not only points to their originating work, but also posts full writer profiles and incorporates a “most influential” ranking model to further incentivize. It’s part of NearSay’s mission to build a site “where you find people and content,” Sumner told BIA/Kelsey.

He stressed that a blogger advertising network, in the image of the TBD’s model in Washington, D.C., will eventually sprout, though it has yet to take shape. First business priorities are to build out premium listings through a self-service business directory and to capitalize on the booming online coupons trend through targeted neighborhood offers. This encourages greater personalization of deals and discounts (Tribeca families, for instance) and opens up additional inventory. Sponsorship of particular content and section features is another monetizable opportunity to be considered.

Then there is the challenge of a start-up site being discovered in New York. Just this month, The New York Times launched The Local East Village in conjunction with NYU, and as BIA/Kelsey’s Peter Krasilovsky detailed, Capital New York (currently online in beta) wants to make its mark with a hyperlocal site devoted to highbrow New York culture. Factor in the dailies, tabloids, NY Observer, New York Magazine, Time Out New York and others, and it’s a cluttered marketplace to be noticed in.

Sumner thinks that could actually play to NearSay’s advantage. “The issues is that it’s too cluttered. There is so much noise in New York. It’s a fundamentally different problem that we’re solving.” He hopes that a high recommendation score from early adopters, coupled with the reach of the blogger network, can spread the word about the site, which will expand to all of Manhattan later this fall and into surrounding burrows early next year.

The post Neighborhood Site NearSay Wants to Take a Bite Out of Big Apple Clutter appeared first on BIA/Kelsey - Local Media Watch.

In a discussion with paidContent, Patch President Warren Webster discussed Patch’s check list of 59 variables that the site uses to determine which new towns it enters, including a first cut that consists of town population between 15,000 and 75,000; having better than average school scores; and better than average household incomes and voting penetration. A second cut includes qualitative characteristics such as civic “walkability” and the presence of an active business community.

While the site hasn’t focused on revenues to date, Webster told paidContent that it has had some experimental advertising, including banners ads and business listings that can be upgraded into advertising. It also has had some geotargeted national advertising for campaigns such as Pepsi Refresh. The site also plans to syndicate the data it is collecting on local communities to marketers.

There has, of course, been a blind assumption that if AOL is investing, then hyperlocal is finally ready for prime time. It is too early to come to that conclusion — witness The New York Times’ pullback a few weeks back from The Local, its aborted hyperlocal effort.

But AOL CEO Tim Armstrong’s consistent and vocal support for Patch, which he founded in 2007 as a side project when he was at Google, is definitely seen as validation for multimillion-dollar investments by others. These include other news-centric town site nets such as Main Street Connect; content creator sites such as Examiner.com; and city sites that break out neighborhood info via ZIP codes such as Allbritton’s TBD.com in Washington, D.C., Citysquares and various newspaper efforts.

Hyperlocal commerce sites such as MerchantCircle, DataSphere, Matchbin and ShopCity should also be seen as part of the mix. So should sites that have hired human writers to supplement local news feeds, such as HelloMetro and Yahoo Local. Event sites such as Zvents and Eventful are also part of the mix, as are sites that have a lot of events and local in them, such as Center’d and AmericanTowns.

City guides that are more metro-oriented, such as Citysearch and Yelp, should also be part of the mix, as should social directory sites such as YP.com, Local.com and MojoPages.

So, what’s the prognosis? We certainly like what we see at Patch. The town sites are attractive; they invite interaction and have a good “human” feel — some more than others, often based on how long the town site has been open. The longer, the better.

The aggregation of events is good and so is their mapping. There is also some intriguing video that draws people in. I especially enjoyed the contentious town meeting in my hometown of Chappaqua, N.Y. A lot of the infrastructure is more economically produced by central resources.

But in truth, Patch’s success or failure won’t ride so much on content and feature differentiation. Fifty million dollars is a lot of money. But it represents the scope of the project, not the individual sites. You wouldn’t go to a Patch community such as Westport, Connecticut, and say it stands head and shoulders above other local alternatives, such as Hearst’s Westport News, Main Street Connect’s The Daily Westport or Westport Now. Patch’s young and enthusiastic reporters are sometimes better (or not better) than their young and enthusiastic reporters.

What Patch’s ultimate success really rides on is changing local user behavior so that people feel compelled to check out the local patch at least a couple of times a week. It has to be a bigger swath than the older home owners who make up the primary audience of community weeklies — it’s got to be everybody. And then they’ve got to sell SMBs from the directory level on up — much of the effort probably riding on self-serve. And then they’ve got to get the geotargeted national advertising going.

Patch hopes to get over the hump by having enough of a footprint in its communities to begin marketing in a major way, perhaps, I speculate, on TV and radio and online. For sure, it is an exciting effort, and no one should dismiss it out of hand. In fact, AOL is spending the money and making the effort that could, in theory, save local journalism and hyperlocal commerce for everyone.

The post AOL’s Patch Gives a Progress Report; The Implications for Hyperlocal appeared first on BIA/Kelsey - Local Media Watch.

The latest attempt to make hyperlocal a sustainable reality came today with Allbritton Communications’ launch of TBD.com, a hyper metro site for the Washington, D.C., area. Allbritton, which has sunk “under $5 million” into the project to date, hopes it will grab hold of the D.C. audience in the same way that its Politico has done with political types — simultaneously via the Web and TV, where it takes over the slot formerly held by Allbritton’s former News Channel 8.

I’ll say right off the bat that I like it a lot. Although I had the opportunity to visit the newsroom with other members of the BIA/Kelsey team about six weeks ago, I got my first glance at the site today. My takeaway? It’s fun, useful and totally up to date with social and mobile media.

Most important, it seems like something I’d probably read (and watch) every day if I still lived in D.C. It just seems natural and un-self-conscious — completely opposite D.C.’s staid (and untrue) image as a stuffed shirt of a city and other hyper metro sites that I won’t name here but that make NPR seem wild and crazy.

The site integrates, a little, with Allbritton’s WJLA TV, and it is co-located with the WJLA newsroom. You’ll see the WJLA programming schedule and its landmark weather reporters Doug Hill and Bob Ryan headline the weather page, for instance.

But it has a totally separate identity, helped by a dozen writers led by former Washington City Paper Editor Erik Wemple. As Wemple notes in a public letter: “One of them writes nothing but lists. One is all over pedestrian life. One holds politicians throughout the region accountable. Three carry a year-round obsession with the Redskins. Three are covering some of the fastest-developing communities in the region. Three are the final authority on all things arts and entertainment.”

The entire site will eventually ramp up soon to about 50, including the TBD News team carried over from News Channel 8, and six community reach-out staffers.The site also seamlessly integrates with 129 D.C.-area bloggers and picks up news from all the D.C. sites, including The Washington Post, and also from WJLA competitors such as WTOP-AM. And much of its substantial neighborhood news comes via a news filter that sorts by ZIP code.

It has also taken some unique approaches that only time will tell will pan out, such as TBD TV, the “companion” channel that takes over from News Channel 8, the 24/7 news channel that had been featured on cable and dish services throughout the metro area. It features programs that sometimes borrow WJLA personalities (i.e., The Arch Campbell Show) but also has begun to produce some of its own unique offerings (i.e. Capital Golf Weekly).

The site was initially slated to launch at the end of August. It is obviously up early — the testing URL leaked and they decided to roll with it. Consequently, the mobile apps (i.e., All Over the iPhone, All over the Android and All Over the Mobile Web) aren’t ready yet, although they’re being promoted, and there is a lot of content that you’d expect to see that isn’t there (i.e., high school sports) and exurban content. It is possible that they’re leaving the tough (and expensive stuff) for the thinning Post to cover.

But we know there are plans to do other things that will be totally innovative if they pull them off, such as having local bloggers for the site featured on the local news when there is a hot breaking story (i.e., the fighting among 70 teens at L’Enfant Plaza Metro station the other night).

The advertising strategies also aren’t fully unveiled, and the site will obviously focus on building up an audience first. Currently, you’ll just see some run of site ads such as Belfort Furniture and contextual tile ads, such as The Washington Ballet under arts, and McCrea Heating and Air Condition under weather.

Will this site ultimately be self sustaining? That’s the big question. It is expected to lose up to $2 million a year as it gets going. But if the site maintains its promising start, the local dollars should theoretically follow. Another question is whether the TV companion will take off.

In the course of writing this post, I was chatting about the site’s debut with hyperlocal pioneer Rob Curley, who ran The Post’s ambitious hyperlocal strategy two years ago before moving on to Greenspun Communications’ Las Vegas Sun. Curley was very enthusiastic about the site’s design. The amazing thing is that they probably showed that sites are more likely to win with a TV station as a partner than a newspaper, he said. That’s food for thought.

The post Allbritton’s TBD.com (and TBD TV) Launch in D.C. appeared first on BIA/Kelsey - Local Media Watch.

Score one for local businesses … at least in Minnesota.

As of Aug. 1, the state began enforcement of a law that prohibits advertising “deceptive local telephone numbers and geographically deceptive business names” across the Internet, as well as in print advertisements and directories.

Legislation targets national businesses that camouflage themselves behind local names and listings, cluttering the advertising space. The landmark represents a clear win for neighborhood “mom-and-pops,” but also a victory for national chains (insurance, restaurants, other retailers) fighting for local brand relevance in an increasingly populous online space.

The Minnesota law cracks down on local-listing squatters, not companies that serve as middlemen between local merchants and customers. Often, national poachers will field a consumer’s order, skim a finder’s fee, then place the order with the actual retailer.

Writing in Ad Age, Casey Squier, managing director at hyperlocal marketing network Wahlstrom, trumpets that “all businesses with a local geographic footprint will find an easier time winning in the online and print battlefield.”

Especially so if similar legislation is adopted in other states. Georgia, for example, passed a similar statute in June that will take effect on Jan. 1, 2011, making it the 27th state to put fraudulent-listing laws on the books.

Unaddressed in the new law is the related security issue of unclaimed online listings. With search engines, social networks, Yellow Pages directories, and other formats all offering listing services, local businesses must claim their listings to prevent phony sellers from grabbing them, then optimize them with photos, video, rich media, coupons and other features. Failure to do so, and waiting for listing-service security to catch up to deceptive business practices, is an invitation to “high-jack.”

The post Minnesota Crackdown on Phony Listings a Potential Boon for Local Advertisers appeared first on BIA/Kelsey - Local Media Watch.

If people would only pay for their local content, nobody would be worried about the future of local news. But so far, most have proved less than willing. EBay founder Pierre Omidyar, however, is testing out new models at his Honolulu “Civil Beat” site, per NYU’s Jay Rosen, who talked with TBD.com’s blog.

Full access to the site is $1.49 a day, or $19.95 a month, which might seem pricey for its current editorial output, which averages between four to six articles per day. As with WSJ.com, free days are occasionally offered as promotions (i.e., today).

Much more interesting is a 99-cent monthly fee to be a “discussion member,” with access to article summaries and the consequent discussions and the ability to comment. Rosen told TBD.com that “solves” the issue of getting bona fide comments.

People who engage in the discussions may not know exactly what they are talking about, since they won’t see the full article. But most will probably get the gist of it.

The post Omidyar’s ‘Civil Beat’ Tests Multi Pay Tiers appeared first on BIA/Kelsey - Local Media Watch.

If people would only pay for their local content, nobody would be worried about the future of local news. But so far, most have proved less than willing. EBay founder Pierre Omidyar, however, is testing out new models at his Honolulu “Civil Beat” site, per NYU’s Jay Rosen, who talked with TBD.com’s blog.

Full access to the site is $1.49 a day, or $19.95 a month, which might seem pricey for its current editorial output, which averages between four to six articles per day. As with WSJ.com, free days are occasionally offered as promotions (i.e., today).

Much more interesting is a 99-cent monthly fee to be a “discussion member,” with access to article summaries and the consequent discussions and the ability to comment. Rosen told TBD.com that “solves” the issue of getting bona fide comments.

People who engage in the discussions may not know exactly what they are talking about, since they won’t see the full article. But most will probably get the gist of it.

The post Omidyar's 'Civil Beat' Tests Multi Pay Tiers appeared first on BIA/Kelsey - Local Media Watch.