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MHT's Galen Moore: New 'hyperlocal' web trend
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Since cable TV operators coined the term “hyperlocal” in the late 1980s, waves of media pundits have preached opportunity in targeting micro-level cities, towns and neighborhoods.
So far, traditional media successes have been few and far between. Gatehouse Media, a newspaper publisher that bet heavily on the hyperlocal model with leveraged acquisitions of regional chains, has found revenue inadequate compared to its debt, for example.
Online, two Boston-area Internet companies are hoping to succeed where others have failed — by turning locally relevant information into small-business advertising dollars. Boston-based CitySquares Online Inc., which launched in 2005, has gone through a few business model iterations, as it continues its plans to aggregate information for neighborhoods across the nation. Wellesley-based Squaredy Cat Media launched two weeks ago with a more modest goal: improving the web presence of local merchants in about a dozen tony New England town squares.
The two ventures are competing with other upstarts, like New York-based content aggregator Outside.in and Boston-based wiki maker Povo.com, to woo users from established sites like Yelp.com and CitySearch.
CitySquares began with Cambridge and Somerville business listings and customer reviews. This year, it expanded to cities across the country. Co-founder and CEO Ben Saren hopes to make CitySquares a clearinghouse for third-party hyperlocal data — blog posts, polling locations, garbage pickup schedules, yard sales and events.
Meanwhile, Squaredy Cat’s first site, wellesleysquare.com, offers an online directory with free calendar listings, and paid ads, promotions and detailed profiles. Founders Chris Davies and Linda Cole last fall dialed down their roles at data center real estate company RTE Group Inc. to start Squaredy Cat.
“Chris and I are going to fill a role that a lot of local Chambers of Commerce have tried to do,” Cole said. Squaredy Cat is offering lower advertising rates to mom-and-pop operations than print publications or online news sites, with programs starting at about $50 a month, she said.
Saren also sees a void to fill as both advertisers and consumers turn away from traditional media.
“The newspaper sites are not delivering,” he said. “If they were, Outside.in would be having a hard time and CitySquares wouldn’t be here.” Instead of creating a website, CitySquares is betting a new generation of mom-and-pop business owners will want a presence among online social media sites.
Hyperlocal startups may have trouble differentiating themselves to web users at large, but to local merchants, the value proposition is clear, said Gaurav Tewari, a principal at Highland Capital Partners who focuses on consumer Internet investments. “They’re acting on a pay-per-performance basis. You get paid when you demonstrate some real flow of leads.”
To that end, CitySquares is inviting businesses to post a free coupon next to their directory listing, which is also posted free of charge. Saren hopes coupon traffic will demonstrate the site’s potential value to local merchants. “They don’t care about clicks or CPMs (cost per thousand impressions),” he said. “It’s … ‘Who are you sending through my door?’ ”
Tewari questioned whether that strategy can expand to the point where it becomes attractive to investors. No problem, say Squaredy Cat founders Cole and Davies, who aim for “high-touch” presences in about a dozen New England communities. Each area will require a full-time “town manager” to work with local merchants. “We don’t want to lose community depth,” Cole said.
But Saren, who is looking to scale up his venture-backed company, said high-touch isn’t realistic.
“I’m a big believer in having a ‘touch’ relationship with the businesses,” he said. “I’m not a believer in having a ‘high-touch’ relationship.”
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