Hyperlocal news providers on the web are increasingly viewed as a gold mine that can increase exposure and boost advertising revenue for major media outlets. With help from the rapidly expanding phenomenon of crowdsourcing (witness the success of Wikipedia), more media outlets are exploiting the internet’s long-tail and slicing into more and more local news coverage to raise viewership and ad pricing. At least four hyperlocal news providers have been acquired since June, and signs are pointing to major media organizations relying more on user-generated content — especially as traditional print news outlets falter, news budgets decline and local advertising continues to generate revenue.
Media company Examiner.com made a $25 million acquisition of citizen journalism-driven Web site NowPublic in early September. Rick Blair, the chief executive of Examiner.com, told the New York Times that his company’s expansion into more than 100 markets indicated that hyperlocal information could be a scalable and sustainable business.
In August MSNBC.com acquired EveryBlock, a hyperlocal news aggregator for an undisclosed price. TechCrunch notes that this specific purchase was not an audience acquisition, but rather a hyperlocal platform play that MSNBC can now utilize on its already popular sites. AOL also made similar purchases in June, of Patch, a tracker of local news and events in New Jersey and Connecticut, and Going, a news and events tracker for San Francisco, each for about $10 million.
These acquisitions emphasize how citizen journalism has come into the spotlight for mainstream media outlets. A recent survey by the Pew Research Center for the People & the Press found that more people (40%) now get most of their news from online sources rather than from traditional newspapers (35%). But newspapers still continue to struggle with making money by providing their news online.
Hyperlocal news could potentially come to the rescue of advertising woes. The deeper, closer-to-home analysis that crowdsourcing provides drives CPMs higher in terms of online advertising — due mostly to the geographically narrowed audience with more closely defined interests. That could be a win for media companies, as The Economist says online advertising often accounts for 10-15% of newspaper revenues. Local advertising (online and offline) has grown to about $103 billion market — approximately 39% of total U.S. ad spending and by 2013, there could be as much as $32 billion in untapped online advertising funds from small businesses that have never advertised outside the local Yellow Pages. Finding the key to turning on this advertising revenue faucet could prove huge for media outlets willing to take the chance.
There are other hyperlocal news aggregators available out in the market, such as New York-based Outside.In, which aims to create a place for neighborhoods to share and explore different information and has brought in $7.3 million in venture investments. More neighborhood blogs continue to sprout up across the country and new tools, such as smartphones with GPS capability, are allowing news sites to easily send out information to readers.
All of these innovations are pushing internet news into the limelight and could be the boost traditional media outlets need to break out of their rut. As news organizations increasingly seek local advertising sources, we expect to see even more acquisitions of crowdsourcing technologies and hyperlocal news aggregators in the near future.
March 4, 2010 at 3:27 pm |
[...] Since 2007, AOL has acquired three social media companies, and most recently branched out into acquisitions of hyperlocal news providers. Although it appears none of these acquisitions have panned out, AOL’s traffic and properties [...]