Threats to mainstream media seem to be coming from all sides. If news aggregators like Yahoo/Google and classifieds like Craigslist were not enough, the latest threat from cyberspace comes in the form of independent local sites, says a new report.
Borrell Associates, a leading research and consulting firm covering local advertising, in its report, "Independent City Sites Gain Steam," has detailed a new crop of local website rivals to old media that have been spawned by the boost in online advertising.
The report says, "Hundreds of independent sites are elbowing in on territory that traditional local media have been trying to stake out for the past decade, but with a decidedly different model. These competitors shun local news, obituaries and classified ads, focusing almost exclusively on fun and interesting things to do around town." Most of these are so-called City.com sites – sites whose URL contains the city's name (such as Houston.com, LosAngeles.com, StLouis.com, etc.). Others have derivative names in their URL � such as MyStatenIsland.com or MVOL.com for Martha's Vineyard.
These independent sites fall into three categories. The first are the City.com URL aggregators. Most of these operators bought a few prime URLs in the mid-1990s and have been busy buying up other URLs and banding with other operators to form networks. They usually rely on travel and tourism advertising. The second lot are the City guide aggregators. The third are local portal and local niche sites. While some try to to emulate a local newspaper, while others focus on niche interests like apartments, entertainment or local business news.
The report says, "For those who own the city name URL, the marketing strategy hinges on the belief that their Web address alone holds tremendous value. Site owners emphasise that they are not reliant on search engines or local advertising and that as much as 95 per cent of their traffic comes from people typing in the URL directly."
Independent sites, according to the report authored by Dorian Benkoil and Martin Nyberg, only have a fraction of the traffic and revenue of competitors who are financed and promoted by traditional-media outlets, but these underdogs offer an interesting lesson: keep it simple, keep it upbeat, and don't forget the out-of-market traffic. They are focusing on sites that win attention from locals and travelers alike, and are tapping ad revenues from some of the largest spenders on interactive advertising: hotels, casinos, airlines, real estate agents, resorts and restaurants.
To drive home the point whether these are valuable or not, the report cites the recent court battle played out by rival Las Vegas newspapers over control of LasVegas.com. At one point, one of the publishers offered $12 million for rights to the URL. Though terms were not disclosed, the final price may have been higher.
Though not all local sites may command such prices, the Borrell survey found that many of these independent sites – not affiliated with a traditional local media property – will generate between $30,000 and $600,000 this year. Most will make less than $100,000. Moreover, the total revenues collected by each independent site amounted to less than 1 per cent of the local online advertising expenditure in their respective markets. In contrast, local TV and radio websites typically capture market shares of 2-4per cent, while individual newspaper websites get about 18 per cent.
The report asserts categorically that the value of these sites are not to be overstated, but says that these independent local sites are gaining steam, and with good reason. "Many have an attractive URL. They are also unencumbered by the very same things that traditional media believe are advantages: content, brand and a large organisation backing them up. As a result, these independent operators are free to develop content that site visitors want (instead of what the TV or newspaper companies want to put there) and don't have the 'baggage of the brand' that might taint a consumer's view of what to expect on the TV or newspaper site."
Most of these independent sites still have a lot of ground to cover. They need to spend more on marketing, not only locally but also where it might matter more: on the Internet. These sites have to develop greater interactivity with site visitors, and maybe also consider partnering with a local media entity.
