Report: Local Revenue Also Going Hyper

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Local online ad revenues for television and radio are expected to grow at a compound annual growth rate of 17.8% through 2014, according to a new report from BIA/Kelsey.

By contrast, the research group expects traditional local ad revenue for TV and radio to grow just 2.8%.

"Broadcasters must evolve to participate in more areas of the media ecosystem," said Rick Ducey, BIA/Kelsey's chief strategy officer and program director of Digital Strategies for Broadcasting. "This means developing the right multiplatform and multiple revenue stream strategies, which in turn requires new workflow, partnerships, business models and resources."

Driven by advertisers' desire to connect with audiences more directly, content creators of all stripes are investing in locally relevant fare.

Just last week, The Tribune Company said it invested in Perfect Market, a startup that helps publishers monetize their content throughout the so-called "long-tail." Leading the startup's third round of funding, worth some $6 million, represented a broader effort by Tribune to establish its online presence at ever more local levels. Last April, its Media Group launched ChicagoNow.com, a network of roughly 70 local blogs on a variety of Chicago-centric topics.

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Meanwhile, at the beginning of the month, local online marketing company ReachLocal acquired reputation management manager SMB Live. Terms of the deal were not disclosed, but it came on the heels of ReachLocal's $100 million IPO. The company saw revenue more than double in 2008, while during the first nine months of 2009, revenue was up 38% to $143.3 million.

What's more, Web sites that report news and deliver other content at the neighborhood, or "hyper-local" level, are attracting the attention of big media and tech companies. The clearest example came last December with Google's failed attempt to acquire Yelp for a reported $550 million. Successful deals last year included MSNBC.com's acquisition of EveryBlock.com for an undisclosed amount, and AOL's purchases of Patch Media and Going.com.

Hyper-local startups are also attracting funding -- as in the case of Outside.in, which pulls together neighborhood blogs and other local content, and closed a $7 million Series B round of funding last month led by existing investor Union Square Ventures, with participation from new investor Turner Broadcasting System. As part of Turner's investment, CNN.com will use Outside.in's aggregation and curation tools to power hyperlocal news across all of its sites.

Despite its continued growth, however, the Web is hardly the most popular resource for local (or national) news consumption. On the contrary, it remains in third place -- behind local and national TV stations, according to a recent report from the Pew Research Center. Pew found that 61% of readers surveyed said they got their news online on a typical day, compared with 78% from local news channels and 71% from a national TV network such as NBC or cable channels such as CNN or Fox News.

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