Commentary

Hyperlocal Market Services, Content Showing Big Gains

Lock-and-Key-A3Pay-for-content services have begun to pay off, especially those supporting services for hyperlocal markets. One of the trends moving up the needle points to local businesses spending more for media. In 2012, spending rose 20%, according to Borrell. The firm estimates it will jump another 31% this year.

Traditional media companies, such as newspapers, have begun to benefit the most, as more start to develop services the research firm believes could spin off into separate businesses, such as search engine optimization (SEO), lead generation or recommendations.

The Borrell Local Online Media 2012 Revenue Survey serves up some interesting stats. It provides an analysis of 6,284 local operations and online ad-spending forecasts for 513 U.S. digital marketing regions. The report shows that about 350 newspapers put up paywalls in 2012, with more planned this year. Some of the most unlikely services continue to bring in large profits with very small staffs because the services are done online, with little overhead.

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This report has a ton of information, but I'm calling out one small detail to which SEO experts and other marketers should pay close attention. The findings from the report provide some interesting input for SEO experts who are thinking about optimizing content or putting it (recommendations and other content) behind a paywall, especially in hyperlocal markets. The report calls out Angie's List -- which charges subscribers about $30 annually to access reviews and business listings and now has more subscriptions than any daily newspaper in the U.S., except The Wall Street Journal and The New York Times.

Angie's List signed on 250 new subscribers in Q4 2012. If the site can keep up with that momentum it will put them ahead of the two news organizations this summer, according to the report. Paid subscriptions to the online review site rose 66% in 2012, to 1.8 million. Ad revenue rose 88%, to $156 million. The company began mailing a monthly magazine to subscribers, packed with consumer advice and local coupons.

How many of you know that Craigslist expanded its pay-for-listing model to nine more cities last year? The classifieds site now averages $3 million per market for the 28 markets it serves, plus an estimated $40 million in its largest market -- New York City. The company generated about $126 million last year, according to The AIM Group, which tracks craigslist.org revenue. Evidently, Borrell reports that Craigslist doesn't employ a staff in most of the markets it serves, but averages about $3 million in those markets. 

Another interesting observation is that advertising seemed to take a backseat to digital services and digital subscriptions. The report points to Belo, Hearst, Gannett, GateHouse and others that began offering lower-priced services related to SEO, online contests, social media and email management, and Web site and app design. The report also makes a point of outlining two main reasons why paywalls are not likely to kill advertising.

First, when paywalls are instituted, Web traffic declines, and then gradually returns to pre-paywall levels after 12 to 14 months. Second, Web advertising seeks buyers, not readers, so commerce-related content like most classified listings or online coupons will not be put behind paywalls.

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