A new breed of ultra local web sites are cashing in on the “feverish growth” in online adspend, and beginning to encroach on the territory of traditional local media, according to American consultancy firm, Borrell Associates.
The new online operators do not compete with traditional media owners on a level playing field, according to Borrell, which reports that their use of a different model, concentrating on entertainment and listings, is proving attractive to web users.
“These competitors couldn’t care less about local news headlines, obituaries and weather reports. They shun the drudgery of repackaging local news and information, and instead focus almost exclusively on fun and interesting things to do around town,” the analyst explains.
“While local media home pages in San Francisco lead their pages with crime news and updates from Iraq, SanFrancisco.com leads with nightlife, dining and attractions.”
According to Borrell, the strategy is beginning to pay off. Many independent “City.com” websites now report revenues in six figures, as well as notching up respectable margins. Elsewhere, around 20 owners of independent local city sites recently grouped together to form their own trade association, underlining their increasing online presence.
The independent sites have secured success through a relatively straightforward strategy – sticking to simple, upbeat features and relying on an audience of both locals and travellers alike.
Borrell reports that while independent operators often attract a fraction of the traffic and revenue of their larger competitors, they work by tapping ad revenues from hotels, casinos, airlines, real estate agents, resorts and restaurants – some of the largest spenders on internet advertising.
The value of these independent sites is rising rapidly, according to the analyst, with one city.com address recently sold for $500,000, while another fetched around $12 million from a newspaper publisher.
The market for localised online services is clearly a lucrative one, with the latest trend for independent city guides underlining Borrell’s previous estimates for local search marketing. According to figures released last month, local search-based marketing will be worth $4.07 billion by 2010, accounting for 12% of the forecast $34.81 billion online advertising market for that year (see Paid Search To Hit $8.9 Billion In 2010).
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