Big Media’s Hyper-Local Push for Local Advertising Dollars

Recent research from Pew Internet & American Life Project shows that one out of five US adults now tracks local issues online. As a result, several major media companies, including AOL, are starting to enter the local and hyper-local news market to lure more local online ad dollars.

First there’s Gannett, who recently announced that it would be adding hyper-local blogs in 10 of their 19 television markets. Pacific Northwest-based Fisher Communications is also launching a new hyper-local project, which will rely on a mix of user-generated and professional content to service neighborhood-style news blogs in several of their markets.

At BIA Kelsey’s Digital Strategies for Broadcasting conference, Colleen Brown, president and CEO of Fisher Communications, gave a keynote describing the project. “As an organization, we need to be able to sell everything from a $60,000 television spot to a $35 directory listing. It’s okay to roll up nickels. They’re adding up,” Brown said. “If a website brings in $2,000 per month, that’s not a lot in our business, but if you multiply times 150 sites and 12 months, that’s over $3 million.”

This push for hyper-local online content from major news organizations is no surprise. Much of the country’s floundering daily newspapers and broadcast organizations—except, perhaps, Fisher, which is a regional broadcast organization—have yet to develop or invest in a successful online news strategy. Even big media companies like the Washington Post, whose 2007 venture into the hyper-local market started and ended prematurely, have yet to truly crack the market.

Still, the local market is attractive for big and small media alike. Local advertisers continue to move their money to the Web, and online news will certainly be a prominent recipient of those dollars. By 2014, one-quarter of all local ad spending will go online, according to BIA Kelsey. Note that “local” in this context does not just mean mom-and-pop operations. It also refers to things like advertising from University football programs or graduate degrees, or regional advertising for national retailers, or local auto dealers which are part of manufacturers’ network.

Traditional media advertising, meanwhile, will remain relatively stagnant, growing just 1% this year. BIA Kelsey estimates local online advertising spending will grow 15.1% in 2010, reaching $17.5 billion. By 2014, the research firm expects local online ad spending will reach 36.7 billion.

Enter AOL, who will try to sidestep sinking local organizations by ordering an army of journalists to create and collect content for its own hyper-local sites, along with the many neighborhood-centric news sites it chooses to partner with. The company recently announced that it will be dedicating $10 million to the creation of hundreds of local news sites in areas with populations of 50,000 or less.

Just so we’re clear: We’re talking about a major (hyper) local strategy from a well-established Web company (AOL) determined to provide quality online content to targeted, niche audiences that are increasingly reading their local news online. We’re also talking about local advertisers that are increasingly putting their money online. Those are fairly powerful forces coming together. Do the local dailies even have a chance? Maybe.  AOL’s army of journalists, in reality, is made up of mostly part-time writers, and the content may not be nearly as compelling as promised. It might fail. Or it might not.