Insider Chatter by Donna Bogatin

What are the “lessons learned” from the demise of Backfence.com, one of the most highly touted hyperlocal efforts to date? What best practices ought to be emulated for future hyperlocal success?

Backfence co-founder and “recovering journalist” Mark Potts promises “lessons learned” at his blog. While he dismisses “second-guessing” of many in the blogsphere and trade press, however, he offers little in the way of fresh perspectives on “dos and don’ts” for winning in the hyperlocal sphere, despite a lengthy post.

Backfence “lessons learned” presents a littany of Web 2.0 “must-haves” that will undoubtedly not be news to any blogger or trade press writer pondering the matter:

Engage the community,
It’s not journalism, it’s a conversation,
Trust the audience,
Leverage social networking,
Keep costs down,
Partner for media distribution..

Potts’ conclusion sums up the at once generic, but contradictory, platitudes that comprise the Backfence public post mortem:

Hyperlocal is really hard, but it works. (not at Backfence, though)

Right, and the “local” sun will come out tomorrow.

It will be difficult to apply any of Potts’ “learnings” as many are in inherent conflict.

“Engage the community” Potts says, mocking “whizbang Web 2.0 features.” Nevertheless, he recommends “leveraging social networking” via such Web 2.0 features as “friending tools” and widgets.

Potts’ “hyperlocal works, but it’s hard” musings are particulalry unsatisfying as they veer all over the hyperlocal map:  

 * Hyperlocal works. You need patience and hard work to embed yourself in a community and become a vital cog in the life of that community. But when a community comes together, it’s striking. We saw it happening in Backfence’s more mature communities after a couple of years—in fact, even after cutbacks earlier this year left us with no day-to-day community outreach, site traffic and posting activity continued unabated, and even rose. Were they at the levels we wanted? Of course not (they never are). But that proves that once the community gets involved, a successful community site can almost run itself. I said “almost”!

* Hyperlocal is really hard. Don’t kid yourself. You don’t just open the doors and hit critical mass. We knew that from the jump. It takes a lot of work to build a community. (Look carefully at most hyperlocal sites and see just how much posting is really being done, especially by members of the community as opposed to be the sites’ operators.)

When I visited Backfence upon its reported demise, the Backfence signoff post had not engendered any response from the theoretically vibrant community with a soul of its own. 

Potts’ assessment of a supposedly “robust hyperlocal advertising” market ripe for the taking is also at odds, with both itself, and the very mature local merchant ad space:

Local advertisers are eager for new online advertising vehicles. I’ve seen it suggested repeatedly that Backfence failed because it couldn’t sell advertising to local merchants. Not true. In fact, we sold ads to more than 400 advertisers, more than any other similarly sized hyperlocal effort that I’m aware of. It was clear that we had staked out an affordable and lucrative corner of the local ad market. Ads in local newspapers—even community weeklies—are too expensive for many small local businesses. Alternatives like the Yellow Pages, Val-Pak-style coupon flyers and local radio are similarly pricey. And most small businesses don’t know from AdSense. That presents a ripe target for a talented, hard-working ad sales team concentrating on offering low-cost ads to local businesses who want to reach members of their communities through hyperlocal sites. It’s a rich, untapped marketplace.

Local ad sales is hardly an untapped opportunity, armies of “feet on the street” are the competitve advantage of print directories. Potts’ may diss “old school” local media as being “pricey,” but that is the only feasable structure to support the high-touch, personal sales approach local merchants require, as Potts himself seems to recognize.

Moreover, an ad sales market will be hard pressed to be “lucrative” if it is at once “affordable” in price, but expensive in cost. Additionally, four hundred low-ball hyperlocal advertisers are not the stuff local dreams are made of.

The moral of the Backfence story? None in particular, except perhaps watch out for where you put your VC money.

SEE: Backfence.com and Google: Money Can’t Buy Local Love PLUS Google Health at Risk: Healthline Medical Search Snags Power Partners, and Money

CONTACT DONNA BOGATIN