Trying to Figure Out Local? Try Marketing Your Own Local Business.

Here's
some advice for anybody trying to create an advertising-driven local
Internet property: Before you begin, try marketing your own local
business.

That would have helped us with 9Neighbors.

Like
many others, we saw the money being spent on local newspaper and
television advertising (tens of billions) and assumed that as soon as
local businesses figured out the web, all this money would move online.
This is the assumption local media companies are making, and the assumption that underlies local web startups like Outside.in.

A few months marketing a local business will convince you that it's a dubious assumption.

Consider
our case with 9Neighbors. We were trying to market a local news website to five specific communities in the Boston area on a modest
budget. Our traditional outbound marketing options were direct mail,
newspaper ads, display advertising on the Web, radio commercials, postering, fliering and pay-per-click campaigns. 

We
experimented with fliers and ppc campaigns, but found both expensive
and ineffective, especially when compared to the results of our inbound
marketing efforts — creating content. Flyering and ppc campaigns drove
traffic to our site, but it came and went without leaving us better
off.

Content always attracted traffic that left us better off — more
discussion and more inbound links. Our most effective piece of
marketing was a map of potholes
that was picked up in forums around the city.

Our
experience was not unique. Small businesses are beginning to adopt
online marketing strategies, but aren't focused as much on online
advertising as we thought they'd be. They're finding they can get better
returns elsewhere. They're blogging like David Levine does at Central Square Florist. They're running creative blogger promotions like the ones Susan Kaup and Nick Peterson have been doing at the American Repertory Theater. And they're creating material for video like Petsi Pies did on Pi Day this spring.

This
is a huge problem for local media companies. The marketing needs of
small businesses are intertwined less and less with content creators
and more and more with the places that give small businesses the tools,
data and insight to create content themselves — places like HubSpot.

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HubSpot, the Company That Markets Itself

Lot’s of good HubSpot articles in the news today.

Mass High Tech has two pieces, "HubSpot Handles eMarketing Surge" and "Online Video Marketers Win Customers with Webinars."

There’s another in MarketingProfs by HubSpot’s
gold-medal-winning Olympic hockey player Colleen Coyne. And there’s a
great new video on the That’s Great PR Blog.

It’s fun to be at a company that produces Google Alerts full of great press on a regular basis.

But what’s really cool is the extent to which people within the company amplify all this news.

It’s only lunchtime here, but Dan Dunn and Mike Volpe have already posted all this news on their blogs. Pete Caputa, Yoav Shapira, Dan Abindoor, and Ellie Mirman are tweeting up a storm about all the articles. And lots of others are posting to places like Sphinn and Yahoo Buzz.

HubSpot is still a pretty small place, so it’s exciting to see the kind
of authentic buzz its plugged-in team can get going.

HubSpot, And Why I’m Thrilled to Be a Part of It

   
   
A few months ago I was talking with David Levine, the owner of Central Square Florist, about his web site and the ways he was trying to promote his business on the web. He asked me if I had heard of an internet marketing company called HubSpot.

"They’re
a bunch of MIT guys who really know what they’re doing. They have a ton
of content on their site, and you can really learn something there," he
said.

I hadn’t heard of HubSpot, but I
checked it out, and a few months later I’m thrilled to be working
there. I can’t think of a place I’d rather have landed after at great three-year run at Faneuil Media.

On
a basic level, HubSpot is just a fun place work. It’s a five-minute
bike-ride from home, they have good snacks in the kitchen and I’m
working with 40 or so smart, down-to-earth folks.

On a deeper level, the thrill of working at HubSpot is the thrill of an opportunity to build something big.

I say this for four main reasons:

(1) HubSpot solves a big, important problem.
If you’re a small- or medium-sized business, your traditional marketing
options are mainly direct mail, telemarketing, display advertising,
events and pay-per-click advertising (ie, Google). This is all
expensive, and consumers are getting better at avoiding your messages.

Instead of interrupting people who don’t care about your product, you
need to be there when people are searching for your product. HubSpot
provides a platform of tools that help companies do this by optimizing
their pages for search engines, monitoring keywords, links and pages,
tracking incoming leads and creating content.

When
I first learned about HubSpot, I didn’t see the value in all this — a
lot of it already exists in one form or another already. I pointed this
out to Brian Halligan
the first time I met him, and he gave me an answer that made sense
immediately: "We’re like the iPod — we pull together a lot of
different features, and put them together in a simple, robust package."

(2) HubSpot has lots of customers.
In its two years, HubSpot has built a roster of hundreds of monthly
subscribers passionate about their product. This is good for the
balance
sheet, but even better for the product. It means they’ve built
something useful. Now HubSpot can focus on scaling
and improving the product. And this will be much easier with an
existing base of customers to tap for referrals, data and feedback.

(3) HubSpot uses (and thrives on) its product.
HubSpot sells marketing software and uses its own software to manage
its marketing. More importantly, the HubSpot product and methodology
are one of the main factors in the success of HubSpot the company.
HubSpot’s, well-optimized, well-monitored, content-heavy site is a
lead-generating machine.

All software companies should use their own
products, but this is a unique case where the product itself is a huge
part of the company’s success.

(4) Heads at HubSpot are screwed on straight.
The people at HubSpot are modest, frank, data-driven and agile. They
know how build things. They’re more concerned with iteration and
learning than with product perfection. They understand online
communities and they participate in them. They understand content, and
they create it. They gravitate towards startups, and many have tried their own. Most importantly, they understand that the road ahead will not be smooth, and they’re prepared for it.

Last week Seth Godin published a piece about icons. He summed it up like this:

The challenge for organizations is this: the easiest projects to start
and fund are those that go after existing icons. The search for the
"next" is easy to explain and exciting to join because we can visualize
the benefits. But success keeps going to people who build new icons,
not to those that seek to replace the most successful existing ones.
HubSpot
is not solving a problem that’s easy to visualize. It’s a problem
that’s huge, but hard to define and a little abstract. That’s exciting,
because it means HubSpot has an opportunity to become a new icon.

(Btw, Seth Godin fans, don’t miss him speak in Cambridge in a few weeks.)

A Post-Mortem for Faneuil Media

A little less than three years ago Theo Burry and I began working
together to create a new business in online news. It’s been a furiously
productive three years, and we’re proud of it, but we have not been
able to build Faneuil Media into a sustainable, growing business. Over
the next few weeks we’re going to be closing Faneuil Media.

Theo
and I are both landing in great places (I joined HubSpot this past week), but I’ll write about that in a
separate post
. Here I want to explain why Faneuil Media didn’t work and
what we’ve learned.

On a high level,
Faneuil Media did not work because it aimed to be an
advertising-supported content business. Today forces are aligned
against these businesses. Content producers face unlimited competition
for attention, while their ability to monetize that attention with
interruptive advertising is diminishing.

More specifically, Faneuil Media went through three phases:

(1)
Google Maps Consulting — We started Faneuil Media in the fall of 2005,
building Google Maps projects for Forbes.com, NYTimes.com, Boston.com
and other big news sites. Our work was groundbreaking and
well-received. (Our projects on NYTimes.com in 2005 and 2006 are now in
Google Maps case studies.) But this was consulting work, and Theo and I both wanted to create a business with more potential for scale and growth.

(2) Atlas Mapping Product — In the summer of 2006 we launched the Atlas mapping tool,
a super-simple platform designed for publishers who want to add maps to
their content.  This was the logical way to scale our map consulting
work, and the tool was very successful. We now have thousands of
registered users including many large metro news sites like those of The Boston Globe, The Dallas Morning News, The New Orleans Times-Picayune, The Orlando Sentinel, and The Baltimore Sun.

While
the product was a success, the business was not. Google pay-per-click
ads ran with most of the high-traffic maps, but our click-through rates
were very low, and despite great traffic, we didn’t make enough
money to grow.

We didn’t think seriously
about creating a paid version of the site, because we felt the Google
terms precluded that option. In retrospect, we probably could have
gotten away with it, but I’m still not sure this would have been a
great assumption to build a business on.  Open sourcing the platform
might have worked, although that wouldn’t have been a trivial
process, and it wouldn’t have accomplished our goal: creating a
business in online news.

So, a year ago
we stopped development of Atlas, and began working on 9Neighbors,
a local content filtering project. (Atlas is still live, and will
continue to be after we close Faneuil Media. 9Neighbors will be going offline within the next few weeks.)

(3)
9Neighbors — As we struggled to create a business with Atlas, we grew
excited about the possibility of creating a business in local content
filtering. We saw enormous growth in independent production of local
content, but very few tools for filtering it and providing meaning for
users. We also saw tens of billions of dollars being spent on local television
and newspaper advertising, and assumed that this would eventually move
online.

So, based on Atlas’ product success,
we raised a small pool of angle funding to build our local content
filtering site, 9Neighbors. The first iteration of 9Neighbors, launched
last fall, was a local version of Digg. We populated it with local
content and tried to create a community to supplement editorial and
algorithmic filtering. We assumed that if we created a big enough
audience we’d be able to sell advertising on the site.

We
ran into two problems with this model. First, we weren’t able to build
a community. People weren’t that interested in local news, and to the
extent they were, they were already finding it other places — not at a single competing filter, but all over the web. They didn’t need a news
filter because their web of online services and relationships was already
filtering local content for them.

Beyond
the traffic problem, we began to see that even with traffic, we wouldn’t be able to sell much advertising. Local businesses aren’t spending much money on
traditional online advertising. They’re moving to the web, but not
with advertising — they’re creating blogs, reaching out to bloggers,
and building their own identities the same way individuals do.

These
facts crystallized this spring. We scrambled to realign 9Neighbors as a
marketing analytics service for local businesses, but we didn’t have
much time, and we ran out of money before we could structure our
product the right way.

What Have We Learned?

When I think about learning, I think of one my favorite lines from Umair Haque, one of my favorite bloggers:

Google isn’t revolutionizing media because it "owns the data". Rather,
it’s because Google uses markets and networks to massively amplify the flow of data relative to competitors.

Another way of putting this: It’s not what Google knows, but how Google has structured itself to learn.

This is true of individuals as much as for companies. People will
always know more than you, but you’ll be at a distinct advantage if you
can structure your life around learning. In this regard, Faneuil Media
was an utter success.

I can’t spell out everything I’ve learned over the past three years, but
I can point out the two changes in my intuition that I’m most conscious
of:

(1) Always ask "Who’s paying who for
what, and why?"
— A good friend and Faneuil Media adviser asked this
question a few months ago as we were struggling to find a new
business model. It clarified a lot of muddled thinking. We came from
the content end of the news business, and we started
Faneuil Media during a bubbly phase of Internet growth where product
was put before
business. Our answer to this question was not always clear or well
thought-out. If your aim is to create a business, it must be.

(2) Cycle Quickly — The emphasis in a business should
be less on doing things right, and more on figuring out how to do things
right. We did a good job of this at Faneuil Media, but I didn’t realize how central to
your thinking it must be. Nobody knows what’s going to work, so you
have to cycle quickly and learn. You have to plan and analyze, but you
can’t get stuck at roadblocks or indecision. Time you’re not gathering
data and learning is time lost.

Now, on to the next project.