Three Questions on Hyperlocal Advertising with Satbir Khanuja, CEO of DataSphere

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the day. Local communities are pitching in content about local events and news. We’ve launched 46 sites in Seattle. They’re getting great traffic. In less than five months, more than 20 percent of the Seattle population is visiting one of these community sites.

Search and discovery is on our platform. What we’re trying to do is organize the content and make it very easy for [news sites and retailers] to connect with users. We’re giving them semantic search, and better organization of information. The revenue model is akin to what Google has done with AdSense. Publishers can go in and drop in a code, and Google cuts them a check. We also have an ad sales force. We’re able to generate 10 times what they’re able to make on their remnant inventory [through traditional, untargeted ads].

These sites are doing very well. In order for any of these things to be sustainable, you need traffic at minimal cost. Starting from scratch—that’s what kills hyperlocal. For us, it’s repackaging what’s already there. Our platform is [search engine optimized], so we’re getting a lot of traffic from search engines. You can see how many local advertisers are on Bellevue.com, Ballard.com, and so on.

X: Ultimately, how do you plan to succeed in such a crowded and competitive field?

SK: The uber-vision for us is to create a general-purpose content discovery platform and make it available to different verticals. The big opportunity for us is hyperlocal websites. We take the same platform and create a compelling, personalized site—on par with the Amazons of the world. It’s a journey for us. We’re going to use this as a platform and become a necessary place people will visit.

Our primary focus is to scale out what we’ve already built. We’ve launched 150 sites in five states. We will announce new relationships, and apply what we’ve built to a broader set of neighborhoods, and continue to launch new products. It will be a combination of a rollout of what we’ve built across communities in the U.S., and beefing up our sales team. We’ve been aggressively hiring, and will continue to do so.

No one’s doing the integrated turnkey solution approach we’re doing. Hyperlocal is extremely competitive, and was doing just fine before we arrived. Think about the audience we’re going after. Anyone who’s got a competitive site—it could be a newspaper or website—people have a finite amount of time. Anyone else in that pie chart will be competitive or complementary—advertisers, media companies.

Our approach has been, you get the technology, and your experience on the site looks like Amazon discoverability, and you get better-looking ads and more money. That approach nobody else is taking. We’re in talks with a lot of media conglomerates who want to use this. Our intention is to have a national footprint in 2010.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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