FoundLocally finds to get some ad revenue, you have to give some away

Mark Ruthenberg, GM of Calgary-based community portal operator FoundLocally.com Media Inc., used to live by a simple mantra: "Get revenue where ever you can in order to survive."But now, Ruthenberg is raking in better returns by giving away select revenue streams. He's encouraging designers and developers to place their company logos and links, as well as those of their customers, on the site, for free. By offering such services, and forgoing a past source of revenue, Ruthenberg has seen traffic - already at one million visitors per month in the first month alone - spike an additional 40% from the same period last year, beefing up his revenues from display advertising and Google Inc.'s AdWords.Founded seven years ago, FoundLocally.com provides localized community news, information, job postings, business listings and events calendars. Its humble beginnings covered Calgary, Edmonton and the Rockies, with eventual expansion to include the rest of the West. It currently has a presence in 16 additional population centres across the country.FoundLocally.com is based on a traditional Web-based advertising model. Local content is provided free of charge, with the bulk of revenues earned from national and major advertisers via AdWords, banner and display ads placed amongst the 27,000 pages solicited by their agency partner 24/7 Real Media.The more visitors the site gets, the more money Ruthenberg makes, whether it is in the form of number of views or numbers of clicks. The company also derived additional revenue from logos and links placed by local business which is now free.Ruthenberg says his recent decision to shift paradigms was triggered by a very unlikely source. "I was talking to some students about the industry and the students were asking profound questions about Web 2.0 architecture," he says. Although his firm has been around longer than many in the online world, that moment was unnerving."It made me unsettled that I could not answer them to my own satisfaction", he openly admits. He realized that the Internet was changing, his current model would be unsustainable and he needed to change ahead of the competition in order to continue to keep his business current, fresh and viable.Ruthenberg's convictions were further strengthened when heard author Don Tapscott discuss his book Wikinomics: How Mass Collaboration Changes Everything. Tapscott, an expert in Web 2.0, advised his audience comprised mainly of technology and business professionals to accept the new reality: consumers are taking a more active role and that businesses have to get used to it.To ensure he was hitting the mark, Ruthenberg wanted to hear from his customers. "I figured the best way to encourage customer feedback was to have a contest," he says.The survey revealed some confusion with FoundLocally.com's old business model. Listing local content on the site had always been free: businesses are allowed to post their own information, jobs, news coupons and events under one or a number of categories. "Like a Yellow Pages on steroids", Ruthenberg says.However, if a business wanted to add a logo or a link back to their respective sites, FoundLocally.com charges a $200 fee. The common misconception was that the $200 fee was for the postings and categories and not just the logos and links. It was also evident that local businesses were reluctant to spend money for those additional services. So they decided that the logos and links for local businesses were considered local content, and local content is free. FoundLocally.com's required redesign took three weeks of planning and one week to perform the changeover. "We were fortunate that the technology we were using allowed us to rebuild this in a short period of time," Ruthenberg says.Giving up the $200 fee has indeed increased his bottom line since the relaunch, but Ruthenberg suggests the overall success is also a domino effect. The new look generated more interest in the site; the free service generated more business listings; more visitors looked at more business listings; and visitors viewed more editorial content, thus creating an increase in traffic.In short, it's the best $200 sale Ruthenberg ever let get away.

FoundLocally finds to get some ad revenue, you have to give some away

News | 06/06/2007 12:00 pm EDT

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