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Battle of the hyperlocal directories

Yellow is desperately reinventing itself in an effort to compete in an increasingly digital world, while NZ Post's Localist arrived on the scene recently to try and steal some of its thunder. But are these duelling directories flogging a dead horse?

There’s a quote attributed to Henry Ford that's often used to justify a healthy disregard for consumer opinion by innovative business leaders and revolutionary, visionary types: "If I had asked the public what they wanted, they would have asked for a faster horse."

Jean-Marie Dru’s Beyond Disruption cites it to support an assertion the idea is the hero, not the customer, and says the conventional wisdom of listening to consumers is inherently limiting. Yet, as business is increasingly influenced by the logic of the long tail and the co-creative wisdom of crowdsourcing, it’s easy to wonder if Ford’s maxim still holds true.

Today the digitally empowered consumer is seen as a resource of business insight, innovation and creativity. In less sanguine moments, self-aware – or paranoid – marketing execs fret that somewhere in suburbia someone is crafting an idea to undermine an entire industry’s business model. After all, excepting the Amish and the Taliban, no-one travels to work by horse any more.

Part of the new digital normal is that when business models fail, they fall faster and land harder then ever before. Few executives at EMI could have anticipated its iPod moment as Napster’s file sharers were seduced to iTunes with the lickable design language of the now departed Steve Jobs' shiny gadgets. As a result, many lumbering and potentially obsolete businesses seem to rush lemming-like into the blue ocean of open-source creativity hoping to re-package it as something that someone else will pay for.

Home grown examples of this ‘if you can’t beat ‘em, join ‘em’ spirit are Yellow Local and NZ Post’s Localist.co.nz. And they share more than a passing resemblance. Both carry the baggage of parent companies with centralised legacy businesses in declining industries. Yellow is fresh from debt restructuring with its bankers moving in to safeguard their cash. And NZ Post has its own issues. Postal delivery rates have declined by 20 percent in the past three years, which has contributed to closures of retail branches and the potential backlash that follows from reduced services.

It’s no surprise that both now claim they’re in the business of listening to customers and giving consumers what they want. Both are investing in new businesses that aim to blend C2C social media, C2B consumer activism, B2C local directory services and B2B networking. Both Yellow and NZ Post know they must do something different to survive. But the bigger question is whether they can learn to prosper by doing things differently. I ask this because when you look at their efforts so far the impression is that both seem desperate to design a faster horse via a committee.

In this two horse race Localist should start well ahead because it has cash to burn and a clean slate. For the most part, people like NZ Post. It is a true local brand and they have form as an underdog through their inadvertent success with Jim Anderton’s pet project KiwiBank. Localist’s handicap is its nemesis, Yellow. Not because they need to beat it, but perversely because they seem to want to be it.

Yellow’s weakness is its size. They’re not local, they’re national. This means that little guys, mainstays of local communities and the New Zealand economy, worry they’ll fall between the cracks. As a rule little businesses don’t like dealing with big centralised ones because they feel powerless. So if you’re a start-up competitor to a big guy in a digital era when small is beautiful why would you try to look just as big as the out of touch incumbent?

What value do Localist’s sign-written vehicles, big city headquarters and teams of office workers housed in a central location really bring to the brand? Is television the best launch medium for a startup seeking free content contribution from the public? Why, if the other guy has gone bust doing it, would you publish five separate full-colour paper directories and push them through people’s letterboxes? It’s nice to see the PR shots of Localist’s advisory board but does it make them feel like a people-high local outfit that deserves my support?

The logic of localism is that you support your own community. So, the further removed Localist feels from those communities the less likely it will spur the grassroots movement it needs to prosper. Looking at Localist’s Central West directory for takeaways, the kind of thing you might want to use it for, there are a meager three dedicated listings for this area. There’s a lot of cool stuff in there too but it’s hard to imagine locals in Hillsborough and Herne Bay seeing themselves as part of the same neighbourhood.

In comparison, Yellow Local seems like it rushed into market to pip Localist at the post. First impressions are good. The website is better designed and nicer to use. Information is delivered via suburbs, the same way people actually describe where they live rather than Localist’s broad compass quadrants. Yet, it feels empty. Neither site feels lived in.

Yellow Local also enjoys another advantage over Localist. It has identified a hero idea to drive the brand ‘Where locals talk to locals’. The result is that Yellow Local’s TV ads are much more engaging and grounded. Problem is there’s precious little evidence of locals talking to locals on Yellow local’s website. A search for Muriwai returns no hint of the Surf School, cafes or B&Bs known by locals as core to their lifestyle community.

Localist’s launch campaign lacks a similar organising thought. ‘Advertising that doesn’t cost the earth’ is either cleverly disguised greenwash, a value message or a bewildering attempt at both. ‘At last a fan club for Auckland’ and ‘Newton’ are exclamations that don’t quite pass the 'so what?' test. The most disturbing aspect of these campaigns is the cost. TV doesn’t come cheap and as they face off over things like the supposedly dubious use of colour schemes and domain squatting, the suspicion is the capital sunk into infrastructure, development and promotion means neither venture is likely to break even in a hurry.

These issues are symptoms of a problem with both launches. Both businesses identified a gap in the market, but do they understand the market in that gap? For example, the salient feature of TradeMe’s launch campaign is it didn’t have one. Their marketing relied on investing in organic growth based on improvements to users’ experiences. They borrowed a proven disruptive technology-based idea from overseas and resisted the temptation to release a printed alternative to the seemingly insurmountable Trade & Exchange and Loot.

After some investigation it turns out Ford may never have uttered the ‘faster horse’ quote after all. That makes perfect sense. Henry didn’t replace the horse with the car. What he did was realise the car was the future and then work out how to make them better, faster and cheaper. His idea was to take a horseless carriage to the masses. Like TradeMe he spotted the opportunity to do something better and profit from doing it. The focus was on what is essential to the product and the process of making it and to strip all else away.

The last word of advice for Localist and Yellow Local should belong to Henry Ford. “The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.”

Google Street View local or Facebook Places Social Shopper anyone?

So what offshore model could Yellow Local or Localist borrow to avoid ending up with Ferrit in the bold market-making ideas knacker’s yard?

One option is Flavorpill – an urban crowdsourced culture guide that is spreading across some of the world’s great cities. Rather than just being a digital Timeout, Flavorpill knits diverse communities of interest together and shows how a broad network of passionate supporters can generate real time content where paid informants will struggle to compete.

Based on Flavorpill’s example, here are a few observations for Yellow Local and Localist.

Cool stuff happens on the fringes. For everything else there’s the Herald. Don’t try to be all things to all people. Forget marketing generalisations or broad audience definitions and focus in on the vibrant hotspots where local culture thrives. Each locality has honey pots where communities of interest really bubble. Focus on these spaces and the mass will follow on once they hear about the party.

Community is the content. People use social media to share their passions. The buzz of participation, either active or vicarious, is what feeds communities of interest whether they are geographical, behavioural or attitudinal. Examine the channels they’re currently using and partner with them to provide a richer and more rewarding forum.

Be where it matters. For local directories this means building a genuine local network. In every community there is an untapped goldmine of highly skilled marketing and sales experts raising their kids or on maternity leave. Many of these insiders would jump at the chance to work on a business that focuses on the communities they know and love.

Originally published in NZ Marketing magazine, November/December 2011.

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