Sidewalk announced today that it had signed deals with several high-profile corporate sponsors in preparation for its launch of Sidewalk 2.0 this fall, in which Microsoft will vastly expand the number of cities it covers from 9 to an expected 50.
However, while the numbers sound good, analysts say Microsoft is expanding by cutting back on its local editorial costs, a move that could dilute Sidewalk's power as an information provider.
The partnerships will allow companies to advertise their goods on specialized buyers guides that will be featured on Sidewalk sites. The guides will include a buying resource, product reviews, and yellow page listings featured on all Sidewalk sites. Advertisers will be able to serve targeted ads on these pages, which Sidewalk said will give readers the added benefit of buying something after looking it up.
Sidewalk hopes that its national expansion will be more attractive to advertisers who wish to target a mass audience, rather than focus on smaller markets. The move also marks Sidewalk's continued strategic transformation into a more formulaic, template-based service aimed more at widespread distribution than specified local content.
The company made that intention clear in January after it had undergone a round of layoffs and analyzed how it could generate revenue in a business model notoriously characterized as a money pit.
The shift towards a more centralized operation that deploys the service over a template-based network is similar to America Online's Digital City guides. Analysts say the move was designed to manage the difficult balance between editorial costs and the ability to develop a wider audience to appeal to national advertisers.
That strategy underscores the disadvantages that many companies have faced in undergoing the expensive task of creating local sites from scratch, analysts say. That is why creating a national template is more of a cost-effective move than simply staffing each city with expensive editorial and overhead costs.
But, while the national strategy is cost-effective, it may not be the best one to win on the local front. The fact remains that newspapers still hold trump cards, having distinct home court advantages because they have the resources to provide targeted local content backed by known brand names.
"[Newspapers] can afford to put the bodies on the street to sign up a lot of local businesses, and they have the traffic on the Web site that these local businesses want," said Patrick Keane, an analyst at Jupiter Communications.
Pointing to the success of services like New York Today, which is a partnership between the New York Times and Zip2, and Boston.com, which is the Boston Globe's local guide, Forrester Research analyst Bill Bass noted that large national brands cannot match the editorial advantages and regional focus that newspapers have.
"If you're not partnered with a local newspaper, there is no business creating local content," Bass said. "It's the newspapers up there with the machine guns in the dug-in position, and it's AOL, Microsoft, CitySearch that are the bodies on the beach."