Tom Grubisich wrote a great piece on the failure of local news sites to capture the boom in revenue happening in local online. He made a great point on the news market not capturing this local revenue.
“The issue that no one seems know the answer to is how to channel even a small fraction of the billions of dollars that flow to local non-news digital into news.
I have spent a lot of time trying to understand why ads worked in newspapers before. I mean, of course, people read the paper to get the news not to find out about wedding dresses at Macy’s. But the surprising thing is that a lot of people get the newspaper not to read the news but to find information about just that same wedding dress in a marketplace the newspapers have created that gets delivered with the paper. In other words, over the last 50 years, newspapers created a market place for local shopping that they owned.
- You are never going to make an effective local ad by sticking ads in online news stories
- You have to create new market local market places online
- No matter how much local news a digital news business like Patch creates, it will never be successful financially without taking that audience and creating a set of commercial marketplaces.
Billions in Local Ad Dollars Surge to Online — But Just a Trickle to News | Street Fight.
It's Called Fishing Not Catching 
Newspapers have to figure how to sell new marketplaces, not just create new marketplaces online. And newspapers have to sell outside their core categories (auto, real estate, classified); go after traditional yellow page (service) categories. Every other sales org going after local struggles with the same issue: leads. Newspapers have leads – they know their local markets. The need to reinvent their sales orgs, and point the “new and improved” sales org at new categories.