It won’t be a surprise to most readers of this blog that I’ve always created content primarily aimed at an American (well North American) audience, but in 2011 for the first time as I’m preparing my new site I’ve stopped to wonder whether it’s the best decision I can make..well, a little bit.
There’s two primary reasons why I’d express any concern at all about aiming a new site towards North America: the US economy and the exchange rate. We’ll get to that a bit later on, but I thought I’d brain dump the pros and cons of aiming for this audiences.
The North American market offers far far more opportunities to scale a site, particularly in a niche vertical, vs a site aimed at a primarily Australian audience. It’s simple maths: 307 million people in the United States as a potential audience vs 22 million people in Australia.
This would apply to many countries as well, particularly the UK and Canada. This is not to say that there are not opportunities to attract a non-local audience to your content (Australia, Canada and the UK were 2nd, 3rd and 4th in terms of traffic for The Inquisitr) and there are a few examples of non-US sites attracting strong US audiences (Times.co.uk particularly comes to mind) but it’s easier to chase the larger market first and then supplement it with local traffic vs the other way around (particularly if your local site uses a local domain such as .com.au).
The sad but true reality is that it remains cheaper to run a site focused on a North American audience hosted and written primarily by those living within the United States than it is for an Australian site.
Hosting, while getting far more competitive in Australia (and I’m surprised regularly by some of the good offerings emerging in the local market) you still get a lot more bang for your buck in the United States when it comes to hosting.
The difference in running costs is greater again. Minimum wages and taxation make it expensive to hire people in Australia and run a site. While contracting people in Australia is perfectly legal, you open yourself up to taxation issues if it turns out any of your contractors were working for you the majority of the time (they would be deemed full time employees) and subsequently administration becomes far more difficult (PAYG Tax, Superannuation etc etc..even payroll tax, liability insurance etc etc..). You simply don’t have that problem with hiring people in the United States, and any tax liability issues with a US based contractor falls on the contractor.
Writing for a US audience with US advertisers also means that you are exporting, which means a GST exemption on sales vs dealing with local advertisers and a local audience, which incurs GST.
One of the biggest advantages of running a US based site for an American audience is the ability to tap into an enormous, and most times affordable talent pool. This is not to say that talented, affordable writers aren’t available in Australia, but there are far, far more on offer in the United States.
The quality of applicants, let alone quantity that have applied for positions with me in the past (and even lower paying positions) will always stagger me. One of our very first writers at The Inquisitr has two Emmy Awards…for writing. I’ve had everything from out of work TV foreign correspondents through to senior people from the newspaper industry apply for jobs with me before, let alone a pool of new media bloggers with a wealth of experience with big US online companies.You simply just don’t get that in Australia.
You can hire some of those people to write for a site targeted at a local audience, but only if you’re primarily writing non-local content…which would in a way defeat the purpose of writing a locally targeted site to begin with.
Everything I’m reading at the moment screams to me that not only is the US economy not in a good way, it’s likely to dip back into recession shortly, and maybe even worse. That said, the same economists predicting this outcome are often the same economists who failed to predict the GFC and last US recession, so perhaps they’re just playing it safe…but where there is smoke there is often fire.
The online ad market in the United States has never been as good as it was pre-recession (in my experience, even if sales are at a record high) due to several reasons, including the ongoing volatility in local markets, best represented by changing spends month to month. Another problem is one of supply and demand: there’s so much more content out there now that getting good, regular money for content is getting harder, and that’s more so a serious problem in the United States than Australia (indeed you’ll get far better CPM rates in Australia on most content these days…but you’ve got to scale it to match.)
That aside, a serious double dip recession has to see some sort of slowdown or decline in online ad spend; I’d suggest that like the last US recession that more money will flow out of old media than new media, but a downturn will affect all segments of the ad market, and that’s offers a serious risk to anyone targeting a US audience.
The exchange rate continues to be my biggest concern…by an old fashioned country mile.
The reality is that the US dollar has continued to decline against most world currencies, and even more so against the Australian dollar. I have to make far more now in US dollars to make the same amount I did in Australian dollars vs even 4 years ago.
To give you a rough idea
In 2007, I’d cash out US$5000 for around AUD$8000
In 2011, I cash out $5000 for around AUD$4500.
Before I even start, my rent is approx AUD$2000 a month (I live in a tiny 2bd apartment that doubles for my office) and utility bills (electricity/ gas/ water/ internet/ phone) add another approx AUD$500 a month on top of that again, and these figures continue to rise.
If the US dollar continues to drop, so does my income unless the site increases its income conversely to the drop in the US dollar…which it never does.
I’m unlikely going to change my mind and write primarily for an Australian audience (although like The Inquisitr, we will always have Australian readers) but in 2011 vs say 2007 the risk is far higher a concern than it was 4-5 years ago.
If you’re an Australian (or non-US based blogger) looking at a local market vs the United States market, I’d still recommend the latter, but the choice isn’t as clear cut as it use to be.