Why local is the new global

It's the age of the internet revival: Facebook, Groupon and LinkedIn have raised vast sums in splashy initial public offerings. The net has gone mobile with the boom in smartphones. Sites such as Amazon and Google have evolved into highly profitable firms.

Scott Davies has an aura of the dotcom revival about him. The 36-year-old British internet entrepreneur wears his hair long, favours the tie-less look and has a preference for the high-concept business plan.

He has raised seed capital for his firm. Could a frothy 1990s-style internet IPO be in the wings?

Davies and his business partners, Simon and Helen Squibb, founded I Love Hong Kong in 2008, targeting small businesses operating in the nightlife districts of Soho and Lan Kwai Fong.

The corporate site is i-love.com. Casual readers might be more familiar with the sub-sites ilovesoho.hk and ilovelkf.hk, where viewers see a shopping and entertainment guide with listings for bars and restaurants, focusing on the nightlife districts of Lan Kwai Fong and SoHo. It is, effectively, an online marketing platform, and the LKF site is done in conjunction with the Lan Kwai Fong Association, which represents the bar and restaurant owners there.

'Think of us as a digital landlord for these local districts,' Davies says.

The sites target people who live, shop and socialise in Lan Kwai Fong and/or SoHo by connecting them to their local interests. About 800 bars, clubs, restaurants and shops operate in SoHo and Lan Kwai Fong.

These are small businesses that want cheap, targeted advertising that reaches only those people with potential to use their services. The sites ilovesoho.hk and ilovelkf.hk aim to provide a forum for such targeted advertising.

The service offers a cheap way for advertisers to reach clients, he says. 'If I am a small business in SoHo or Lan Kwai Fong with only HK$10,000 to spend on advertising, should I use the random approach of buying print ads? Or should I try an online platform that delivers low wastage by seeking people who are actually seeking your product?' He says the I Love LKF website has averaged about 80,000 views per month from January last year to now.

Hongkongers prioritise their shopping, dining and entertainment habits by focusing on particular neighbourhoods, he says.

'Many people don't leave the neighbourhoods where they live and work,' says Davies.

Davies is also looking at what is going on with the internet in the US, where sites are getting more location focused. Sites such as foursquare invite readers to 'check in', or flag up their location using their smartphones. Other sites such as Yelp builds communities of readers around the city where they live. Web marketers have discovered that, while the internet is global, people still live and spend most of their money in the neighbourhoods where they live.

'During the creation phase, our conference room was covered in Post-it notes as we generated many ideas and features. And often the Post-it notes were removed because Facebook or foursquare soon innovated the same idea,' says Davies.

One might wonder what the ilovesoho.hk and ilovelkf.hk sites offer that is different from services such as the free online versions of HK Magazine and Time Out.

The firm makes better use of data than such publications, which he says are too wedded to their print models, he says.

Davies previously worked in publishing and as a commercial director for the BBC show Top Gear. So, he is intimately connected to old media, their business models and limitations. For example, he says it is becoming more difficult to launch print titles. 'For example, HK Magazine took over 20 years to become a market leader,' says Davies, indicating that it's much quicker and effective to publish online.

He says I Love Hong Kong is profitable. However, as is typical of the funding evolution of the dotcom, it will inevitably be approaching investors for a new round of capital. This will test whether people understand this model and whether they believe in this business.