AOL still makes most of the money from its dial-up business – the one you remember from the 1990s.
It’s trying to change that by investing the revenues from that still huge, but slowing business into two new businesses: The Huffington Post, and Patch, which is a network of local news sites.
Patch is a really big bet. AOL plans to invest about $120 million into it this year and more at the same rate in the future.
Clayton Moran of the Benchmark Group says AOL’s fate will “hinge on the success or failure of Patch.”
We’re sceptical Patch is working.
Even with all that money, and all the people it buys (about 850 editors), Patch has a tiny amount of traffic. Because of that, it isn’t a very effective way for local businesses to get word out.
Despite this, we’ve finally found someone who does not work at Patch – who in fact spends money on Patch ads – who says he is bullish on AOL’s plan.
Meet Foster Winans, author, former Wall Street Journal columnist, Patch advertiser, and believer from Doylestown, Pennsylvania:
As a career journalist who started more than 40 years ago on the ground floor at a local newspaper and ended as a Wall Street Journal columnist—and as an online advertiser with four-plus years experience with Google Adwords—I’m rooting for Patch.com’s success and I would hesitate to bet against it.
I stumbled across Patch about a month ago, via a local article that had been picked up on HuffingtonPost. As soon as I saw the site for Doylestown, Pennsylvania, I recognised a brilliant idea, offering local advertisers the first true alternative to the fading influence of the area’s dying 200-year-old newspaper.
My conclusion, after advertising my partner’s photography studio for a couple of weeks, is that Patch offers an advertising context unavailable anywhere else—right next to the town police blotter (Who got a DUI this week?), school news (Did the high school lacrosse team win?), cultural events (Where can I take the kids Saturday afternoon?), and even the latest real estate transactions reporting the price that the house down the street actually sold for. I was impressed that they’d hired as editor a person who had been a top reporter at the local paper, and the content shows it.
I hesitate to pass judgment on the advertising’s effectiveness because Patch is clearly still ironing out the wrinkles and my experience is recent and brief. The first salesperson I dealt with oversold the site, claiming five times the unique visitors it actually has, according to stats shown to me by the supervisor who fired her.
Yes, as measured by cost-per-thousand impressions, it’s a ridiculously expensive ad buy at about $100 versus $30 or so for a parallel Google Adwords campaign. The metrics have been abysmal and, after a short run in the middle of the summer doldrums, no inquiries.
But I’m hopeful they’ll figure it out and here are my five reasons why I think they have a shot to make it work:
Patch is fun. Visiting my local Patch is addictive and interactive. Editorial is updated daily and the content concerns events and news taking place almost literally in my backyard, appealing to the localist movement. I can’t get that sort of information from our shrinking local newspaper. I enjoy rating local businesses and Patch allows anyone to list a local business, even without owning it, and add their two cents of personal knowledge. Users can also list local nonprofits and other resources. Thus, much of the valuable content on Patch, community resources, is being donated by volunteers. For bloggers, the Local Voices feature is much more friendly and visible than the alternatives.
Patch has buzz. A friend active in the local Chamber of Commerce tells me the business community sees Patch as a potentially valuable networking resource and marketing tool. As the content evolves, I suspect it will become the go-to site for local news, which in turn should generate ad revenue.
Patch is not Google. I suspect that current Google advertisers are, like myself, looking for an alternative, especially when Google periodically screws with its algorithms and makes extra work for me trying to figure out how to get our metrics back on track.
Patch is targeted. Most advertising dollars are spent reaching audiences that will never be customers. Patch’s audience is well-defined and follows a general rule I learned about marketing, that most retail businesses get the lion’s share of their customers from within a 10-minute drive of their front doors.
Patch hires professionals. At least in this region, in addition to hiring real journalists Patch has hired sales managers with track records in the media business. Our regional sales manager had previously been a national account exec with a major, publicly-held newspaper conglomerate. My complaints about technical issues, impressions, and other details resulted in the regional manager and local sales person coming to my office to discuss how to make things right. We haven’t quite worked out the details, but I have the impression that somewhere up the line, there is a recognition that the system needs to be tweaked.
The jury is out and Patch has a lot of work to do to make itself financially successful. Ad rates are too high, the metrics available to advertisers are paltry compared with Google, the site loads too slowly, and ad delivery often makes no sense—on some pages the only ad showing is a house ad for Patch advertising, which drives this advertiser crazy.
But unlike any other medium, I want it to work because it is centered around my community. I add content periodically and I am motivated to spread the word. If AOL can go the distance, learn from its mistakes, and survive long enough to catch the wave, Patch could own the niche for local news and advertising.
Other views on Patch:
- Confessions Of Patch Salesperson: “It’s Been A Disaster”
- Confessions Of A Patch Editor: “The Model Isn’t Sustainable”