AOL’s local business, Patch, will lose at least $100 million this year and generate paltry revenues, according to documents we’ve obtained from a source.
Analysts say that, during 2011, AOL CEO Tim Armstrong invested ~$160 million into Patch, a network of 850 or local news blogs.
His big bet was that AOL could, eventually, richly profit by filling one of the last remaining “white spaces” on the Internet by creating local content and selling local ads against it.
How did the bet do this year?
Patch generates revenues through national ad campaigns sold by an “inside sales” office, small business listings and profiles, branded partnership, and through local ads sold by a 152-person “outside sales” team.
We understand the largest piece – the perhaps not the majority – of this revenue pie are Patch’s local ads, sold by an outside sales team.
According to documents we’ve viewed, Patch’s outside sales force generated just $7.8 million dollars in revenue through the middle of December. The average sales person generated $52,022.15. The top sales person racked up $178,978.70.
Even if you overestimate Patch’s other revenues streams – let’s say their total is twice the size of Patch’s outside sales revenues – you can still safely say that Tim Armstrong’s local news project lost about $100 million this year.
In one light, this is very good news. People have talked about how AOL’s media business is losing tons of money, it turns out that Patch is losing most of it – and the rest is not quite as unhealthy as it appears on the balance sheet.
Briefed on the details of this story, Patch PR declined to comment.
Patch sites are now viewed by 10 million to 15 million individuals per month, depending on whom you ask.
Want to know (hire?) the people made that $7.8 million for AOL? Click here to see its top 10 local ad sales people, by revenues >>
Business Insider Emails & Alerts
Site highlights each day to your inbox.