Not Just A Haircut, A Buzz Cut

It’s about time AOL stops burning money on the failed hyperlocal news experiment. I’ve never been a fan of this effort and am surprised relieved that they are finally taking action.

The Wall Street Journal’s original source article is down, or pay-gated, or a combination of the two, so here are the numbers from Forbes’ Jeff Bercovici:

Armstrong said Patch is on track to book around $40 million in advertising revenue in 2012 after taking in virtually no money last year. While that’s a big change, Patch’s costs last year totaled around $160 million.

The traffic has flat-lined and does not appear to be improving. Speculate all you want about the halted expansion into new markets…but yes, even endless content creation has a ceiling.

Today’s announcement was a small one in a story that will only get uglier from here on out.

I’ve never worked for a company that has been as scrutinized, criticized, and coal-raked as this one. As Jon likes to say, you’d think we were creating toxic waste, instead of, you know, free useful information. We have critics on Wall Street, critics in the media, local critics, national critics, the business press, the journalism reviews, bloggers, etc. There are so many that I’ve come to think of them as a single large, screechy, off-key band called BI and the Haters. It’s music to kill yourself by.
Former Patch Editor-In-Chief Brian Farnham, who announced he was leaving AOL today.

Source: venturebeat.com

AOL's Patch Strategy Shift: Not A Good Sign

AOL’s ambitious hyper-local news platform is consolidating some Patch websites, and it’s not awfully clear why.

AdAge:

Yet internally, AOL is in the process of figuring out just how small (or large) a Patch should be, a calculation that includes available readership and just how “hyper” local advertisers want to go.

Patch’s model gets quite tricky when you break it down on a micro level. Local advertisers (as well as the demand for placement) vary significantly across the country. One strategy for acquiring local advertisers may work for one city, but be completely ineffective in another.

And from that, a major problem arises. AOL is trying to figure out the proper size of a Patch, but they fail to realize that Patch sizes, by number of users, will vary greatly. Throw in the fact that Patch’s model is built off strong SEO, assume that some people click through and never return, and you have an immense challenge.

The other incorrect approach was to name a solid number of Patch websites for the end of the year. Why hold yourself to a number (1,000) in this case, when there was so much testing and tweaking that would need to be done at a later time?

Quite frankly, I’ve never been a believer in Patch, and today’s report only serves to further my thought process. I don’t think they know what they are doing, and I think AOL executives are sweating bullets as each day goes by. Not to mention, people are really starting to question whether the initial heavy investment in the platform was justified.