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The plight of Patch.com

When the first few Patch.com sites launched in New Jersey back in 2009, who could have predicted it would become the behemoth it is today? Invading small towns from New York to California, its Aol parentage and hyperlocal mission gave existing community newspapers and news sites reason to worry.

Now with over 850 sites in 23 states, Patch.com has become the subject of some derision and much speculation. Rumors have run rampant for some time that Patch overworks its editors. Given that each site is primarily run by one person, it’s not hard to imagine that the role of running such a site might be wearisome. Others wondered if it could continue to sustain its swift and expansive growth. As a result, the recent announcement that Patch was consolidating sites was no surprise for many media observers. “It’s been pretty clear for a while now – to us, to Aol shareholders, and to Aol employees – that Patch has been a waste of Aol’s money,” wrote Business Insider’s Nicholas Carlson.

According to multiple sources, Aol has merged the New Jersey Patch sites of Franklin Lakes and Wyckoff, and Glen Rock and Ridgewood. In California, the Clayton and Concord sites have been combined. If Patch is happy with the results of these mergers, more may follow. While many have speculated that the reason for the mergers was a business decision to better serve advertisers and readers, Janine Iamunno, vice president of communications at Patch, told inVocus in an email interview that this wasn’t true. “We launched a number of new sites in the weeks after merging a few sites that our editors proposed we merge for editorial purposes – it was not a revenue-driven decision, but based on feedback from our editors and users,” she said.

Meanwhile, Dennis Wilen, founder of Pocho.com and a former editor of the Brentwood, Calif. Patch, noted that in his opinion Patch wasn’t doing so well. “Working for Patch was like trying to captain a cruise liner when the intercom was out, the radar was broken, headquarters was radioing mixed messages 24/7 and the icebergs were approaching. It was an agonizing, energy-sapping trip to nowhere,” he said in an email interview. “They want a hyperlocal product but exert senseless controls. Their sales models and staff have been in constant turmoil from day one.”

But as traffic goes, Patch doesn’t seem to be doing too shabby. A recent announcement noted that the latest comScore data showed Patch as the fourth largest regional/local property online. In December 2010, Patch was ranked at 10th. Either way, there is definitely more to the Patch story.

According to Mel Taylor of Mel Taylor Media, a hyperlocal consultancy, Aol’s network of hyperlocal sites is what he referred to as a loss-leader. It may be losing money, but it adds to their reach of sites in the overall Aol network. “Much like Wal-Mart does and goes into a market and does a lot of loss leader stuff where they literally lose money on some items, one of the goals is get traffic in their stores. The other goal is to hang out and wait for the small mom and pops in that community to shut down,” he said. “It [Patch] is a platform, its primary focus; its primary reason for existing is to add to the advertising reach of as many markets as possible. Notice I didn’t say journalism. Patch was not created to be a great journalism enterprise.”

Aol is also picking up some of the best brands like Huffington Post, he continued. Even if the name “Patch” goes away, the platform, technology and business operations won’t, he noted. Even independent hyperlocal sites are adapting the Patch model. Meanwhile, the Huffington Post model is pretty strong, he said. And there is now Huffington Post Chicago, Huffington Post Denver and so on, which is pretty close to the Patch.com model. “But it has a way better brand equity. Patch is kind of corny. Huffington Post is almost at the level of the New York Times and Washington Post in terms of news and brand awareness,” he said. “The Huffington Post brand is far more powerful. Don’t be surprised if the name goes away and the Huffington Post replaces that name.”

But that probably won’t be happening quite yet. Forbes recently reported that some Patch sites did make a profit in 2011, with Aol shares up 14 percent as of Feb. 1. The goal, however, reported Forbes, is for the sites, which have been broken up into 30 clusters, to become profitable. Patch.com’s growth may have slowed, but evidence indicates that it isn’t going anywhere anytime soon.

–Katrina M. Mendolera

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