Markets

What Will Make AOL's Patch Successful: Good Content

By Catharine Taylor

Updated on: December 15, 2010 / 2:22 PM EST / MoneyWatch

PaidContent did an interesting examination about whether the hyperlocal news sites that make up AOL's Patch can actually make money. It took as its test case New Canaan (CT) Patch, which according to Google AdPlanner has about 8,000 unique visitors every month. Since the town has a population of just under 20,000, PaidContent pegs it as one of the most successful of Patch's 500-plus sites. Adding up expenses and doing some educated guesses on what it charges advertisers, it decided that New Canaan Patch was indeed making money: a whopping $135/month.

But here's one thing that PaidContent probably can't tell you: the reason that site looks even modestly profitable has to do with much more than scale, or even technology. New Canaan is my hometown, and I keep up with it mostly using Patch. The site's success in 2010 is attributable, in large part, to two things: old-fashioned reportorial hustle done on quick turnaround and the X factor -- a particularly newsworthy year. Just like in Soylent Green (ha!), it's people, and content, that make it work.

Among the big, well-reported stories were a storm in March that left much of the town without power and dozens of roads closed for several days, creating a rare period in small town news where frequent updates actually matter -- said updates presumably filed via mobile phone charged in the family SUV. Then there's been a rash of home burglaries, and a tragic piece de resistance: a Bonfire of the Vanities style fatal hit-and-run which occurred over the summer.

In this era of social media, that saga has led to the kind of communal, and public, introspection seemingly reserved for the well-to-do. It has also no doubt led to traffic spikes: several of the stories involving the ongoing case have resulted in more than 200 comments; stories about the same incident on the Website of the century-old New Canaan Advertiser had only a handful of comments. (One town resident told me Patch has also wisely focused in on local sports.)

So, while analysis of the numbers can tell you one thing about Patch, there are certain things the raw data can't tell you, like why traffic is so good for New Canaan Patch in the first place. In fact, the quality of Patch, just like small-town newspapers, is spotty. The Patch sites around where I live now rely far too much on content meant for a broader audience, like New York state residents, or the elderly. Sorry, but if I really want to find out more about problems with Medicare reimbursement, Patch is not going to be my first stop.

But no matter. AOL is betting much of the farm on Patch being able to drill down into the minutiae of small-town life, and make money off it, having hired more than 800 salaried journalists, which Paid Content says make at least $35,000/year plus benefits. Those reporters work on a network of inherently low traffic sites. A BNET colleague of mine was recently told by a Patch employee that revenue was trending ahead of forecasts, but that's always a slippery slope. Were the forecasts ambitious? Middle-of-the-road? Set low to make for a positive soundbite? It's hard to know, and, for now, according to an AOL rep, the company isn't saying anything more than that Patch has "met or exceeded every sales goal we've set for ourselves."

What is clear, however, is that the proof will be in the content. But there's no algorithm that can ensure its quality.

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