Patch’s Troubles Show the Need for Data Analytics

Patch: Doomed?

AOL had big hopes for Patch, its collection of hyper-local news Websites. It poured an estimated quarter-billion dollars into setting up sites around the country, often with a single journalist and advertising person in each location. Yet despite those ambitions—and a network of 900 sites at its height—Patch has entered a critical phase, with rumors abounding that AOL intends to sell off or shut down the network as a consequence of continuing unprofitability.

“The long-term vision was clear: If you get the consumer, can you get the revenue?” AOL CEO Tim Armstrong said on a conference call with journalists last week, as noted by The New York Times. “And we have a whole bunch of Patches where the answer is yes. But we rolled it out on a national basis and we’ve had to adjust based on the investor commitments that we have made.” According to the Times, “adjustment” means either dismantling or selling the various Patch properties to unnamed partners.

But in a Dec. 16 email to employees, Patch COO Leigh Zarelli Lewis suggested that the newspaper had everything wrong. “We are continuing to talk with potential partners about Patch and there is no change in course or direction from what we have discussed as a team,” read that missive, which was obtained by Business Insider. “Patch gets and will get a lot of media coverage, but we will keep you updated as we walk through the partner talks.”

Whether Patch is sold, or continues to limp along under the AOL umbrella, or ends up unceremoniously tossed into history’s dustbin of dead Web properties, it’s clear that the network could have benefitted from a more targeted use of data analytics at its inception. While hyper-local advertising is potentially lucrative, some cities and regions boast a more robust local news scene than others—judicious application of analytics tools could have helped AOL executives decide which markets to target first, rather than attempt a Blitzkrieg strategy of launching multiple sites across the country in a relatively short period of time.

More intensive analytics, combined with some executive wherewithal, could have allowed AOL to invest more resources in those Patch sites making demonstrable progress—rather than simply dumping two employees into each market and hoping for success.

Even so, all the data crunching in the world isn’t much use unless managers agree to a plan incorporating it into a broader strategy; reports suggest that AOL wanted to go big with Patch from the very beginning, a strategy incompatible with a gradual rollout supported by analytics. That strategy wasn’t a breakaway success—even before this latest news of a possible winding-down, Patch laid off hundreds of workers and began to shut down underperforming sites. But it’s easy to see how things might have been different with a more judicious application of data.


Image: Patch/AOL