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January 16, 2014 02:14 am GMT
Not final closure after all for AOL’s struggling hyperlocal effort Patch, but a segue into a new life where AOL is no longer the sole owner. Today the company is spinning it off into a joint venture with Hale Global, with AOL retaining a minority stake. The news was sent out to AOL employees (TechCrunch is owned by AOL) in an internal memo from CEO Tim Armstrong, who described the move in classic startup terminology, “pivot.” The memo is below. Patch, which AOL acquired in 2009, has been long on aspirations but very short on financial returns over the course of its life. The idea was that AOL would use the platform to develop a chain of hyperlocal news sites, which would then help AOl tap into local advertising (and national advertising aiming for local audiences) alongside that content. But it was never profitable, and is estimated to have cost AOL between $200 million and $300 million to run. Last year, after winning a proxy battle in 2012 that was partly tied to the financial problems with Patch, Armstrong made a commitment to turn Patch around. While there may have been efforts to improve the content, what we tended to hear about where the more cost cutting efforts to right-size it: drastic layoffs of 40% of staff, closing and consolidating some of the local blogs, and with one particularly bad firing that didn’t help morale or public perception (the dismissal, of creative director Abel Lenz, was made in front of other employees, but of course, it leaked). Despite whatever downsizing may have taken place, Patch is still large — some 900 local sites, according to the official release AOL sent out — and possibly too unwieldy, to steer into better waters. And on top of that, it’s seeing decent traffic, of 16 million people monthly according to figures from comScore. So now, the plan going forward will be to focus on a few changes to convert some of that traffic into revenues: new technology for community participation; more mobile-first and social experiences; better advertising tools; and more geo-targeting for ad products. Seems like a very logical set of goals, so I’m not quite sure why AOL didn’t try to focus on them earlier — or why, if they did, Hale is likely to execute on them better than AOL has. The transaction is expected to close in Q1 of this
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/agCPyFayqwk/
AOL Pivoting Another Area Of Our Business: Local, Puts Patch Into JV With Hale Global And Keeps Minority Stake
Not final closure after all for AOL’s struggling hyperlocal effort Patch, but a segue into a new life where AOL is no longer the sole owner. Today the company is spinning it off into a joint venture with Hale Global, with AOL retaining a minority stake. The news was sent out to AOL employees (TechCrunch is owned by AOL) in an internal memo from CEO Tim Armstrong, who described the move in classic startup terminology, “pivot.” The memo is below. Patch, which AOL acquired in 2009, has been long on aspirations but very short on financial returns over the course of its life. The idea was that AOL would use the platform to develop a chain of hyperlocal news sites, which would then help AOl tap into local advertising (and national advertising aiming for local audiences) alongside that content. But it was never profitable, and is estimated to have cost AOL between $200 million and $300 million to run. Last year, after winning a proxy battle in 2012 that was partly tied to the financial problems with Patch, Armstrong made a commitment to turn Patch around. While there may have been efforts to improve the content, what we tended to hear about where the more cost cutting efforts to right-size it: drastic layoffs of 40% of staff, closing and consolidating some of the local blogs, and with one particularly bad firing that didn’t help morale or public perception (the dismissal, of creative director Abel Lenz, was made in front of other employees, but of course, it leaked). Despite whatever downsizing may have taken place, Patch is still large — some 900 local sites, according to the official release AOL sent out — and possibly too unwieldy, to steer into better waters. And on top of that, it’s seeing decent traffic, of 16 million people monthly according to figures from comScore. So now, the plan going forward will be to focus on a few changes to convert some of that traffic into revenues: new technology for community participation; more mobile-first and social experiences; better advertising tools; and more geo-targeting for ad products. Seems like a very logical set of goals, so I’m not quite sure why AOL didn’t try to focus on them earlier — or why, if they did, Hale is likely to execute on them better than AOL has. The transaction is expected to close in Q1 of thisOriginal Link: http://feedproxy.google.com/~r/Techcrunch/~3/agCPyFayqwk/
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