AOL’s Patch was, handily, the brainchild of Tim Armstrong before he became the media giant’s CEO. In 800 local communities across the country, Patch is one of the bright spots in hyperlocal business models, with each “Patch” manned by a single editor and an ad sales person, and supported by a network of regional editors. But how will AOL’s acquisition of Huffington Post impact Patch? Well, just yesterday Arianna Huffington announced that she is planning to hire as many as 800 new full-time employees to beef up content on Patch’s network of sites and reduce the use of freelancers.
Street Fight spoke recently with editor-in-chief Brian Farnham about Patch’s mission, the importance of pothole stories, how to help local businesses navigate online advertising, and the local-national strategy it’s developing with HuffPo.
What does “hyperlocal” mean now?
I think “hyperlocal,” if everyone is being honest, has been a handy buzzword. It does mean something, but I think it also has had connotations of technology and “next-ness,” and certainly all the promise of online focus… But I think what it really is is an area of focus for media that isn’t being served right now.
“Hyperlocal,” strictly speaking, means, “Why were there police sirens on my block last night?” or “When is that pothole on my block going to be fixed?” But I think what most people mean when they say “hyperlocal” is actually “local,” which is a slight remove up, a slightly higher altitude. And it’s just as needed: there’s a big gap at the local level. So what Patch is doing is really both; we’re starting at local, but are able to drill down into the hyperlocal.
Hyperlocal is really much more difficult for everyone to reach because it is so granular. If you’re familiar with [Outside.in founder] Steven Johnson’s “pothole principle” — the pothole on my street corner is big news to me, but one block over it could not be less interesting (and certainly beyond that). And so that makes it difficult if you’re doing reporting, unless your newsletter covers eight households on your street. If you’re doing reporting on that pothole, it’s not interesting to a lot of people, even at the local level. But if you make that story about all the potholes in the town, or why they’re not getting fixed, or why there’s a trend there, then you’ve got something that everyone can relate to. And it’s that level of coverage that is not being met. That’s what drove the creation of Patch. Even at that community level of 20,000 to 50,000 population, there was a real vaccuum of viable places to get that kind of news and information in a cohesive way on an online platform.
There’s a big gap at the local level. So what Patch is doing is really both; we’re starting at local, but are able to drill down into the hyperlocal.
What’s your sense of what local businesses want from hyperlocal sites? How is Patch serving that?
It’s really two or even three things. Certainly, we are based on ad revenue; we sell ad products to local advertisers. But that’s not the whole relationship. At the local level, your local advertisers are really residents, right? They’re members of that community, and your site needs to serve them in the same way that it serves those families that live there who are looking for information. So there’s another nuance: not only are they residents, but as owners of a small business in the community, they have other needs.
So we’re not just trying to sell ads to small businesses. We’re trying to come up with solutions online for them that make sense. They all know that they should be on Google in some way, and on AdWords, but they don’t know exactly what that means or how it applies to a local business. They also may or may not have a Web site. From our research, 50 percent of small businesses in our communities don’t have a Web site at all. And even when they do, it’s likely something that their cousin set up, and that they don’t have time to maintain. And even if they do maintain it, a click-through for them is meaningless. “Joe’s Pizzeria” doesn’t need someone to click through on their Web site; they need someone to walk through their door and buy pizza. So their needs are very different; everyone gets this, it’s just hard to get at them.
So our sales reps — and our editors to some extent, even though they don’t do any selling — are there to figure out what those needs are. The low-hanging fruit are definitely banner ads, but there are more sophisticated products that we offer. One example of that, which is actually free, not something we sell, is our directories. Basically, our directory is a local Yellow Pages, and it’s hand-built by us. We don’t just buy a third-party directory and slap it up there. We actually, before we launch a site, go to every single local business organization, local park, et cetera, and take pictures and do structured data against that thing. It’s custom by category, and robust, and it’s really informative. It’s useful right away for a user. And for a small business owner who is getting a listing, it’s kind of a de facto Web page. So they’re already getting a presence on that site, and they get the opportunity to expand the utility of that with premium services. Even that is just kind of scratching the surface of what we want to do with small businesses.
Doesn’t this kind of directory-building take a lot of time and resources?
We’ve actually got a whole separate unit here, the directory team. They have a whole slick operation. They’ve been working on this for a couple of years, and they’ve obviously figured out how to do it efficiently and cost-effectively. It’s definitely time-consuming, but it’s not as dollar-consuming as you might think because we’ve really figured out how to do it. But you basically end up with a system that employs freelancers to go door-to-door, and they have a way of obviously completing the listings and plugging them into the system. But it’s very streamlined and efficient.
Patch’s model is ad-supported. Do you think there’s any future in paid local content or feeds?
It’s not on our list at all, even to test. We think that the model is in another place, financially. Obviously at the national level and the regional level there are a lot of people talking and experimenting, and the [New York] Times just dove in. So it’s probably a matter of time before it’s attempted locally. I think there are a lot of local applications that are working along those lines — like Angie’s List — where there’s a clear service-oriented value. So there are aspects of local coverage that I think make sense, but the news and information part, the creating conversations and communities online… I don’t think that works on a paid model.
Are there other revenue streams Patch is considering for the future?
Everything is kind of on the table for us. It’s all interesting and we want to be the hub for local communities. We want to make sure that we’re considering everything and exploring everything. There are a few things that are built into the model that we’re testing — nothing that I can speak about specifically, but stuff that you’ll see rolling out on the site over the next few months.
How is the AOL’s acquisition of Huffington Post affecting Patch?
We’re still figuring that out. It’s still early days. … We’ve had many active conversations with them so far, but the integration is an active machine with a lot of moving parts. I don’t have the crystal ball for how it’s all going to shake out. But I do know that in the conversations we’ve had with Arianna Huffington, she’s a huge Patch fan, definitely gets what we’re doing, loves the principle behind Patch… which is how AOL always felt too. Everyone realizes that Patch is trying to do something special and we don’t want to muddy those waters.
That said, the reach of going from local to national via the Huffington Post Web site is really intriguing. And that’s something that we want to be able to exploit and use without confusing the message on either end for people. So there’s some low-hanging fruit ways that we can do it. Huffington Post has already been employing its own local strategy and has rolled out HuffPo New York and HuffPo Los Angeles. So with those sites we’ve been just feeding them, like in Los Angeles, our sites out there will be doing a certain kind of coverage which is local and which also has regional interest, and that’s just a sort of natural thing to feed up. So we’ll see more and more of that as we figure out the best way to interact.
Will there be more aggregation on Patch (following the HuffPo model)?
We definitely want to lead with full-time journalists, and we’re devoting the hard work and energy toward original content. But it has always been within our model to consider anything… not necessarily in a programmatic aggregation model, but in a manual aggregation — or, I think, “curation” is a better word, when you have that editor saying, “In our ecosystem of local media there’s this newspaper and that blogger and that bulletin board.” And sometimes they’re going to say something that we want to present to the attention of our users. That’s naturally happening. But I think what you’ll see more of is that we find more ways to pull that in more organically and fluidly. We don’t want to be an aggregator — that’s not our model — but I think if you’re being realistic about what any local media and information ecosystem is, it’s interplay, and that’s the beauty of the Internet. And so we’ve been exploring those kinds of relationships both from the local level and the regional level, formally and informally.
Who do you think is “winning” hyperlocal right now (Patch excluded)?
I’ll give you the cheesiest answer possible, which is that the winners are the users, the residents of all these communities that are getting a renewed focus on them, and getting these tools which folks in cities have always sort of taken for granted. I mean, in New York we have a dozen or so choices of how to figure out what’s happening or what you want to do where you live. I worked for one of them (Time Out New York), and you take those things for granted.
Local didn’t have that. You could argue that if you live in a small community you know how to find the restaurants, and you don’t need to refine your searches a lot. But that’s taking for granted a lot of the offerings that someone in the community would consider to be available. So it’s really just giving those tools and getting the Web for communities up to the level of 2011.
So that’s my cheesy answer. The real answer is that it’s too early to say right now. Obviously I’m biased, so I think Patch is doing an incredible job, and we’re right where we want to me. We’ve got a lot of work to do and we try to be humble — we don’t think that we’ll be the absolute word on it, nor do we want to be the only thing — I think the ecosystem for a lot of this stuff is really the key. It’s how are these things going to work together. So I think it just remains to be seen. There’s obviously a lot of activity in this space both from legacy media and startups. Not everybody will make it, but it’s a really cool time to be dealing with these issues, because we’re seeing so much energy in this space.
There are over 800 Patches now. How many markets in the U.S. do you expect you can expand into?
Here I am with another cheesy answer for you: We’ve always felt like this can work in any community; it’s just the ones that need us and want us where we’ll start (and, to be honest, where the business model makes sense). The goal is to just keep a really open mind about expansion, because as we’ve expanded to 800 you see what works and what doesn’t, as far as what communities have a need for Patch, or have a need for Patch that’s different from three towns over. And I think you’re going to see more experimentation and exploration.