Patch Misses 2012 Revenue Target

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aol-s-patch-sites-get-iphone-app-for-hyperlocal-news_1Patch missed the $40 million to $50 million revenue target set by AOL for 2012, which CEO Tim Armstrong attributed to disruption from superstorm Sandy in the fourth quarter during a Friday earnings call. The company remains committed to achieving run-rate profitability for the hyperlocal network by the end of 2013 — a goal being reached, in part, through continued cutbacks implemented since Armstrong first announced the projection in last year’s second quarter.

The future of Patch plays big in AOL’s turnaround efforts, particularly as it looks to transition the web giant out of a prolonged restructuring period into a growth phase. The implicit message was clear: Patch may not drive growth in the near term, but it needs, at the very least, to get out of the way. The hyperlocal network’s losses continue to drag on the returns of AOL’s brand group, which include powerhouse media brands like The Huffington Post,, and TechCrunch.

AOL remained mum on Patch’s performance in 2012, saying only that losses at the closely watched network “decreased” from a reported $150 million loss in 2011.

Given the substantial cuts made during the second half of last year, the path to profitability in 2013 will likely have to come through the revenue side of the equation. Armstrong pointed to two areas — regional advertising and media partnerships — as potential growth areas for the property over the next 12 months.

“We played very heavily in the national and local segments until now, and we’re just untapping the regional revenue now,” Armstrong said. “We expect to make progress revenue-wise on this front.”

On the partnerships side, the company has seen interest, and content partnerships with legacy media brands could play into the equation moving forward, according to Armstrong: “If you own a TV station, newspaper, or media company in a major metro [area], chances are you’ve cut back on your content investment. But Patch has surrounded your assets,” he said. “ We see a lot of opportunities there overall.”

One interesting development is that AOL appears to have recommitted to one of its original hyperlocal properties, MapQuest. Armstrong mentioned the property in his prepared remarks, telling investors the business had “real value and is turning around.” It’s unclear where MapQuest fits on the revenue equations for AOL, but Armstrong highlighted the platform’s massive amounts of transit data as “an interesting business-to-business opportunity” for the company.

In his closing remarks, Armstrong quoted Andy Warhol in a fitting summation of Patch’s tumultuous ride over the past year: “Don’t think about making art, just get it done. Let everyone else decide whether they love it or they hate it. While they are deciding, make even more art.”

Steven Jacobs is deputy editor at Street Fight.