AOL Chief: We Will Use ‘All Means Possible’ to Get Patch to Profitability by Q4
AOL’s hyperlocal media network Patch has rolled out its redesign from a handful of pilot communities to 100 markets across the country, Tim Armstrong, AOL’s chief executive, said during an earnings call Wednesday morning. The move comes as AOL focuses in on Patch’s model, pushing the closely-watched news network to reach run-rate profitability by Q4 of this year.
The redesign, which the company originally debuted on several of the network’s sites in September 2012, aimed to transition Patch from a traditional news property to a community-driven platform, in part to reduce the heavy editorial costs that have brought down the company’s bottom line. The original pilot centered around subject-specific Groups, where readers could discuss topics such as crime, schools, and government.
The rolled out redesign appears to be something of a departure from the original pilot. On the Bellmore, NY site — one of the original pilots that has since been updated — Groups (now called Boards), which dominated the pilot’s central feed, are now buried into a secondary tab, leaving the homepage a mixture of blog posts and “announcements” posted by readers.
The redesign is one part of what Armstrong has called “the finish line of profitability.” In September, the company forecast a rapid rollout for the redesign, planning to reach the 800+ patch sites by the end of Q1 2013. The company also missed its own $40-50 million revenue target for 2012, effectively shifting more of the burden of achieving profitability to cost reductions.
“The plan to get [Patch] to profitability is driven around trying to keep the information in local communities as stable as possible, and then working the business side and cost structure side to get to that point,” said Armstrong, responding to a question about potential courses of action if Patch does not reach its goal by the end of the year. “What you’re going to see as we approach Q4 is us trying to get to the finish line of profitability, and we will use all means possible to get there.”
In addition to further cost cutting, Armstrong said he would not rule out “other revenue products,” such as partnerships, to reach that goal. In the company’s Q4 2012 earnings call, the former Patch founder floated the idea of partnerships with legacy media companies, but the extent to which the company has tapped these potential revenue streams is unclear.
Steven Jacobs is deputy editor at Street Fight.