Patch Ramps Up Hyperlocal Gamble

If hyperlocal is truly the next news frontier, Patch is the nation’s biggest homesteader. The AOL-owned network of sites is garnering as much attention for its rapid proliferation — 814 sites in 18 states plus Washington, D.C., and counting — as for its reported $160 million investment in hyperlocal this year alone.

Patch hired more than 1,000 editors in 2010 and has upped the ante by bringing on additional thousands of unpaid local bloggers in recent weeks. It’s an initiative that notably follows the mold of The Huffington Post, the recent $315 million AOL acquisition that may be playing the de facto big sister to the fledgling network.

Patch President Warren Webster says there are lessons to learn from The Huffington Post, and he’s paying close attention as Patch’s content model evolves. He’s also eyeing a near-future map of Patch communities with very few blank spaces in between.

In an interview with NetNewsCheck's Michael Depp, Webster says Patch’s criteria for growth in new communities is sound and sustainable, as is its locally centric business model. He says early viewership metrics are exceeding expectations, and that mobile platforms will play a key role in Patch’s continued growth.

An edited transcript:

Patch represents a massive investment in hyperlocal for AOL. For many, this is a can’t-miss, $1 billion-a-year front, and yet the hyperlocal field is strewn with more than a few bodies that weren’t able to make it work. Why does AOL see this front as so pivotal for its strategy, and how is Patch going to do it differently?

The media landscape has changed enormously in just the last year — and five years. Since we started three years ago, we’ve even seen more of a need for a company like Patch. The differentiator between us and those who’ve tried this before is three-fold. One, we’re looking at this as a scaled big opportunity where we know we need to be everywhere ultimately. Two, we are looking at this as a platform that empowers local journalists and local residents to really run these sites — to provide the content, to drive where they go. And three, the technology. I think we bring a best-in-class technology to the problem.

The void in local news and information has only grown in the last couple of years, and we see that as a major opportunity and a major need.

Patch’s rapid growth is capturing a lot of attention, having added 33 new targeted sites just this week alone. Now it’s in 810 local markets overall in 18 states plus Washington, D.C. What is Patch’s ultimate target in terms of markets and state coverage this year and next?

The momentum has been amazing. In fact, every time I talk to anyone I have to check where we are. As of yesterday it was 810. Today we’re at 814. We just launched two new sites in Newark, N.J. We expect to be in 1,000 sites by the end of this year, and at the end of this year we’ll look around and see what the next milestone will be. Ultimately, we believe that every community in America could use a Patch, and the success of the Patch sites so far is a testament to that.

So ultimately this is a 50-state strategy?

Ultimately that’s what we believe should happen. We’re going to look next year and see where we should go next.

Is the $160 million-a-year, with $40 million being widely touted as AOL’s investment in Patch in the first quarter, accurate? If so, can you give me an idea of where the investment typically goes to grow a new Patch market?

I can’t speak to the level of investment beyond what’s been publicly announced in the filings, but I can tell you we invest heavily in hiring local journalists and other local staff including advertising staff. In 2010, we believe we were the largest hirer of journalists in the U.S., and we hope to continue to be able to hire journalists at a time when most news outlets are not.

We also invest in technology in the back end. Our headquarters is staffed by people who are supporting the local sites with technology, marketing and research and information.

By what criteria does Patch choose its markets for expansion? What are you looking for in terms of demographics and community size in adding a new market?

It’s really a range. We just launched two sites today in Newark, inner city sites — South Ward Patch and West Ward Patch. We’ve recently just launched our first Patch military site at Camp Pendleton. We’ve announced plans for Patch Latino, which will start in Southern California and be largely in Spanish.

When we first started Patch, we realized we could go anywhere, so how do we decide where to go? We created a half-qualitative and half-quantitative process to build our list of where to go first. On the quantitative side, we built an algorithm that weights 59 different factors ranging from the voter turnout index against the national average to the ranking of the local public high school because we want to find communities that are very engaged in what goes on in the town. And we ran every Census track in America — all 63,000 Census tracks — through that algorithm and we plotted them on a map and looked for clusters [because] our management structure depends on having clusters of sites all very close to each other.