Earnings

Patch Is Good for AOL After All. Maybe?

AOL reports that the hyper-local news network helped with growth in fourth quarter ad revenue
tim armstrong Patch Is Good for AOL After All. Maybe?

Mr. Armstrong (aol.com)

Gianna Palmer is a guest blogger for Betabeat.

AOL released its fourth quarter earnings report today and not shockingly, profits are still falling. Q4 net income fell 66 percent to $22 million (23 cents a share) and revenue slipped 3 percent to $576.8 million. CEO Tim Armstrong seemed pretty happy, though.

“AOL took a large step forward in Q4 and I am very pleased with the way we ended the year,” Armstrong said.

At least one reason for Armstrong’s cheery outlook: AOL saw its ad revenue increase 10 percent to $363.8 million. To what does it attribute this growth? In part: its hyperlocal news effort Patch.

You read that right. The hyper-local news sites springing up in largely wealthy communities across America is apparently helping AOL stay (sort of) afloat.

We’re a little confused, however, because back in December Nicholas Carlson of Business Insider reported that of the roughly $140 million AOL invested in Patch in 2011, its largest source of revenue, local ads, generated just $7.8 million. This, according to documents “obtained from a source.” (Patch declined to comment.)

Today, however, AOL reported that Patch traffic, advertisers, and ad impressions grew 100 percent year over year.

Perhaps the best way to reconcile the two stories is the fact that Patch represents just one piece of AOL’s ad revenue, and they’re not saying how big that piece is.¬†Still, weird.

Comments

  1. guest says:

    y-o-y advertising grew because Patch launched more then half of it’s now live sites in 2011 – if you look at advertising compared to the number of patches that existed, you will see that it is all smoke and mirrors

  2. Mikeshapiro says:

    Taking all the costs involved with Patch (the layers of overhead, benefits, 401K, etc) and spreading them equally among the Patch sites, there is no way any of them are profitable.  If you look at one Patch site and only take into account the expenses for that specific Patch site, it could be profitable.