* AOL to launch 500 more local Patch sites
* Plans to spent more than $50 mln this year
* Shares of AOL down 6 pct year-to-date
By Jennifer Saba
NEW YORK, Aug 17 AOL Inc AOL.N is gearing up
to launch an additional 500 websites under the Patch umbrella
this year, part of a broader effort to remake itself as a
destination for users seeking maps, reviews, and a grab bag of
other local content.
AOL, which is trying to move past its roots as a dial-up
Internet service provider, has launched 100 of these local
sites so far and plans to spend more than $50 million to
initiate hundreds more this year.
The move, announced on Tuesday, is part of the company's
turnaround strategy conceived when it spun off from Time Warner
Inc (TWX.N) after a disastrous 10-year marriage. AOL has been
since shedding properties like the social networking site
Bebo, streamlining its sales force and rebuilding its ad
platform to capture more marketing dollars.
"We think local will be an important part of [AOL's]
future," said Chief Executive Tim Armstrong, who was an
original investor in Patch before he joined AOL from Google Inc
Jon Brod, executive vice president for AOL Local and a
Patch founder, said that as traditional media struggles there
is chasm of quality information at the community level. "That
is the need Patch is filling," Brod said.
Think of the Patch sites as an online-only community
newspaper led by a professional journalist who oversees a
handful of freelancers who cover everything from neighborhood
crime-related events to gallery showings.
"If we build this infrastructure now as the economy
improves people are going to be conditioned to use Patch to
really get their message out," said Warren Webster, president
AOL is eyeing $20 billion of local online advertising
dollars, he said. "It's the largest commercial opportunity that
has yet to be won," Brod said.
Brod said AOL first wants to concentrate on increasing
Patch readership as its sales team hunts for three types of
advertisers: small, locally owned businesses, banks and auto
dealerships, and national advertisers interested in targeted
"I like what they are doing," said Douglas Anmuth, an
analyst with Barclays Capital. "It's still very very early and
still in investment mode."
Patch is just one part of AOL's content offering, which
also includes Seed, a platform that relies on user-generated
material on popular topics, and several popular topic-specific
sites like Engadget, which is dedicated to consumer electronics
and tech gadgets.
AOL is in good company. Yahoo Inc (YHOO.O) is also staking
a claim at being a go-to source for information, snapping up
journalists, striking deals with several hundred newspapers and
buying user-generated content site Associated Content.
Demand Media, a rival to AOL's Seed, earlier in August
filed with regulators to raise up to $125 million in an initial
public offering [ID:nSGE6750KG].
Also vying for those same dollars are countless newspapers,
local TV stations, directories, and online news sites including
the Huffington Post.
Andy Chapman, leader of digital trading at Mindshare, a
media agency that buys advertising on AOL on behalf of many of
its clients, says there is a lot of interest and promise in
"It's not clear to me whether there is enough interest," he
says about AOL's Patch. "The jury is still out."
(Reporting by Jennifer Saba; Editing by Steve Orlofsky)