Wall Street Journal | Poynter
In a cost-cutting move promised during AOL’s first-quarter earnings call earlier this month, the company is reducing its Patch staff by about 20 people, Keach Hagey reports, by turning its four geographic regions into three. “No sites will be closed or merged and no local editors or ad managers will be affected,” Hagey reported.
AOL CEO Tim Armstrong, who founded Patch, has been under pressure from Starboard Value, an AOL investor that believes Patch has a “structurally flawed business model.”
In its first-quarter report, AOL said “Patch grew traffic and advertisers over 40% year-over-year and revenue over 100% year-over-year.”
During a conference call about the report, Armstrong said that “there’s a lot of noise about Patch” but it remains “a very long value proposition for us.”
We reported at the time:
Patch has already booked revenue for 2012 that exceeds revenue booked in 2011 and will be profitable by the end of 2013, in part by lowering expenses, he said. Expenses have been lowered as town and regional staffs have “smartly organized the editorial process.” Armstrong also said Patch is planning a new product.
In a statement released today, Armstrong said “Patch continues to deliver on its original mission and is on the right path for success in 2012 and beyond,” according to The Wall Street Journal.
Here’s the memo Patch Chief Executive Jon Brod sent to staff:
Since setting our OTOG strategy in motion several months ago, we have been closely monitoring its impact — and the results have been impressive, to say the least: the most traffic in Patch history, a significant boost in revenue, and more dynamic collaboration between Edit and Sales at every turn. OTOG has allowed us to streamline our business while addressing the individuality of our markets and serving our communities as effectively as possible.
As our platform has scaled and we have continued to gain traction with both consumers and advertisers, we aren’t letting our wins to date stand in the way of our momentum toward tomorrow. Now more than ever, we are confident in our model and we are gearing up for long-term success. As discussed on recent company calls, one of our four focus areas (alongside Product/Engineering, Content, and Revenue) is Efficiency – making sure we’re doing things well, we’re doing them fast, and we’re using our resources as effectively as we can. With this in mind, we have made a decision to integrate the South zone into the East zone. Effective immediately, our three zones are East, Central, and West.
This is the next step toward achieving our ambitious revenue and traffic goals for the second half of the year and beyond. We have a strategy to win, and further streamlining our field structure will give our model added strength, more operating leverage, and greater flexibility to meet our users’ and advertisers’ needs. And it’s important to note that no sites will be shutting down as a result of the zone integration.
We will be holding team discussions throughout the day, along with Zone calls this afternoon, to discuss this change and what it means for you. We encourage you to join these calls later today (invitations to follow). I want to thank you for all you’ve done so far to make 2012 our best year ever. Let’s keep it up, stay focused on our mission, and continue to make Patch the massive success we know it will be — we are well on our way.
Related: AOL earnings reports tell history of Patch since 2009 (Poynter)