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Armstrong: ‘Certain’ Patch Outlets Will Be Profitable By End Of This Year

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During a Q&A break from the presentations at AOL’s Analyst Day, CEO Tim Armstrong and several other executives took a range of questions about the company’s plans for profitability and growth, its content strategy, its ad products and how Patch is performing. Armstrong said that “certain” Patch outlets — there are 800 and counting — should be profitable by Q3 or Q4, though he didn’t offer specifics. In the meantime, Patch announced that it would be working with Interpublic Group’s Geomentum, an agency focused solely on hyperlocal and headed by digital ad vet Sean Finnegan.

Under the terms of the the deal with Geomentum, the agency will steer its clients through the creation of locally-versioned, hyperlocal advertising campaigns on Patch sites.

Shopping and advertising: In addition to driving more ad dollars to Patch, executives are also looking to e-commerce as mutually-reinforcing revenue stream alongside ads. Jon Brod , president of AOL (NYSE: AOL) Ventures and COO of the HuffPost Media Group, pointed to what he said was some of the network’s advantages in the social shopping space. “Patch Deals benefits from the strength in the suburbs and there’s not a lot of competition there,” Brod said. “Most of the deals sites are focused on urban areas.”

Secondly, as Brad Garlinghouse, president of the applications and commerce group, noted, the hyperlocal aspect ensures more relevancy. “I got a Groupon the other day for eyeglasses,” Garlinghouse said. “I don’t wear glasses. So that ad was of no use.”

Super Channels: The questions turned to AOL’s wider advertising strategy. Much was said about the development of both AOL’s “engagement-boosting” Pictela and Project Devil ads, both for AOL’s owned content sites and the marketing of the ad formats in that program to outside publishers like Hearst.

Jeff Levick, the head of AOL Advertising, and Ned Brody, the chief of the Group, discussed the introduction of “AOL Super Channels,” which involves organizing “a select group” of publishers around 20 verticals including women, technology, retail, travel, multicultural and others. The publishers will receive access Pictela platform. By taking Pictela and Devil to the Interactive Advertising Bureau for the Rising Stars initiative, which standardizes the large screen, interactive formats of Pictela and others, “we expect more adoption of these ad units across the industry,” Levick said. “We’re going to continue to do this for ourselves, because it works for us, but we’ll continue to take it to the wider market.”

Exchanges:’s Brody addressed a question that’s been on the minds of online ad observers this past week: how is it responding to the growth of ad exchanges and RTB. This past week, Google (NSDQ: GOOG) acquired supply side platform Admeld for an estimated $400 million.

As Brody noted, AOL is already a large buyer on ad exchanges, through it network. But would AOL want to get into the DSP — demand-side platforms, of which, AOL’s AdDesk product is close — or SSP businesses? Brody said it didn’t make much sense. “Do you want to own the New York Stock Exchange or do you want to be an investment house? We feel you can make more money as an investment house, not as an exchange.” He showed an image of Terence Kawaja’s Luma Landscape of the online advertising ecosystem and said that AOL was covering many more areas beyond the ad network box, including offering yield optimization and publishing.

Content and freelancers: Since the $315 million acquisition of The Huffington Post, AOL and HuffPo have endured a great deal of criticism both from insiders and outsiders. Arianna Huffington discussed the decision to de-emphasize the role of contract writers and editors at AOL, saying the company had too many thousands of freelancers and it made it difficult to control the content. “When you hire professional journalists, it becomes easier to manage both,” she said.

2 Responses to “Armstrong: ‘Certain’ Patch Outlets Will Be Profitable By End Of This Year”

  1. So, lots happening in the paid content/news/advertising and related sectors online. Will be interesting to see how it all shapes up. I guess the rest of this year and Q1/Q2 next year will revel the outcome with some clarity.