The Hype Over Hyperlocal News | AOL's Patch increases its presence in the crowded local online news market
Two years ago, so-called “hyperlocal” news websites were unknown in Central Massachusetts. Today, 18 local communities have their own online-only mini-newspapers, and some have two. Much of the growth comes thanks to Patch.com, a 2-year-old subsidiary of America Online that has nearly 800 sites in 17 states across the country.
Patch is entering an arena where Grafton-based hyperlocal chain CentralMass.com says it is having increased success with advertisers, and where two of the Boston Globe’s Your Town sites are ramping up. Still, there remain significant questions about whether local markets can support even one online news site.
Science-Based Siting
Warren Webster, president of Patch Media, said the company targets communities with a population between 15,000 and 100,000. It chooses exactly where to go with the help of an algorithm that incorporates 50 factors, including voter turnout, the ranking of the local high school and retail spending in town. Then it hires a local editor who works from home with the oversight of a regional editor and the company’s New York-based management.
“All the editorial decisions, what gets covered, all that kind of thing happens in the community,” Webster said. Patch has 14 sites in Central Massachusetts, most of them in the MetroWest area. All patch sites share the same root domain. For example, there’s Acton.Patch.com and Framingham.Patch.com
One person who’s made note of Patch’s entrance into the area is Spiro Koulisis, general manager of Celtic Tavern in Northborough. Koulisis has been pushing a major rebranding effort, and he was pleased with a story Northborough Patch did on the restaurant in January.
“They were very gracious,” he said.
After doing an interview for the story, Koulisis said, he asked if Patch’s advertising staff would be interested in coming by. He never head back from anyone.
In fact, advertising is not yet a big part of what Patch does. Even its most established sites have only a handful of ads, and many of the new Central Massachusetts sites have none at all.
Even before it was acquired by AOL, Webster said, Patch’s business plan was to start by building an audience before pursing advertising revenue. And he said the company doesn’t simply want to get ads for the sake of ads. He said it wants to create marketing efforts that draw readers to local businesses, and that inform them about what’s going on at the local branches of national companies. The idea, he said, is to make advertising a useful part of the site for readers instead of a distraction.
“In a small community, finding out there’s a deal on something is just as interesting as the news,” he said. “It’s really local content.
Competitive Market
In contrast, CentralMassNews.com, which launched its first site about two years ago, has more than a dozen ads on each of its nine sites.
“We’re now seeing a lot bigger companies coming to us,” said CentralMassNews Publisher Jack Schofield.
Schofield said he’s certainly watching Patch.com closely, and he’s been mostly impressed with what they’re doing. When they do start ramping up their advertising, he said he expects them to be a powerful force in the local area.
“Right now they’re no competition for us,” he said. “I completely expect them to be competition for us in 18 to 24 months.”
Another strategy comes from Boston.com, which covers 34 communities, including Framingham and Natick, plus 17 Boston neighborhoods with its Your Town sites.
Rather than being produced by site-specific journalists, Your Town borrows Boston Globe content and plans to bring in unpaid student reporters from local colleges.
Print To Web
Of course the original hyperlocal news outlet is community newspapers distributed in print, and most of them are now online in one form or another.
In Central Massachusetts, GateHouse Media has 26 Wicked Local sites, which complement and share content with its local weekly papers, as well as its MetroWest Daily News and Milford Daily News.
And there’s Worcester Magazine and The Holden Landmark — owned by Cracked Rock Media — which all focus on local news and have websites.
Joe Giacobbe, general manager at Palley Advertising in Worcester, said hyperlocal sites, like community newspapers, are good, affordable places for small local businesses to place ads.
“People who need to reach (customers within) 10, 15, 20 miles, it certainly makes sense for them,” he said.
But is there room for more than one site in a single town?
“Probably not, he said. “And that’s going to come out in the wash, I think.”
As things stand, Giacobbe said, CentralMassNews.com is more rooted in the communities where it has papers than Patch, making it a more attractive place to advertise. But he said that could change.
“Patch could be there six months to a year from now,” he said. “It needs to get some traction.”
Upfront Investment
Patch has a certain amount of breathing room when it comes to its finances.
AOL said it was investing $50 million in the subsidiary in 2010, and it continued to trumpet the hyperlocal venture in its statements this February as it announced the acquisition of The Huffington Post and Arianna Huffington’s new position overseeing all of the company’s content.
Still, with AOL’s generally shaky financial position (its revenues fell 26 percent in 2010), some are asking about the game plan for Patch.
No matter what sort of package they’re selling, if any Internet news sites want to get the business of the Celtic Tavern, they’ll have some work to do convincing Koulisis.
He said he’s tried a variety of advertising methods, including working with the web coupon company The Local Deal and using Facebook and Twitter, as well as more old-fashioned media like radio and direct mail.
But he said the best return on his investment has come from print ads in the Worcester Telegram & Gazette.
Koulisis said his customers often mention that they saw his ads in the paper. In contrast, he said, despite the positive write up in the Patch site, he didn’t hear about it from anyone.
“I didn’t get any bang from it,” he said.
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