The Patch model and why it won't work

I recently ran into a couple of people who are working on AOL's Patch project. Nice people, very intelligent and very pleasant. Patch was building out my state and suddenly stopped in order to follow the Primary Elections, in hopes of gaining ground in the "interesting" Primary states, as the model suggests that they'll get lots of people using Patch if they want to talk politics.

Patch is currently available only in 22 states and the District of Columbia. This is a clear attempt to make AOL relevant to the Internet again, as they were back in the 1990s when you generally got an AOL installation disk in the mail once monthly (especially in certain zipcodes).

Here are the problems I'm having with Patch:

1. They're AOL and they, apparently, think they own the Internet. AOL might have back in the mid 1990s, especially when everyone was using dialup, but now that most people access the Internet using a cable company or a DSL line, AOL has ceased to be relevant as an on-ramp to the Internet.
2. They charge way too much for advertising and they're using the wrong model. Let's face it: Google's Pay-Per-Click model is superior. You can get your message out there consistently using Google's AdWords for a lot less cost than you can with the old, tired "pay per impression" model used by newspapers, magazines and AOL.
3. I question how compelling they will be. Patch fashions itself as local news—literally town-by-town. While that is an admirable concept, their "newsrooms" tend to consist of one person who cannot possibly write sufficient stories to give you a good picture of what is happening in your locality. And a "you make the news" model just does not work. Individuals just won't consistently send in responsibly-written and edited content unless they have a real axe to grind. And if you have an axe to grind, you won't be fair or impartial.

Let me give you an example:

My wife has a business where she advertises on the Internet. Her business website is presently on the top of the search engines due to very good search engine optimization (using keywords within her website and making the content accessible to the web crawlers out there) and she is doing very well in search engine marketing (having a blog, a business Facebook and Twitter account as well as using Google's AdWords to drive hits to her website). She typically spends between $100 and $150 monthly for Google's AdWords which, in her category, is better than most. Certainly more than anyone else in her state is doing.

Google's "Auction" business model works like this: All AdWords (search keyphrases and search words) are up for auction. You can limit your bid or limit your daily cost. My wife chooses the latter. She pays in advance. If her account is running low, she makes a payment. Each advertisement goes to a landing page with a specific message designed to close a sale. The most she has paid in any one day is just shy of $13.00. Her ads are effective. Google does not charge you for advertisement impressions. If someone sees her advertisement online and does not click on it, she pays nothing.

On February 5th, her advertisements received 18,785 impressions. She received 13 clickthroughs. Average cost per click was 95¢ and, since she charges a minimum of $60.00 to a client, if she closed one of those, she's making her money back easily.

Patch counts impressions, but only impressions of Patch.com members. They set their rates in accordance with how many members a particular town or city has. I suppose one could liken that to a newspaper which doesn't count pass-alongs or free copies and just counts actual paid subscribers. Last fall, since they were trying to make a good impression, they offered a special. Their representative was offering October to January for $250 for an advertisement. I figured that was a bargain, as it's lower than what my wife pays for Google's AdWords per month and that the pay-per-impression model might work on the basis of Patch being inexpensive.

But we didn't get things together for an ad and did not sit down with a representative until December. And the price was about $250 monthly, but you could "lock in your ad space" and this would not allow anyone else to advertise there. Generally, if you sign an annual contract with a newspaper or magazine, you can pay for placement like that.

But we thought we would try things out.

I produced an ad. It was my wife's logo with several messages, put together as a GIF file that changed once per second, as I hate ads that flash at you annoyingly. I got the ad over to the representative in late December. And I got a strange email back from her:

Can you provide us with the .swf files for the flash ad?

I wrote her back, telling her it was a GIF ad.

On the 5th of January, she wrote back:

…we usually don't work with animation, so it took my team some time to figure out what to do and tried to use your ad, but we couldn't without making the site go down.

Patch.com would "go down" if there was a GIF image?! The GIF file format was introduced by CompuServe in 1987 and its use on the Internet has been widespread. In fact, GIF files have been around since before JPEG files.

But it is possible for servers to have MIME type issues. So I went searching for GIF files on Patch.com. I found a lot of them, but none animated. I also found a lot of PNG files, which may be animated as well, but none of those animated, either. The only animated images were Flash (.SWF) files.

So there was nothing that might cause their site to "go down." And the claim that they "don't work with animation" didn't fit the reality of their website, as there were lots of Flash animation banners on their website. Problem I have with Flash is that it does not display on mobile devices without Flash plugins and the iPhone and the iPad will never have that kind of a plugin. So why should anyone build an animation that won't play back on everything (as GIF will)?

Here's the real issue: My wife had purchased a position that "did not allow" animation. Of course we read through the contract and there was nothing in it that said that. When we talked to the Patch people, they told us that in October 2011 they had made a decision that only certain ad spaces would allow animation. Of course they did not notify us of that fact and the contract we signed said nothing about it.

So, you can see that the folks at Patch.com are not prepared to deal with anyone who actually knows anything about the Internet. They had changed my wife's advertisement to a JPG file, there was no "alt" tag with it and it was given a name that said nothing about her business. This is bad search engine optimization on their website.

We withdrew the ad after two weeks. We had received two clickthroughs in that time. During two weeks, we typically receive 40 to 50 clickthroughs from our Google advertisement at a cost of $40 to $60. Patch.com charged my wife $230.00, then refunded $80.00 because the ad only showed for two weeks, so for two clicks, my wife paid an astonishing $75.00 per click for a Patch ad that disappointed from the outset!

Had we gotten in on the $250 for three months deal, we might have felt a little better about Patch.com but they obviously have the wrong model here. Paying per impression does not work on the Internet. Google is proving that it doesn't work by being so significantly cheaper than anyone else and by only asking for money when your advertisement is actually clicked on.

So, if you are advertising on the Internet, look at your actual statistics and your actual results of the advertisement. If you're not closing anyone from that ad (and aren't getting any clickthroughs to your website), you need to stop wasting your money. I recommend Google's AdWords because you get real, provable results.

It's a shame about Patch, because AOL could have done this right. They could have picked a model that counted actual clicks on an ad and charged accordingly for real results, rather than some theoretical "impression-based model." But they didn't, and I predict AOL will suffer as a result. And the real shame here is that AOL used to be the primary on-ramp to the Internet for most people who had any kind of internet access. They hand-held senior citizens with technical support who could suddenly stay in touch with their grandchildren on a daily basis. And they were the biggest company with an on-line presence.

I don't hope that AOL becomes a footnote in the dustbin of Internet history. Instead, I hope they'll figure out the right way to do business on the Internet as it is today.

Addendum:

We used Patch for three months, June, July and August, 2012. placing advertisements in two towns that are close. We created landing pages for the website so that these ads would trigger a count. The landing pages are definitely primed to close a sale.

In June, we had one page load for each site. In July we had two. In August (and, at this writing we're in the middle of the month), we have had one page load for one of the towns. During the same amount of time, for similar money, we had over 50 page loads from Google's AdWords.

Clearly, Patch greatly overvalues their ads.