Looking Hard at Local
For his part, Doctor had been optimistic about another of Huffington's post-acquisition objectives: a major expansion of local sections. However, he feels that "they have been slower than I thought they would be at some things. There's all these predictions about the potential for local digital advertising. Yet Patch is still not coordinated with The Huffington Post's local efforts. If there were effective local ad exchanges, they could get the local money."
Swisher says, "What they are trying to do with local is laudable." However, she points out that "it is very hard to get traffic on that level." She also cites the fact that, despite The Huffington Post's affluent influential audience, "AOL is struggling in the premium advertising space," causing her to further question the company's ability to monetize local audiences, even if it can generate sufficient traffic.
Since the acquisition, The Huffington Post has added Miami; Washington, D.C.; Detroit; and San Francisco to its roster of localized sites, which already included Chicago, New York, Los Angeles, and Denver. The Local tab on the site's homepage also includes a link to Patch, which had previously been branded AOL Patch.
Patch is likely to be one of the thornier problems for HPMG. Launched as an initiative to produce hyperlocal content on a bare-bones budget, Armstrong once had ambitious plans for Patch to be a profitable set of 1,000 sites by the end of 2011. Neither his fiscal nor launch objectives are likely to be reachable. At the close of 2011, there were about 860 Patch sites, and advertising revenue was also falling short of expectations. According to Forbes.com, AOL put $40 million into Patch in 1Q 2011, with very little to show for it in terms of earnings.
Capital New York media reporter Joe Pompeo, who wrote an extensive piece outlining the editorial structure and direction of HPMG, says, "I don't think the idea was to make it Huffington Post Patch, but to leverage the resources Patch has and to cross-purpose some of the content."
Just after the acquisition, Huffington announced plans to provide stronger staff and editorial leadership for Patch sites as well as the incorporation of bloggers and commentary into the editorial mix-a formula that has served her well on The Huffington Post. According to the Forbes.com piece, Patch's editor-in-chief, Brian Farnham, wrote an internal memo stating, "The introduction of blogging on our sites is far more than just the release of a new feature. It is a full-on course correction heading Patch in the direction we want to go."
In February 2012, Armstrong appointed Rachel Fishman Feddersen as chief content officer of the Patch properties in an effort to appease shareholders. At the time, speculation was that Huffington wanted to distance herself from the Patch sites, while turning her attention to video and international editions of the HuffPo.
While local efforts have been a struggle for parent company AOL and continue to look like a challenging proposition under the HPMG banner, another of Huffington's objectives has picked up the pace in keeping with her post-acquisition plans. Huffington said she wanted to continue to add "additional sections that would fill in some of the gaps in what we are offering our readers, including cars, music, games, and underserved minority communities."
This year has seen the addition of more than 20 new sections including HuffPost Women, HuffPost Parents, HuffPost Celebrity, HuffPost Culture, HuffPost Latino Voices, HuffPost Black Voices, and HuffPost Gay Voices. Her success with these initiatives (for example, comScore rated The Huffington Post the most popular gay site when it launched in October 2011) has widely been linked to her hiring of well-known journalists. Michelangelo Signorile, who has a popular Sirius XM radio program, took the role as editor-at-large for HuffPost Gay Voices.
Pompeo points out that "they always bring in these notable big name contributors to lend clout ... and who get a lot of attention. When they announce these launches, you'll often see marquee names attached, even if they are not necessarily the ones running the sites day to day." In addition to pointing to Signorile, Pompeo cites examples such as Nora Ephron heading up HuffPost Divorce and Rita Wilson who is editor-at-large for HuffPost50.
Yet perhaps no marquee name at HuffPost is writ larger than Huffington's own. While the AOL brand is highly recognizable, as Swisher and others point out, what it signifies is far less so. According to research firm General Sentiment, The Huffington Post brand is worth more than twice as much as AOL's, with an Impact Media Value of $358.6 million in 2011, versus $156.3 million for AOL. According to Pompeo, "Certainly, Arianna's personal brand benefits AOL's brand to a certain extent."
Swisher says that "Everything rises and falls on Arianna at this point ... she'll always be an interesting media brand and there's no downside for her." Doctor, however, points out that this is not the case for AOL. He says, "It is hard to be both an authoritative top flight global media company and a cult of personality."
He finds it concerning that The Huffington Post brand has not been extended beyond Arianna. "This is dangerous," according to Doctor. "For Tim Armstrong, the acquisition was a big play. But when you bet on a person, you run a big risk. If you are any major news organization, you don't rebrand your paper the Keller Times [referencing The New York Times' op-ed columnist Bill Keller]. You must have an identity that is long standing and long serving outside of one person."
In terms of goals, Swisher says, "For Arianna, things are going well. She's gotten the money to do what she wanted to do." For AOL, she sees the investment in making The Huffington Post its brand of choice as a bold move that will allow AOL to step back into the role of parent company, rather than trying to reinvent its own brand.
Doctor agrees that, in terms of editorial goals, Arianna Huffington "is moving in the direction she wanted to, her brand is out there more widely." However, he says he doesn't get the sense that AOL is positioning itself or The Huffington Post for a big payoff. Doctor says, "There are about a dozen better positioned to do what Tim Armstrong wants to do." He cites The New York Times, The Wall Street Journal, Bloomberg, BBC, and NPR as among the companies "that are more experienced and have a much better business model and are more diversified, despite their own transition issues."
While The Huffington Post in its new home as part of the AOL family of products certainly has the resources to grow its sites, traffic, and global and local reach in ways it did not have before, the bottom line is about monetizing that growth. Total AOL revenue, including the portal's declining internet access business, fell 6% to $532 million in 3Q 2011, though it was the lowest percentage decline in 5 years. Overall advertising revenue, on which the company seems to have staked its future, grew to almost $318 million, an 8% increase over the same period last year.
However, Doctor says, "I don't think they are going to break through on advertising. In terms of advertising, AOL looks like a fifth player in a three horse race led by Google, Microsoft, and Facebook. And the only way this makes sense for success is turning the traffic into significantly more advertising."
The Huffington Post
[While The Huffington Post Media Group told EContent it would participate in the creation of this story, it ultimately failed to do so. --Ed.]