The layoffs at Patch have been met around the industry as the latest sign that hyperlocal can’t work because of the difficulties in scaling content and ad sales locally while attracting a reasonable quorum of local readers. Hale Global, the new owners at Patch, don’t believe it. And neither do the hundreds of people who make up an extended hyperlocal community, including a number of ex-Patchers who remain at least personally committed to making hyperlocal work.

Chris Jennewein has been pushing the envelope in hyperlocal since the early days of Videotex at The Atlanta Journal Constitution. Since then, we’ve followed him as he lead a series of major initiatives at Knight Ridder Digital, The San Diego Union Tribune, The San Diego News Network, The Las Vegas Sun and most recently, as Southern California’s editorial leader for Patch.

Today, Jennewein launched The Times of San Diego. Is he The Man of LaMancha, chasing the Impossible Dream? I asked him a few questions via email.

Q: People think hyperlocal will never work. What did you learn about what does work?

The challenge with hyperlocal is to match the market size with the economic opportunity. Bigger markets simply have more opportunity. We think the San Diego metropolitan area, with a population of 3.2 million, is a sufficiently large opportunity and yet still local. In fact, in today’s world regional is probably local because people commute long distances and their personal and professional networks stretch far beyond individual communities.

Q: What have you learned about San Diego as a media market in terms of hyperlocal? Pros and cons?

San Diego may be farther along in regionalization that some older markets in America. San Diegans think they live in the entire metro area, not just La Jolla or Chula Vista or Carlsbad. So a regional news source is more likely to succeed here.

Q: Is this a model you can take to other markets?

I think this is a model that would definitely work in other markets, especially in the West, but our focus is solely San Diego right now.

Q: Do you think you are directly competing with other media properties at this point? Which ones?

We’re not competing with other media but instead going after what we call “unaffiliated local news consumers.” These are people who get news from a wide variety of sources on an almost serendipitous basis. Our goal is to provide this audience with essential local news and information in an easy-to-consume manner.

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The layoffs at Patch have been met around the industry as the latest sign that hyperlocal can’t work because of the difficulties in scaling content and ad sales locally while attracting a reasonable quorum of local readers. Hale Global, the new owners at Patch, don’t believe it. And neither do the hundreds of people who make up an extended hyperlocal community, including a number of ex-Patchers who remain at least personally committed to making hyperlocal work.

Chris Jennewein has been pushing the envelope in hyperlocal since the early days of Videotex at The Atlanta Journal Constitution. Since then, we’ve followed him as he lead a series of major initiatives at Knight Ridder Digital, The San Diego Union Tribune, The San Diego News Network, The Las Vegas Sun and most recently, as Southern California’s editorial leader for Patch.

Today, Jennewein launched The Times of San Diego. Is he The Man of LaMancha, chasing the Impossible Dream? I asked him a few questions via email.

Q: People think hyperlocal will never work. What did you learn about what does work?

The challenge with hyperlocal is to match the market size with the economic opportunity. Bigger markets simply have more opportunity. We think the San Diego metropolitan area, with a population of 3.2 million, is a sufficiently large opportunity and yet still local. In fact, in today’s world regional is probably local because people commute long distances and their personal and professional networks stretch far beyond individual communities.

Q: What have you learned about San Diego as a media market in terms of hyperlocal? Pros and cons?

San Diego may be farther along in regionalization that some older markets in America. San Diegans think they live in the entire metro area, not just La Jolla or Chula Vista or Carlsbad. So a regional news source is more likely to succeed here.

Q: Is this a model you can take to other markets?

I think this is a model that would definitely work in other markets, especially in the West, but our focus is solely San Diego right now.

Q: Do you think you are directly competing with other media properties at this point? Which ones?

We’re not competing with other media but instead going after what we call “unaffiliated local news consumers.” These are people who get news from a wide variety of sources on an almost serendipitous basis. Our goal is to provide this audience with essential local news and information in an easy-to-consume manner.

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AOL’s Patch.com, which is now in 813 markets, is meeting internal goals and poised for success, according to President Warren Webster, who addressed San Diego Interactive Day yesterday.

Webster said Patch is now reaching 6.9 million unique visitors and has seen 194 percent growth in the past six months. The site will continue to rapidly add new communities, including some special local/vertical sites such as inner city Newark and military community sites for Camp Pendleton and Coronado, California. By the end of the year, Patch is expected to hit the 1,000-site milestone. “We’d like to have thousands more,” he said, noting that today’s typical Patch community has a population of 27,000 people.

Webster noted that one of the keys to the site’s potential success is a tight focus on potential users. The typical Patch “persona,” he said, is a 41-year-old wife and full-time mother who is a daily Web user; checks Facebook on her iPhone; and is engaged in activities involving kids, friends, school and her town.

Editorially, the site is focused on a Patch 360 initiative, hitting users in every way they need to be hit. Core to the strategy is the daily email newsletter, which integrates content from a variety of sources — especially seasonal content, which gets 67 percent higher usage. New initiatives include the Patch eSaver on Tuesdays, which show all the deals that are available in town. “Patch is all about giving people 10 things they want every day,” said Webster.

Mobile is also playing a major role in the site’s strategy, added Webster, especially for weekend use. iPhone users generate 7 percent more traffic on the weekend than the average weekday. “We could be an entirely mobile company and be just as successful,” Webster mused. “But we would never do that.”

All this is a big bet on on being an attractive local ad medium, added Webster, who said Patch already has several hundred salespeople. “We are focused on being a concierge to the Web” for local businesses. The challenge is “to find the right feature set on our site that is very, very simple, trackable and drives traffic.” Businesses need a single source like Patch to “do it for them.”

While the site runs banner advertising because businesses are used to it, “we want to put products up on Patch the drives people to retail business. Banner and click based advertising doesn’t work for local,” he said. The focus, he reasserted, is on providing solutions that are “less fragmented, platform agnostic and hugely simplified.”

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AOL will buy The Huffington Post for $300 million in cash and $15 million in stock, and put Arianna Huffington in charge of the AOL Local sites (MapQuest, Patch, MovieFone) as well as its growing collection of opinionated tech and vertical news properties, such as TechCrunch, Engadget and Popeater. AOL’s vertical sites, such as TMZ.com, run by David Eun — the former “MediaGlow” properties — will continue to be run separately.

The acquisition of The Huffington Post might be seen as the crown jewel of an AOL strategy that has rounded up some of the most provocative sites that bring consumers back to check multiple times a day. The Huffington Post will add its tabloid-like, huge headlines on its front page to AOL’s already successful funneling.

The service relies on the contribution of hundreds of inexpensive-but-often famous contributors who are happy for the exposure. It also relies on aggregated content. As such, HuffPo represents a different view of the industry’s future than Yahoo’s $100 million acquisition of Associated Content, which commissions content based on demand analyzed by search algorithm — although a content farm would fit too. AOL CEO Tim Armstrong was an original investor in Associated Content.

The Huffington Post gets a lot of mileage from its links to pictures of semi-naked women, and its provocative headlines, including, it seems, anything to do with Sarah Palin. It has a tabloid-like appeal and represents a liberal alternative to Fox News on the right. It receives more than 25 million unique visitors a month.

Strategically, however, The Huffington Post is more about its successful verticalization of 25 vertical headings ranging from politics, media and entertainment (the early ones) to newer ones such as green, books, divorce, comedy and college.

The vertical strategy, indeed, was first explored as The Huffington Post began to branch out in local, with city editions developed for Chicago, New York, Los Angeles and Denver. The irony is that local, after a big splash, has been backburnered by HuffPo as it saw a bigger bang for the buck by pushing more efficiently into the other verticals.

Will local become more of a priority under Huffington? It might, in a sideways manner. Editorially, Huffington noted on her site that Patch’s broad scale now provides “an incredible infrastructure for citizen journalism in time for the 2012 election, and a focus on community and local solutions that have been an integral part of HuffPost’s DNA.”

Business-wise, one of the reasons Patch has spent so heavily to launch so many editions so quickly is to scale nationally. That would allow it to heavily market the Patch brand — and attract national advertisers for geotargeting. With a broader collection of vertical content, the branding effort might now be more efficient. But the brand may not be Patch (or MapQuest, or MovieFone) so much as The Huffington Post.

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The high amount, and assumption of geographic concentration, would put the company in contention to compete against other ambitious hyperlocal efforts, such as AOL’s Patch.com, which is set to spend up to $50 million in 2010.

A twist to Main Street Connect’s model is its focus on annual visibility programs that raise awareness for local businesses in several ways, including banners, social media, etc. Part of its strategy is to sell local partnerships, or franchises. Its website notes that “Main Street Connect provides local partners all the tools, working capital, and guidance they require to build profitable high-quality community news sites.”

We previously reported that Main Street Connect has a core base of 25 full time — albeit virtual — staffers, including 11 editorial, six sales, four engineers and four administrators.

In other hyperlocal news, The U.S. Local News Network, which raised $3.18 million, is operating with reduced staff, and in need of new investment. USLNN had previously shut most of the operations of its its Orange County Local News edition, which had been partnered with The Los Angeles Times.

Given all this, the question in all this is whether conditions are now ripe for hyperlocal to work, or whether its scale and audience will always be too fragmented.

Besides Main Street Connect, Patch and USLNN, other competitors include Yahoo, which is hiring local news editors in a number of markets and just acquired Associated Content, an SEO-based content creator; other content creators, such as Demand Media and Examiner.com; local news aggregators such as Topix and Fwix; event aggregators and city guides such as Center’d, American Towns, Eventful and Zvents; and CMS-based systems such as Matchbin.

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Jon Brod, EVP, AOL Ventures

Patch.com, AOL‘s hyperlocal network, will grow from its tally of 30 sites today to “hundreds” by the end of 2010, per an internal memo read by Business Insider (and that we saw on www.netnewscheck.com). The memo sites AOL’s goals to be “the global and local leader in sourcing, creating, producing and delivering high quality content,” and calls local “one of the most promising ‘white spaces’ on the Internet.”

AOL had previously said it would be investing $50 million into its local efforts during 2010. In November 2009, Patch.com President Warren Webster told us that Patch was just starting to sell advertising in the towns that it initially launched in. “We have a multi-prong revenue model, with fixed placement banners, classified ads and other products,” he said.

AOL Ventures EVP Jon Brod, the primary architect of AOL’s local strategy, is our opening keynoter at Marketplaces 2010 in San Diego March 22-24.

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