The article originally published in Street Fight

To meet the promise he made to shareholders, AOL’s chief executive Tim Armstrong is in the process of cutting staff and other costs at Patch in the hopes that his network of hyperlocal sites will be profitable by the end of 2013. His moves may get Patch into the black, but the company must also make substantial strategic changes if it hopes to build a sustainable business.

But just making short-term cuts to hit profitability might not be the optimum choice. Patch also has to plant seedlings for mid- and long-term benefits that the company can reap 6-12 months from now. Here are six approaches that Patch can take to patch itself up:

1.     Abandon the “Donut” Strategy: Patch currently focuses on the neighborhoods and areas that surround larger cities, dramatically affecting its ability to monetize. As urbanization continues to take hold, cities continue to grow as places where people live, work, play and spend money. If Patch would focus on cities in addition to suburbs, it would open up healthy new revenue pipelines.

2.     Diversify Content to Increase Use Cases and Become a Part of Daily Habits: As with all media brands, Patch needs to become a part of its readers’ lives beyond local news content. Once it becomes a source of information for all aspects of the neighborhood (traffic, weather, et cetera) by leveraging the available data streams that exist, it will truly become the neighborhood guide that it aims to be. Patch needs to use people for content curation in addition to content creation. Little pieces of information — like a 40-cent drop in prices at a nearby gas station — are news to locals, because it affects their daily lives. Snackable, real-time data points like these are changing the definition of hyperlocal news, and do not require a human to actually report on it. Patch should (and can) own this new hyperlocal environment.

3.     Focus on Personalizing Mobile Experiences: eMarketer recently reported that U.S. adults will soon spend more time consuming media on their digital devices than their TVs. As more consumers are considered “always addressable,” Patch needs to make mobile the core to its content distribution and relationship management strategy. If it takes advantage of mobile’s unique sensors (location, accelerometer, gyroscope) to push relevant, situationally-aware content and advertiser messages (i.e., Lucy’s boutique two blocks away is currently having a sale), the company could provide an engaging experience that is relevant, exciting, and real time. Through mobile, Patch can also provide real-time social experiences that become part of dinner table conversations.

4.     Play Matchmaker with Content and Advertising:  Patch is currently only personalizing content and advertising by location, which is not very personal. All media brands need to deliver the right content and ad at the right time and within the right context to the right person. To do this, Patch needs to build user profiles and interest graphs based on a reader’s personal history with content, online and on mobile, while also combining semantic, sentiment and virality scores to ensure relevance. The news organization also needs to leverage predictive analytics to anticipate how certain content will resonate with specific reader segments as well as the time/day/frequency that would be the most effective. By tapping into profiles and interest graphs, and applying predictive analytics, Patch would be able to personalize the news reading experience by anticipating which articles and advertiser messages each reader would want in their news feed or push alert.

5.     Monetize Locally By Becoming a True Partner: Patch needs to build new tools to generate loyalty, not just acquisition via advertising, for its small business partners. By moving from being simply (yet another) advertising channel to a catalyst for merchants to engage with their customers in unique ways, it will become an essential partner and open up new opportunities to monetize. Patch should take a page from Facebook and Twitter, test native advertising and make advertiser messages and content a part of people’s news and information feeds in an organic way. Or, readers could opt in to follow a merchant on the Web or through mobile to access special offers or content.

6.     Own Social Classifieds: For so long, local media owned advertising from local businesses and individuals. If Patch enhances its mobile offering, it would be poised to become the frontrunner in social classifieds as no other classifieds services have an engaging mobile offering. Own classifieds and open revenue channels.