With 2 acquisitions, AOL looks to tap local ad market
Boston's Going Inc. Web firm bought
AOL, the troubled Internet company that is being spun off by parent company
Going Inc. of Boston, founded in 2006, offers information on local parties and entertainment events. The company runs websites targeting 30 US cities, including Boston, Chicago, Miami, and New York. Patch Media Corp., based in New York, publishes community news online, covering five towns in New Jersey. Patch was launched in 2007 and funded by an investment company owned by AOL chief executive Tim Armstrong. Financial details of the transactions were not released, but the Associated Press reported AOL paid less than $10 million each for the two privately held companies.
"By joining with AOL, we have the opportunity to greatly expand the reach of our platform to more cities both in the US and around the world," said Evan Schumacherm, Going's chief executive.
"They want the local advertising dollars," said Carl Howe, Internet analyst at Yankee Group in Boston. Howe said that small and midsize businesses throughout America spend vast sums on ads, mostly with local newspapers and radio and TV stations. Howe said newspapers alone took in $29 billion in local advertising in 2008, and acquiring Going and Patch will help AOL tap this market. "It lets them approach a different set of customers than the national advertisers," Howe said.
Last month, Time Warner said it intended to spin off AOL, nine years after the two companies merged in a deal valued at $166 billion. At the time, most users connected to the Internet over dial-up telephone lines, and AOL was the dominant US provider of dial-up Internet service. But over time, millions of customers abandoned AOL and switched to high-speed cable and DSL Internet service. In addition, the company's Internet advertising business has been unable to gain ground on rivals, including industry leader Google Inc.
Hiawatha Bray can be reached at bray@globe.com. 