Leaked Revenue Figures Illustrate Need For Hundreds Of Patch Layoffs

Yesterday I ran estimates on Patch’s revenue, yielding the point that, given the scope of the proposed cuts to its staff, the hyper-local news service does in fact have a shot at reaching profitability this year.

A reader helpfully pointed out a leaked document from Patch, via the excellent Jim Romenesko, detailing its year-to-date advertising incomes. It’s time for a round of “how good were our estimates?” Let’s play.

Here’s the key information from Romenesko:

The above numbers are accurate as of August 5th, according to Romensko. So, there were 31 weeks prior to the above information. That matters, because it gives us foundation to extrapolate to full-year revenue figures.

Let’s get a handle on what Patch wants to earn in ad bookings in 2013. We begin by summing its year-to-date goals: $12.55 million + $4.86 million + $5.40 million = $22.81 million. On a weekly basis, using our 31-week figure, that’s $735,800 in ad bookings. On a 52 week, full-year basis, that works out to anticipated ad bookings of $38.62 million. Given how close that figure is to $40 million, we can essentially presume that AOL hoped that Patch would bring in $40 million in 2013.

Now, how is it doing thus far? Not so well, it turns out. Gary Graefen, from the screen shot above, has only sold bookings equivalent to 45 percent of his goal.

Let’s repeat the mathematical formula from before, but with actual bookings, and not anticipated sales: $7.96 million + $3.59 million + $2.44 million = $13.99 million. Again, we divide by 31 to get a weekly figure: $451,300. We can now estimate Patch’s actual 2013 revenue by taking its real weekly sales figure and multiplying it by the weeks in a year: $23.47 million.

So we have the figure. Now, what did we predict before?

A number in between is perhaps more interesting. Assuming $75,000 in ad revenue per diem, Patch would, discounting for weekends and not, generate yearly top line between $19.5 million and $27.4 million.

The real figure falls directly inside the range predicted using the fairest estimates. If you want to dig through how that figure stacks up to the expected cost of running Patch, head here. We don’t need to write that post twice.

What matters is that Patch’s revenue for 2013 will fall far short of what AOL had hoped the service would earn in 2012. This explains, and places into context, the hundreds of layoffs that Patch is currently enacting: It wasn’t making enough money to stay alive otherwise.