AOL is also establishing a dedicated venture capital fund to support entrepreneurial initiatives in the local space.
"Local is the one area of the Internet that has not been built out in an extensive way," said AOL CEO Tim Armstrong. "While there are companies in the local space, AOL has the technology to digitize the local space at scale ... We believe it's an untapped market for the most part and one of the largest commercial opportunities online that has yet to be won."
In addition, AOL intends to increasingly incorporate local content on the AOL.com home page, using geo-targeting technology to tailor information across a range of interests to the user's location later this year.
Patch currently operates 40 community-focused sites serving towns in New Jersey, New York, Connecticut and California, where five more communities -- Brookfield, Danville, Hermosa Beach, Manhattan Beach and San Ramon -- have now joined the network.
The first Patch site in Massachusetts will go live at the end of March, with up to 15 more launching in the following three months.
AOL intends to relaunch and revitalize the City's Best service in 25 major metro markets in the third quarter of 2010, using the company's scaled content systems to create relevant content for the cities it covers, in addition to leveraging local resources to provide listings and information.
AOL plans to expand geo-targeted local content with the help of its proprietary Relegence technology, which monitors, indexes and filters thousands of news sources.
The newly independent AOL is being positioned less as a Web portal and more as a fragmented network of niche content sites. Its MediaGlow network presently encompasses over 80 content sites -- and is shooting for about 100.
To be more specific, AOL is increasingly focused on the creation of original -- rather than repurposed -- content. A year ago, AOL licensed as much as 80% of its content, while today, the company says it generates 80% of it.
To streamline this effort, AOL's recently launched Seed.com publishing platform employs an algorithmic system that trawls the Web for stories that readers are likely to prefer, and then parses out story assignments among a large freelance staff.
Driven by advertisers' desire to connect with audiences more directly, content creators of all stripes are investing in locally relevant fare.
Earlier this month, The Tribune Company said it invested in Perfect Market, a startup that helps publishers monetize their content throughout the so-called "long-tail." Leading the startup's third round of funding, worth some $6 million, represented a broader effort by Tribune to establish its online presence at ever more local levels. Last April, its Media Group launched ChicagoNow.com, a network of roughly 70 local blogs on a variety of Chicago-centric topics.
Also, at the beginning of the month, local online marketing company ReachLocal acquired reputation management manager SMB Live. Terms of the deal were not disclosed, but it came on the heels of ReachLocal's $100 million IPO. The company saw revenue more than double in 2008, while during the first nine months of 2009, revenue was up 38% to $143.3 million.
Web sites that report news and deliver other content at the neighborhood, or "hyper-local" level, are also attracting the attention of big media and tech companies. The clearest example came last December with Google's failed attempt to acquire Yelp for a reported $550 million. Successful deals last year included MSNBC.com's acquisition of EveryBlock.com for an undisclosed amount, along with AOL's purchases of Patch Media and Going.com.
Hyper-local startups are also attracting funding -- as in the case of Outside.in, which pulls together neighborhood blogs and other local content, and closed a $7 million Series B round of funding last month led by existing investor Union Square Ventures, with participation from new investor Turner Broadcasting System. As part of Turner's investment, CNN.com will use Outside.in's aggregation and curation tools to power hyperlocal news across all of its sites.