UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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(Amendment No. )
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On June 12, 2012, AOL Inc. made available the following investor presentation materials.
Patch June 12, 2012
Forward-Looking Statements
This presentation may contain forward-looking statements within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. Words such as anticipates, estimates, expects, projects, forecasts, intends, plans, will, believes and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management s current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. Except as required by law, we are under no obligation to, and expressly disclaim any obligation to, update or alter any forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. Various factors could adversely affect our operations, business or financial results in the future and cause our actual results to differ materially from those contained in the forward-looking statements, including those factors discussed in detail in the Risk Factors section contained in our Annual Report on Form 10-K for the year ended December 31, 2011 (the Annual Report ), filed with the Securities and Exchange Commission. In addition, we operate a web services company in a highly competitive, rapidly changing and consumer- and technology-driven industry. This industry is affected by government regulation, economic, strategic, political and social conditions, consumer response to new and existing products and services, technological developments and, particularly in view of new technologies, the continued ability to protect intellectual property rights. Our actual results could differ materially from management s expectations because of changes in such factors. Achieving our business and financial objectives, including growth in operations and maintenance of a strong balance sheet and liquidity position, could be adversely affected by the factors discussed or referenced under the Risk Factors section contained in the Annual Report as well as, among other things: 1) changes in our plans, strategies and intentions; 2) continual decline in market valuations associated with our cash flows and revenues; 3) the impact of significant acquisitions, dispositions and other similar transactions; 4) our ability to attract and retain key employees; 5) any negative unintended consequences of cost reductions, restructuring actions or similar efforts, including with respect to any associated savings, charges or other amounts; 6) market adoption of new products and services; 7) the failure to meet earnings expectations; 8) asset impairments; 9) decreased liquidity in the capital markets; 10) our ability to access the capital markets for debt securities or bank financings; and 11) the impact of cyber-warfare or terrorist acts and hostilities.
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In connection with the solicitation of proxies, AOL has filed with the Securities and Exchange Commission, a definitive proxy statement and other relevant documents concerning the proposals to be presented at AOL s 2012 Annual Meeting of Stockholders. The proxy statement contains important information about AOL and the 2012 Annual Meeting. In connection with the 2012 Annual Meeting, AOL has mailed the definitive proxy statement to stockholders. In addition, AOL files annual, quarterly and special reports, proxy statements and other information with the SEC. You are urged to read the proxy statement and other information because they contain important information about AOL and the proposals to be presented at the 2012 Annual Meeting. These documents are available free of charge at the SEC s website (www.sec.gov) or from AOL at our investor relations website (http://ir.aol.com). The contents of the websites referenced herein are not deemed to be incorporated by reference into the proxy statement.
AOL and its directors, executive officers and certain employees may be deemed to be participants in the solicitation of proxies from AOL s stockholders in connection with the election of directors and other matters to be proposed at the 2012 Annual Meeting. Information regarding the interests, if any, of these directors, executive officers and specified employees is included in the definitive proxy statement and other materials filed by AOL with the SEC.
We believe Patch has a differentiated and powerful strategy with a chance at significant monetization
Large Market
Local online advertising is big (~$24B)1
Local U.S. Retail and Food market is even bigger (~$3T in 2014)2
Fragmented & Weakening Media
Market for local information is fragmented with no platform Newspapers going weekly; radio going satellite
A Market Leader
Patch is in 850 high GDP towns Scaled hyper-local platform
Disruptive Economics
Patch s in-town costs are approximately 3.0% of a like-sized daily newspaper3 Patch can achieve in-town profitability4 with <1% of a town s advertising market
Source: (1) BIA/Kelsey Annual U.S. Local Media Forecast, 2010-2016, (March 2012); (2) McKinsey Study, Forrester Research; (3) Patch Internal Data; (4) In-town profitability defined as town revenues less direct costs of operating the town. This measure does not include allocations of costs that are shared with other parts of AOL’s business
3
Ad spending by channel and source
Ad Spending Source 2011 (millions)1
Telemarketing
Online
Direct Mail
Cinema
Out of Home
Radio
Cable TV
Local TV Stations
Network TV
Directories
Other Print
Newspapers
National Local
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000
2012 Local Advertising Spend by Channels (billions)2
Local
$11.1
National / Regional $13.3
Source: (1) Borrell Associates 2011 US Total Ad Spending; (2) Borrell Associates 2011 US Total Ad Spending
4
Patch s In-Town Business Model
Huntington, NY Patch
Omniture Monthly UVs ( 000)
50 45 40 35 30 25 20 15 10 5 —(5) (10) (15)
$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $- $(5) $(10) $(15)
Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12
$ per month ( 000)
Omniture UV, Excluding staff Revenue In-Town Profit
Key Drivers of Patch s Model Score
Claimed Listings > 100 5
Tenure of Sales Personnel > 1 year 4
Business Listings > 1000 4
Newsletter Subscribers > 2000 3
Huntington April Revenue
24%
1%
75%
Local Regional National
Huntington April Revenue by Product
5%
5%
3% 86%
Display Ads Newsletter Paid Listing
Huntington Local / Regional April Advertisers by Category
3%
3% 9% 3%
31% 3%
4% 5% 5%
15% 7% 12%
Services Shopping
Arts & Entertainment Schools
Food & Dining Government Auto & Boating Travel & Transport
Health
Sports & Fitness Community Other
Note: Importance level scales are 1 5, 1 being the least statistically important and 5 being the most statistically important.
In-Town Profit defined as town revenues less direct costs of operating the town. This measure does not include allocations of costs that are shared with other parts of AOL’s business. Claimed listings refers to Patch directory listings that have been registered by the business owner or manager.
5
We believe 95% of Patch towns approximate the ideal town profile
Top 15% at or approaching in-town profitability
Middle 80% revenue trending well
Bottom 5% need to employ alternative business models
15% 80% 5%
Key Drivers of Patch s Model
Bottom 5% Middle 80% Top 15%
(Patch Score)
Business Listings 827 1,078 1,301
Average Claimed Listings 32 60 115
Newsletter Subscribers 657 1,380 2,578
Sales Rep Tenure (Months) 4 8 14
Source: Patch Internal Data. The result above is based on a multi-variate regression model, which tested town demographics (Population, HHI), in town business listings, AM tenure, content production and Patch traffic & engagement stats (UVs, Penetration, Visits/UV, Registered Users and Newsletter Subscribers). The model showed 0.62 R-squares, which is statistically significant. And top 15% towns have shown high correlations to those factors listed above, separating them from rest of the Patches. In-town profitability defined as town revenues less direct costs of operating the town. This measure does not include allocations of costs that are shared with other parts of AOL’s business.
6
Patch is currently running segmented models
Traditional Dual-Site Co-Op
Grouped towns with shared Satellite Patches to anchor
Standalone communities
Editor tenant
Average Population ~35K ~25K per ~20K
Household Income ~$100K ~$100K ~$100K
Number of Businesses Large Average Average
Directory Requirements Full Varies Varies
~No dedicated Local Editor
~1 dedicated Local Editor ~1 Local Editor
Unit Staffing Model contributions from regional edit
manages 1 site manages 2-3 sites
pool
Investment Score 4.5+ 4.0 4.5 3.0 4.0
3 High revenue 3 Medium-high revenue 3 Low revenue
Business Rationale 3 High investment 3 Lower cost structure 3 Minimal cost
3 Medium margins 3 High margins 3 Highest margins
Note: Investment score determined based on weighting of town selection criteria including population, HHI, listings, retail spend and proximity to other Patches. Importance level scales are 1 5, 1 being the least statistically important and 5 being the most statistically important.
7
We believe Patch has a valuable and organic audience
33% of Patch s Audience comes Direct1
12%
7%
33% 19% 28%
Direct Google AOL Facebook Other
70% Average town penetration2
2x Median national household income
10% of US Population3, 29% of US Retail & Food Sales
1,500 Local events in past 15 months
20,000 Bloggers
54% Female4
Male, Female, 46% 54%
2X Median National Household Income5
Patch
~$100K
National Median
$49K
Key Audience Segments6
Moms on the Go
Description: 35 to 49 year old women with children in the household, high income
Local Business Owners
Description: Owns local business, married
Empty Nesters
Description: 45+ years old, no children in the home, long time residents
Source: (1) Patch Internal Data; (2) Calculation based on (a) publicly available 2010 US Census data and other publicly available demographic data sources such as City-data.com and local and municipal government websites, in each case as analyzed and adjusted by the Company to approximate geographic areas served by individual Patches, and (b) internal Patch data; (3) Calculation based on Patch populations/total US population. US population based on 2010 US Census data, and adjusted by the Company to account for town level specifics; (4) comScore May 2012; (5) Patch Internal Data (6) Patch Internal Data
Patch s organic audience is growing size & engagement
UVs
Monthly Unique Visitors (thousands)
12,000 10,000 8,000 6,000 4,000 2,000 0
Launch
Patch grew UV s 14% M/M
Scale Grow
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May
2010 2011 2012
Source: comScore May 2012
Visits / UV
3.25
3.15
3.05
2.95
2.85
2.75
2.65
2.55
2.45
2.35
2.25
Patch grew Visits / UV
12% M/M
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
9
We believe continuing to shift our contributor mix increases production and operating leverage
Content Mix Shift
Thousands
250 200 150 100 50 0
Content Count / FTE
Dec ‘11 May ‘12
225 359
Staff produced Community produced Freelance produced
Implications
Shifts towards community produced content
Increases audience engagement and traffic
Improves edit cost structure & operational efficiencies
Note: Content production included announcement, articles, blog posts, events, Q&A, reviews, shouts, videos.
10
Patch s Content & Revenue Channels: Growth in New Channels
New Offer / Channel Description
Videos Enhanced Video Products
Peer to Peer Neighbor to neighbor commerce
FSI (E-circular)1 Digitizing $10B circular market for both National and Regional retailers
Patch Payments Payments product in conjunction with major credit card companies
Regional Sales Focused effort selling to regional ad agencies and advertisers
Patch Revenue Mix 2011
National 24%
Local 76%
Patch YTD Revenue Mix 2012
National 24%
Regional 8%
Local 68%
Patch Estimated Revenue Mix 2013
Commerce 10%
National 18%
Regional 18%
Local 54%
Note: (1) BIA/Kelsey, Local Merchants and Online/Mobile Revolution , 2011
11
National Advertising: Local Budgets / Great Results
12
Patch
June 12, 2012
Patch has reached a major tipping point both locally and nationally
Local Impact
Improving our neighbors’ lives as the community engagement platform
Nearly $15,000 Raised For Homeless Montclair Pre-K Teacher
Checks are still coming in for LaMonica Carter and her family, who lost their home in a fire on Mother’s Day.
Poll: Who is the Unofficial Mayor of West Roxbury?
Who is the unofficial mayor
of West Roxbury?
Chuckie Bruen 231(3%)
Tom “TD” Dougherty 528(8%)
Richie Gormley 2112(33%)
Mary Mulvey Jacobson 2032(32%)
Mike O’Brien 304(4%)
Tony Saroufim 805 (12%)
6,254 117 28,663
Votes Comments Total Population
1,000 $10,000
Event Attendees For Charity
Horse Evacuation a ‘Horrifying’ Scene
Private and public barns are opening their stalls to
displaced in Ridge brush fire.
Joan
7:14 pm on Monday, April 9, 2012
3 stalls available on Shelter Island 917 679 2262.
Well reported story
Nicolas
7:54 pm on Monday, April 9, 2012
5 stalls available, backyard barn, in center moriches,
call 917-805-3129
Nik
8:26 pm on Monday, April 9, 2012
Wow, great job on this—hats off to the patch and
everyone up on this
Jack Connors
9:59 pm on Monday, April 9, 2012
Great job to the patch from folk afar that want info and
News12 & news day want you to subscribe.
Heather Caputo
10:09 pm on Monday, April 9, 2012
Stony Hill Stables in Amagansett has some stalls
available for horses displaced by the fire. Call
646-704-2884 if you need help.
Gonzalez Family Shares Moment On Patch
Daniel Gonzalez was honored at City Council. His dad watched from Afghanistan.
From Sgt. Gonzalez:
Daniel, I am so proud of you! You never cease to amaze me. Keep up the good work and I count the days that I can hold you and tell you in person how proud I am.
I love you buddy.
Dad
From Sgt. Gonzalez:
I had to email you to tell you how much I appreciate your work in covering Daniel’s award presentation.
You brought a very important part of my life out to me here in Afghanistan, which I would have missed if it wasn’t for your dedication. I really miss my kids but its even harder when I miss events as such. Know that my family and I are very grateful. I am so proud of my Son! Thanks.
From Cindy Flores:
Grandpa Edward and all of us here in San Antonio,
Texas are so proud!
Local Voices
New Canaan Neighbor Needs an Air Conditioner
Thank you to all who called, emailed or posted here on Patch.
The New Canaan Community Foundation stepped up yet again, to help a neighbor in need. They are delivering the unit tomorrow, so the family can enjoy a nice cool weekend. On behalf of our residents, thank you again
NCCF and the Touch a Life fund for all that you do to support the residents of this community
Pine-Richland
Gu e ri n o Family’s Miracle: Wheelchair-Accessible Van Made Possible by Anonymous Donor
Editor Bryan McGonigle bryn.mogonigle@patch.com
NorthAndoverPatch 48
Home News Events Directory Commute Pics & Clips
Schools
Superintendent Statement on Death of NAHS Student
The following was submitted by Superintendent Chris Hotel.
October 26, 2011
I am writing to let all members of our North Andover school community know of a tragic event that occurred in our town. A 16-year-old junior at North Andover High School took his own life in the early hours of Tuesday, Oct. 25. This news has deeply saddened everyone in our schools, and particularly at the high school.
In response to this tragic event, the high school Principal convened the school Crisis Team early Tuesday morning. This group includes about 15 administrators and staff, including the Principal, who led the meeting, the two assistant principals, the School Resource Officer, the nurse, the school psychologist and special education department head, school adjustment counselor, and guidance counselors. A plan was developed consisting of personal contact with the student’s circle of friends and with teachers who are now teaching, or have taught, the student. The remaining faculty was notified at a full staff meeting yesterday.
Upload Photos and Videos
Local Voices
Sylvia paull
High Tech Communications Strategist, Event Organizer
Blog: Let’s Celebrate Patch on Jan. 9
“In praise of Our Patch”
A pleasant Patch of ground, but one mile square
Forever in fog that pours from the Golden Gate
Where eighteen thousand know our town so fair
Is NOT the smallest Albany in the United States
From the Bulb in the Bay to the bump of Albany Hill
From creek to creek within the city limits
Albanians were lost on their little mile, until
Along came Albany Patch, with everything in it.
Our news, our bulletin board in cyberspace
WIth editor extraordinaire Emilie at the helm
She planted the seeds of community within this place
And grew our hamlet into a neighborly realm.
No matter how grand, no metaphor, no simile
Can do justice to the incomparable, our Emilie!
Poem by Toby Bielawski,
poet laureate of Albany, CA
Insurance Companies Save Wyandotte’s Summer Playground Program
“I saw on the Wyandotte Patch that it was going to be eliminated back in the fall,” he said. “I’m a lifelong Wyandotte resident and participated in Green Box as a kid. .... I just thought it was an opportunity for us as an agency to give back.”
After making some calls, Ochmanek got other insurance companies on board and together, raised the $10,000 to keep the program going.
“It’s nice to know kids have a safe place to go,” he said. “It gives them a reason to get out of the house. It’s nice that we can continue to keep it going.”
Larchmont-MamaroneckPatch
National Exposure
Building brand recognition nationally
Patch Readers – The President Will Now Take Your Questions
Last night the President addressed the nation, but today he’ll take questions from a few Patch readers.
Norristown Patch is becoming quite the A-list cyber-destination. Two weeks ago we had Angelina Jolie here in a live Q&A taking questions from fans, and now President Barack Obama wants to get in on the action.
The White House has asked Patch to extend an invitation to our readers to submit questions to the President and his administration. The White
House will pick the five best questions from across the country and provide video responses (though it’s still a bit unclear if the answers will come from the President himself.) In any case, this is an unprecedented opportunity for Norristown residents to have their voices heard in the highest corridors of power. I suggest we take it.
Obama Dines at Liberty Tavern in Clarendon
111
117
AOL
121
Heidi Klum
Model, TV Host, Actress, Designer
Mark Teixeira
First Baseman, New York Yankees
Christie Lands Write 72 hours In Check Bergen To later… State County In State
Police F r Helicopter Helicopter Ride For Son’s Baseball Game
374 4,300 147
C o mme n ts R e co mme n d s Tw e e ts
Christie Brinkley
I LOVED it too!!! I must have said “Great shot” 100 times and the two leads are radiant and the silence “allows their expressions to charm your pants off! (is THAT an expression?) “The Artist” is art!
Review “The Artist,” a Loving Tribute to a bygone Era of Hollywood
s outhha m pton.pa tc h.c om
Christie Brinkley
Model and Actress
Jerry Ferrara, “Turtle”
Actor
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New Hampshire gearing up for primary
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Early Start Added on January 6, 2012
Dan Tuohy, editor for Patch.com, weighs in on the upcoming New Hampshire primaries.
DAN TUOHY
Associate Regional Editor, Patch.com New Hampshire
Colombia to hand over deported American teen
2:51 AMPT
@ Edward_Burns
Edward Burns
@FiveTownsPatch It’s been a few years but I will try to go back next year
See you at the Long Island Film Expo@BellmorePatch
Ed Burns
Actor, Producer, Writer, Director
@Alec_Baldwin
Alec Baldwin
All of the proceeds of my Cap 1 ads are given to support the arts and culture.
easthampton.patch.com/articles/alec…
Alec Baldwin
Film, Stage, Television Actor
The Summer Reading List!
Patch
James Patterson’s
READKIDDOREAD.com
Dedicated to making kids readers for life.
Chad Ochocinco
How long will the power be out Mrs. Jansson
28 August at 21:59
Chad Ochocinco
New England Patriots Wide Receiver
Wayne Gretzky
“The Great One”
Milford Patch @MilfordCTPatch
@Dratzenberger John! What’s your favorite burger in Milford, CT? milford.patch.com/articles/who-m…
Details
14 May
John Ratzenberger
@Dratzenberger
Follow
@MilfordCTPatch Well, I’m not sure if I have tasted all of them. My suggestion; a burger contest. I’ll be a judge!
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ONPIX
THE WALL STREET JOURNAL
ELECTION 2012
WSJ BLOGS
Washington Wire
Political insight and Analysis From The Wall Street Journal’s Capital
December 30, 2011
Romney Son Apologizes for “Dumb Joke’
Mitt Romney’s son cracked a joke about Barack Obama’s birth certificate at a New Hampshire event Friday, following it up with an apology on Twitter.
Asked whether the Republican presidential candidate would release his tax return Mitt Romney said, “I heard someone suggest the other day that as soon as President Obama releases his grades and birth certificate and sort of a along maybe he’d do it to, “according to a video on
Patch.com saying that, “jumped in another son, Tagg Romney. Matt Romney followed up his remarks with an apology via Twitter. “I repeated a dumb joke. My had “ he tweeted
The candidate is travelling to evening and Saturday morning 10-stop swing the st
ConcordPatch
Rormney Son Asked About Tax Returns, Makes Birther Joke [VIDEO]
UPDATED: Son comments on Twitter about Obama birth certificate statement at Concord’s Havenwood-Heritage Heights.
NETS
