Hyperlocal advertising?

In class we mentioned how most revenue from Google came from smalll businesses and that they tended to advertise locally. It was intersting to see a company - Patch.com - who exclusively sells hyperlocal ads through providing hyperlocal news for a specific community. This company started by AOL seems to be getting negative press despite the fact that the business model makes sense. Google has shown that there is a need for hyperlocal ads but can someone else, like AOL, provide a better service? Interested in learning more, read the article at: http://www.businessweek.com/articles/2012-05-31/aols-patch-big-losses-on-hyperlocal-news