(REUTERS) - AOL Inc, which has been investing heavily in content to make up for declining revenue from dial-up Internet access, has hired an executive for the newly created position of chief content officer at its struggling Patch hyperlocal news network.

The company will announce on Wednesday that Rachel Fishman Feddersen will be joining Patch in the new role reporting to Jon Brod, head of AOL Local, effective February 14.

Feddersen's appointment comes at a crucial time in Patch's evolution. While the network of 863 local news sites gained some traction in terms of user and advertising growth to end 2011, critics say that Patch will never return the roughly $145 million AOL has invested in it so far.

Patch is underperforming, said Ken Doctor, media analyst at research and consultancy firm Outsell and author of the book Newsonomics.

It is halfway from where it needs to be in terms of revenue and user experience, he added.

Investor pressure on AOL CEO Tim Armstrong to show both financial and editorial improvement at Patch has been intense in part because of his personal involvement with the site, which Armstrong founded with Brod in 2007.

AOL purchased Patch in 2009 after hiring Armstrong, raising speculation that personal rather than business interests motivated the deal.

Patch is not a pet project, Armstrong defiantly declared on AOL's fourth-quarter earnings call last week.

But with RBC Capital Markets analyst Ross Sandler estimating Patch losses at roughly $150 million, investors are losing patience with AOL's so far unprofitable experiment in hyperlocal news. In comparison, AOL reported a profit of $13.1 million in 2011, reversing the massive $782.5 million loss it recorded in 2010.

AOL shares traded flat Tuesday, ending the session down less than a cent at $17.80. Its shares are up 17.9 percent year-to-date.

Feddersen comes to Patch from Sweden's Bonnier Group, where she led digital content and strategy for the publisher's popular Parenting Group, spearheading development of online extensions for magazines such as Parenting and Babytalk.

Armstrong started wooing Feddersen to Patch after inviting her to speak on a panel during Advertising Week in the fall and being impressed by her thoughts on reaching mothers through digital media.

He didn't have to do much selling, Feddersen, a 41-year-old married mother of two, told Reuters. I am a regular Patch reader who lives in a Patch town. I came to this as a believer.

While Feddersen's role is still being defined, she said she sees her job as crafting a cohesive strategy that takes the elements of what works best locally and weaving those principals into coverage across Patch's network of sites. Essentially, she's looking for a bottom up - not top down - content strategy.

Our editors have so much local knowledge, said Feddersen, who has a deep history in local digital media as one of the six original editors of Metrobeat, which morphed into CitySearch. Patch is the best realization of the hyperlocal concept I've seen.

Not everyone agrees, however. Doctor, for one, said Patch is not a go to source for local news and called most of its content generic.

Patch did end 2011 with some positive trendlines. Some, but not all, of the network's 863 sites did reach profitability last year. The network averaged 10 million unique monthly users in December, according to tracking firm comScore, ranking it as the fourth most-visited regional/local property.

Armstrong said Patch ended the fourth quarter with 6,500 advertisers and that 401 of its sites generated more than $2,000 in revenue per month. In total, Patch collected about $20 million in revenue last year. Underscoring the network's budding momentum, Patch so far this year has already produced 50 percent of the revenue it did for all of 2011, he said.

We're seeing meaningful changes and improvements in Patch monetization, Armstrong said. We expect to make a lot of progress on revenue in 2012.

(Reporting By Peter Lauria; Editing by Bob Burgdorfer)

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