The publishing giant is looking for new revenue sources with hyperlocal ad targeting tech.
Gannett, the publishing house which owns over 100 local news outfits and USA Today, has recently closed a deal to purchase ReachLocal, location-based marketing, and advertising tech firm, for $156 million. The massive, but struggling, the publisher expects the deal will increase its digital revenue by around 50 percent.
“The acquisition of ReachLocal accelerates Gannett’s digital growth strategy, adding more than $320 million of annual digital revenue, the best digital marketing solutions technology in the market, and an outstanding and well-respected management team to Gannett’s digital business,” Gannett President and CEO Robert Dickey said. “ReachLocal’s focus on local small and medium-sized businesses aligns well with Gannett’s local-to- national strategy and extends our reach into new local markets.”
ReachLocal brings its 16,000 customers, predominantly small- and medium-sized businesses, to Gannett, where they will be able to use ReachLocal’s digital marketing offerings in Gannett’s 107 U.S. local markets. The move brings Gannett a wide range of new advertisers from the automotive, healthcare, home services, and professional services industries.
Gannett content reaches more than 100 million people monthly, according to the company, and it has focused recent expansions on creating a digital network of local news outlets. As small, local papers individually face declines in print sales, ad revenue, and readership, Gannett hopes to leverage the scale it has with its national network to create new advertising opportunities and develop digital capabilities. The company has been trying to acquire Tribune Publishing to expand its network further but has not succeeded yet.
The purchase of ReachLocal brings an immediate revenue increase to Gannett because of its existing customer base and hyperlocal advertising platform. Longer term, the acquisition gives Gannett access to valuable technology and its developers, tools which will enable the company to improve its news offerings and develop new marketing, advertising, and social products.
“We are excited to bring new market opportunities and scale to Gannett’s growing and important digital business,” ReachLocal CEO Sharon Rowlands explained. “We believe that this powerful combination will drive growth and allow us to accelerate innovation, enabling the best and most complete digital marketing solutions on the market today.”
Newspapers and publishers have been facing an increasingly challenging environment as readership and revenues from traditional print sources continue to decline. Recent statistics from the Pew Center show daily print newspaper circulation is down 7 percent and advertising revenue dropped 8 percent from 2016 to 2017. The Newspaper Association of America is shuttering its national ad sales company, the Newspaper National Network this month after it was on track to lose $1 million in the first half of 2016.
Gannett is looking for new ways to drum up revenue and is focusing on digital as the place to do it. Gannett CEO Dickey explained, “This transaction represents an important step as we continue to transform our business to meet the changing needs of consumers and advertisers in today’s digital world. We are excited to welcome the talented ReachLocal team to Gannett and look forward to working with them to drive digital growth and create value for our stockholders.”
A recent PwC Media and Entertainment Outlook predict that newspaper revenue will drop to $121.1 billion in 2020 from $130.5 billion in 2017. The drop is primarily due to readers moving online through desktop and digital. The publishing giant’s new acquisition will help it improve Gannett’s online and mobile advertising and marketing offerings and should help it better position itself in the increasingly digital news environment.