Tribune Publishing Invests in a Content-Marketing Shop

Contend Makes Videos for Tribune Advertisers

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Petya Shalamanova, a Chicago based photographer, stars in a video produced by Contend for a Tribune advertiser.
Petya Shalamanova, a Chicago based photographer, stars in a video produced by Contend for a Tribune advertiser.

Marketers' increasing desire for content has led most publishers down a similar two-pronged path: Media companies including The New York Times and The Huffington Post create in-house teams, then occasionally outsource work to content marketing agencies such as Contently.

But Tribune Publishing, which was spun off from its sibling TV stations into a publicly traded company last month, is striking a third and less traveled path as it pursues content-marketing dollars.

The owner of major newspapers including The Los Angeles Times and Chicago Tribune, which have burgeoning staffs to create text-based content for brands, is taking a minority stake in Contend, a content-marketing shop that works with Tribune Publishing on making videos for advertisers.

Contend was founded earlier this year and employs 27 full-time people with offices in L.A. and Chicago. The money from Tribune Publishing will go towards technology, content and hiring more staff, according to founder and CEO Steven Amato.

Neither company would disclose the terms of the investment.

The Tribune is "bedrock," said Mr. Amato, the former president and chief content officer at the creative agency Omelet. "They have an audience. That's the Holy Grail."

Tribune Publishing's newspapers combined attracted 43.6 million unique visitors across desktop and mobile in July, a 26% increase over the previous year, according to ComScore. But the company is trying to weather a harsh environment for print media. Its print ad revenue is steadily declining and digital sales aren't making up for the losses. The company also spun off with $350 million in debt -- though analysts have said that's manageable given its current market capitalization of about $559 million.

That's emblematic of an industry-wide challenge: Publishers can charge much more for an ad in print, where there's relative scarcity and other advantages, than they can for a digital-display ad, where prices are under intense pressure from a glut of inventory and automated ad-selling technology. Advertisers, meanwhile, are following their consumers, who are abandoning ink on paper for digital media. Against this backdrop, media companies are selling so-called native ads, which seek to mimic editorial content surrounding it. They can typically charge more for a native ad -- and extract additional fees from advertisers in exchange for creating the content, whether that's text, images or video.

Marketers are expected to spend $2.29 billion on sponsored content, including native ads, this year, a 20.5% increase over 2013, according to eMarketer. By 2017, the tactic is forecasted to hit $3.2 billion.

Tribune Publishing sells native ads across its own websites and is planning to introduce new mobile apps with sponsored-content units with them.

"Content marketing and digital services is really their number one growth area," Ken Doctor, a media analyst with the research firm Outsell, said of Tribune. "That's clear."

Tribune Publishing said its investment in Contend is the first time it was aware of a newspaper publisher buying into a content-marketing company, although in 2012 the Dallas Morning News teamed up with local ad agency Slingshot to create a marketing services firm called Speakeasy.

It does mark the first significant move since Tribune Publishing was spun off, and provides a glimpse into the company's revenue strategy around digital media: offering small and medium-sized businesses marketing services, including content production.

"It's perfectly plausible for the Chicago Tribune and the L.A. Times to be good at creating content" for brands, said Bill Adee, exec VP-digital at Tribune Publishing.

Mr. Adee is an energetic former sports editor at the Chicago Tribune who in 2010 helped start 435 Digital, Tribune's marketing service agency, which initially sought to work with businesses on social media, but shifted to help with everything from basic web design to search marketing.

Tribune Publishing doesn't break out revenues for digital marketing services, but digital advertising revenue for 2013 was $190 million, or 18% of all total ad revenue. "We've seen traction on the digital marketing front," Mr. Adee said.

Offering digital marketing services, including content production, is also from the playbook of Jack Griffin, CEO of Tribune Publishing. "It reinforces everything we know about Jack Griffin's strategy," Mr. Doctor said.

Mr. Griffin, a veteran of the magazine business, spent six years as president of the national media group at Meredith, owner of magazines like Better Homes & Gardens and AllRecipes. During his tenure, revenue at the company's marketing agency, Meredith Xcelerated Marketing, or MXM, grew sharply, partly as a result of acquiring agencies in the digital, mobile and social media space. MXM's annual revenue is about $150, according to people familiar with the company.

"There's a marketing arm inside Tribune publishing … waiting to be further developed," Mr. Griffin told Ad Age in March. "I would characterize Tribune Publishing as having real digital chops. That's a big item on the list to continue that and certainly important in a public company environment."

Mr. Griffin has said he hopes to grow advertising as well as subscription revenue, introducing metered paywalls to its newspaper sites that don't already have them.

But MXM's client roster includes big national brands. Tribune Publishing's sweet spot is the local and regional advertisers in the areas its newspapers cover. That means the success of this strategy leans not only on Tribune Publishing's ability to produce, distribute and evaluate the content it produces for brands, but also the willingness of local businesses -- which often have limited marketing budgets -- to spend on the latest trend du jour, content marketing.

Tribune needs to determine the appropriate pricing for these services, according to Mr. Doctor. "Unless you can answer that question, it doesn't make sense to focus on this strategy," he said.

Already, Tribune Publishing and Contend have produced a series of videos for Chicago-based grocer Jewel-Osco. The videos, which star Chicago residents, are meant to resonate with millennials who place a premium on fresh foods. They were not only distributed across the web -- including a site built for the grocery chain -- but also on taxi screens in Chicago.

"We've been tickled pink by it," said Doug Cygan, Jewel-Osco's VP-marketing and merchandising.

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