Gannett Dives Deeper Into Agency Business With 'G/O Digital'

BliNQ, Shoplocal, Key Ring and DealChicken as 'One-Stop Shop'

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Gannett certainly sells a lot of advertising across its 80 daily newspapers, USA Today, and 23 local TV stations. Increasingly, it wants to sell ads on other sites as well.

Like a lot of publishers looking to squeeze more ad dollars out of marketers, Gannett is dipping a toe into marketing services to tap additional revenue that once went to agencies. The company is pulling together a group of companies with agency-like capabilities under one roof called "G/O Digital."

The new entity will include BLiNQ , the Facebook ads agency it acquired last year, Shoplocal, Key Ring, GannettLocal and daily deals site DealChicken into what its calling a "one-stop-shop" for advertisers.

"Our business ultimately is to help consumers and advertisers come together," Vikram Sharma, president and CEO of the new venture, told Ad Age. "We see media continue to be an important part of that, but we also see the value we can bring to our merchant partners by offering marketing services."

By making the move, Gannett is hoping to capitalize on its existing relationships with local advertisers in an effort to further diversify its business. The tactic is one of growing importance for traditional media companies which are looking for new ways to sustain themselves in the face of a splintered ad market.

Gannett's effort is not unique. Conde Nast, has its own media group, for example, Hearst owns iCrossing , a digital marketing agency, and Meredith Corporation recently consolidated a number of its own agencies into one: Meredith Xcelerated Marketing. Smaller publications have jumped on the bandwagon too. Monocle, for instance, puts its in-house design team to work for advertisers, creating ads which fit the feel of its magazine and website for significant fees. For many of these companies, the extension is a necessity.

"The media landscape is evolving so quickly and advertisers are becoming more sophisticated, so you need this kind of offering," said John Janedis, a UBS analyst who covers Gannett. Mr. Janedis explained that as advertisers move money into digital media and elsewhere, the type of agency Gannett is introducing today is what it might take for companies in its mold to survive.

The new offering, he said, will likely end up a good solution for Gannett's clients and an incremental revenue generating opportunity for the company itself.

Gannett realizes its local relationships will be key here. Sharma argued that local merchants, such as pizza shops and car dealers, do not want to spend time figuring out Facebook's latest algorithm tweak or managing search campaigns. Gannett, already a trusted partner, can run these campaigns without giving the small businesses another relationship to manage, Sharma said.

Peter Krasilovsky, an analyst who focuses on local online commerce, said he believes the move is a good one on Gannett's part. "It makes a lot of sense to us," he said. "When you're selling to a small business, you really want to provide them with everything in one stop. It does the small business a favor."

It's a good deal for Gannett too. In a 2012 meeting with investors, the company said it expected its marketing services to bring in up to $350 million by 2015.

Staples gave the new G/O Digital structure a test run for 12 weeks and came away pleased. "Our test was very successful," said Alison Corcoran, Staples' svp of marketing for North America and online. Corcoran explained that her team worked with a single point of contact at Gannett over the course of the test and the collaboration led to increased sales and foot traffic in stores.

"We continue to increase our spend with companies where we continue to see an improved ROI." Ms. Corcoran said. "And you can read between the tea leaves on the rest of it."

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