Newspapers Follow Groupon's Suit; Enjoy Slice of Group-Buying Pie

New York Times, Hearst, McClatchy Are Elbowing Their Way Onto Deal-making Table

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Even newspapers are following Groupon's lead. It's no surprise, considering the 3-year-old startup made a reported $760 million in revenue from local merchants last year -- that's one-quarter of the entire newspaper industry's online revenue.

While it is not yet nearly enough to stop the steady bleed in print ad dollars, media companies are seeing their own Groupon-style deals bring in new revenue. Better yet, the revenue is often from entirely new customers. The San Diego Union-Tribune is now making more money in deals than in interactive advertising. That's more revenue than LivingSocial in San Diego, said Mike Hodges, Union-Tribune's VP-interactive. "We're not up to the Groupon standards but we're starting to cut into their market share as well," he added.

The New York Times launched its first daily deal, called TimesLimited, last week. Hearst will launch about 70 deals properties in the next month. And McClatchy, which first partnered with Groupon to provide deals to its web readership, will be rolling out its own in April.

Even magazine companies are considering it: Meredith Corp.'s Parents has launched weekly deals on its site for national advertisers. Cable has made moves, too. Belo has seen a slight lift in online revenue after launching its first deals in November under the brand Yollar, largely from a set of advertisers new to the company.

Media companies are going up against Groupon and LivingSocial for the $3.9 billion daily-deal revenue projected for 2015, according to BAI/Kelsey Group. After all, they already have the sales forces, relationships with advertisers and cred in the market.

"You'll see even more [local media companies] flock to group buying," said Jed Williams, analyst and program director for BAI/Kelsey. "It's a sizable enough opportunity to catch the attention of media execs."

Media companies are taking different routes to daily deals. Some partner with outside firms for white-label e-commerce and email tech. Others, like Meredith, look to partners to sell deals on their behalf.

Seeing opportunity, several companies have popped up to get local media companies into deals. Publishers can turn to companies such as Analog Analytics, ReachLocal, Tippr and Group Commerce for everything from technology to sales, but challenges persist.

For one, some publishers have had to retool their sales forces. "You learn that it really takes a standalone sales organization," said Doug Bennett, president of Freedom Interactive. Freedom has 27 dailies, eight TV stations and six properties offering deals of the day. "You can't use the same people that are out selling your interactive and print customers because you are calling on a lot of smaller advertisers that don't advertise on print or interactive today. It's opened up the door to bring in new advertisers."

Should Groupon be worried? Well, it has a more than sizable head-start, with 60 million users in 42 countries, so it's likely safe for now. It was also the first major deals site and has become synonymous with the entire category. But media companies are betting their oldest assets will be a major draw for merchants.

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