Monday, July 29, 2013

In big tech story, the score is Google: 6, Gannett: 0

I'm talking about yesterday's news that the world's No. 2 and No. 3 advertising agencies are merging to become No. 1, a global behemoth with $23 billion in annual revenue.

The headline over The New York Times' Page One story about the hookup of Omnicom and Publicis says it all: "Two ad giants chasing Google in merger deal." No wonder. Google's name appears six times in the story.

Newspapers? Zip. Gannett? Also, zip.

Indeed, I didn't see newspapers mentioned even once in any coverage by (ironically) the other national U.S. newspapers: The Wall Street Journal and GCI's own flagship, USA Today.

One NYT paragraph shows why this is actually a technology story, rather than one strictly about advertising: Between them, Omnicom and Publicis accounted for $22.7 billion in revenue last year, more than the next highest ad firm, WPP. But no ad company comes close to the $50 billion in revenue that Google made last year, largely on the strength of its advertising business.

GCI's Achilles' heel
And those other ad companies, of course, include GCI. Last year, the company's newspapers and other print publications sold $2.4 billion in advertising, making that it's single-biggest source of revenue. Throw in advertising from the broadcasting division, and it rises to $3.4 billion. Heck, GCI's total 2012 revenue, which includes $1.1 billion in circulation, was still a drop in Google's bucket: $5.4 billion.

Newspaper ad revenue is the Achilles' heel. In the second quarter, it fell 5.3%, representing an acceleration in the rate of decline over the past two years, according to last week's financial report.

The challenge for Omnicom and Publicis is that more and more advertisers are bypassing agencies (and newspapers, TV stations and other media) in favor of direct appeals to consumers via online publishers including Google, Facebook and Twitter.

"Advertisers like Nike, Comcast, Progressive and Procter & Gamble," the NYT says, "are now using automated exchanges -- fast-paced, algorithmic bidding systems -- to target individual consumers rather than the mass audiences that broadcasters and publishers serve up."

To be sure, GCI isn't sitting still. For one thing, the nation's No. 1 newspaper publisher can't run fast enough from its newspaper and news roots. The "About Gannett" boilerplate at the bottom of every company press release illustrates that perfectly. In last week's earnings release, it said:

"Gannett is an international media and marketing solutions company that informs and engages more than 100 million people every month through its powerful network of broadcast, digital, mobile and publishing properties. Our portfolio of trusted brands offers marketers unmatched local-to-national reach and customizable, innovative marketing solutions across any platform. Gannett is committed to connecting people -- and the companies who want to reach them -- with their interests and communities."

Compare that to 2011
Here's the boilerplate on the day GCI said it had hired its first chief marketing officer (emphasis added):

"Gannett is an international news and information company operating on multiple platforms including the Internet, mobile, newspapers, magazines and TV stations. Gannett is an Internet leader with hundreds of newspaper and TV web sites;, the nation's top employment site;; and more than 80 local sites. Gannett publishes 82 daily U.S. newspapers, including USA TODAY, the nation's largest-selling daily newspaper, and more than 600 magazines and other non-dailies including USA WEEKEND. Gannett also operates 23 television stations in 19 U.S. markets. Gannett subsidiary Newsquest is one of the UK's leading regional community news providers, with 17 daily paid-for titles, more than 200 weekly newspapers, magazines and trade publications, and a network of web sites."

Near as I can tell, that press release about CMO Maryam Banikarim was the last time "newspapers" and "news" appeared in the boilerplate.

Now, GCI emphasizes its own network: a collection of sites drawing an average of about 55 million unique visitors each month. To be clear, nearly half of those -- 24 million -- are at CareerBuilder, the giant employment site GCI controls with minority partners Tribune and McClatchy.

And within that broader network, the company is racing to establish a big subsidiary: the USA Today Sports Media Group, which sews together all the sports content from USAT, the 23 TV stations, and 81 U.S. community dailies. That group is supposed to generate more than $300 million in additional annual revenue by 2015.

A too-slow digital shift
There's also the still nascent Gannett Digital Marketing Services division, which advises small and mid-size businesses on social media and other mobile and Web strategies. It's forecast to add between $275 million and $350 million, also by 2015, the company said early last year.

Meanwhile, GCI is nearing the relaunch of its mobile and news websites to create a more uniform experience and easier buying opportunity for advertisers. That could help with national ad sales, where last week GCI appointed a new vice president, Howard Griffin, in the community newspaper division.

But the drawn-out timetable for the digital relaunch project illustrates the challenges the company faces in dealing with Google, Facebook and other more nimble 21st century media companies. GCI announced plans for the relaunch in August 2011. Now, two years later, the company's best forecast is for a relaunch in only the top 35 markets to be "largely completed" by the end of 2013. That slow-mo pace was revealed in last week's quarterly conference call with Wall Street analysts.

The Omnicom-Publicis deal is the traditional advertising industry's push back against Google and a growing number of other digital competitors. But it's not an effort to shore up newspapers or TV -- industries that are increasingly 20th century news.


  1. Somewhere in that big Madison Avenue of the skies, Darrin Stephens and Larry Tate are shaking their heads in wonder.

  2. "To be clear, nearly half of those -- 24 million -- are at CareerBuilder, the giant employment site GCI controls with minority partners Tribune and McClatchy."

    And to add, while GCI may have financial "control" of CB w/their partners, they have absolutely no control over any of its operations from the top to the bottom. CB operates by itself and makes about 99.9% of it's decisions without any input from GCI. As a matter of fact, they do not like to have input from GCI or any of its other partners.

    So, anything CB does or does not do or makes or does not make is not because GCI had anything to do with it.

  3. USA Today? Newspapers? Gannett? What's that?

  4. Consolidation in the ad agency world is BAD news for PointRoll. Pretty soon people start to figure out how much PointRoll is ripping off all those small agencies that are part of these conglomerates.

    PointRoll is dead.


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