Gannett has a rich history as a media company, with outlets that include top local newspapers as well as national newspaper USA TODAY. The company also has a strong digital presence locally and nationwide. However, in 2016, the company decided it needed to make a change. While Gannett was growing rapidly on the digital side, many investors still saw the company as a declining newspaper publisher instead of an online leader.
In order to move forward, Gannett wanted to expand the audience reach of USA TODAY online and fully integrate some of its recent local market acquisitions. With print advertising revenues continuing to decline at faster-than-expected rates, it was important for the company to move quickly.
USA TODAY is a national newspaper with a strong focus on content that resonates across America. The coverage tends to feature more human interest stories than other national newspapers like the New York Times or Wall Street Journal. Many subscribers still read hard copies of the paper only. While readership was relatively strong, there was still room for improvement and modernization.
Gannett hired a new Chief Revenue Officer and a Chief Content Officer, and built an internal native advertising studio called GetCreative in order to accelerate its digital advertising revenue growth and digital content capabilities both locally and at USA TODAY. Additionally, Gannett acquired ReachLocal, a hyperlocal digital marketing services company that would become part of Gannett's local product suite, enabling the media company to expand its local digital advertising business to more customers.
Gannett's media brands attract a wide range of readers, making them a key partner for advertisers both in print and online. A key component of Gannett’s strategy is expanding the marketing services business that is now central to their model, with significant growth potential in the digital advertising arena. In order to capture this opportunity, however, Gannett would have to redevelop its business-to-consumer (B2C) strategy with readers and its business-to-business (B2B) strategy with advertisers while finding better ways to mine and use audience data.
Gannett CFO Alison Engel readily acknowledges the challenges associated with digital revenue models. Getting reliable data from advertising and page views can be difficult. Rates for digital advertising are much lower than traditional print advertising. New software like online ad blockers and privacy apps limit the reach of digital ads. Reaching profitability is challenging with digital advertising alone; the dominance of revenue sharing and in-kind partnership models currently drives the market.
In order to improve its audience reach and engagement, Gannett invested heavily in developing a content strategy based on audience segmentation.
Gannett’s core audience is called "In The Know." These readers are the news junkies and daily readers that make up the stickiest part of Gannett's audience. The second group is "Know The Score," and consists of the sports readers. Sports readers make up one of the most significant groups of repeat visitors to Gannett's pages. In order to add to the already strong In The Know and Know The Score audiences, Gannett is focused on targeting the "Family Forward" group. These are a mix of homemakers and parents that are looking for activities, finance news, and parenting news. The final two groups are "Take Action," describing readers that look to their local content providers to make decisions about how to spend their free time, and "Entertain Me," featuring readers that are interested in celebrity updates.
Each audience segment expects a certain type of media coverage and reading experience. That creates an opportunity for Gannett to not only expand and target coverage, but also to create native advertising opportunities like targeted sponsored content or more relevant embedded ads.
An acquisitive media company may seem counterintuitive given all the stories about layoffs and shrinking coverage, but Gannett sees mergers and acquisitions (M&A) as part of its core strategy. With the acquisition of ReachLocal, Gannett added $325 million in revenue and expanded its hyperlocal platform. In 2017, Gannett acquired SuiteIQ, a company that helps people find local stores that are open when they are conducting web searches. SuiteIQ is a tuck-in acquisition for ReachLocal, which will give ReachLocal additional products to sell to their local clients.
According to Engel, the key for Gannett's M&A strategy has been discipline. The number of online media startups is growing and their founders often have unrealistic valuation expectations. With ReachLocal and SuiteIQ, management teams at both companies understood the broader vision at Gannett and saw partnering as a way of reaching bigger advertisers that were often out of reach.
While the transition to an advertising- and finance-led digital strategy has created new revenue opportunities, it hasn't been easy on the staff. Like all media outlets, Gannett has seen its fair share of layoffs. The company still has over 20,000 employees, but many of them are used to running print newspapers in small local markets and didn't sign on to join a multinational advertising company.
Engel says that the changes at Gannett have meant hiring new staffers that are digital natives, while also working closely with leaders at Gannett's local papers to help them re-train current employees and understand where the company is headed.
Like so many companies today, Gannett has had to learn how to disrupt itself or risk becoming just another failing newspaper company. By harnessing the power of data segmentation Gannett's team is able to gain new visibility into how readers interact with different types of content online and in print newspapers, opening up a whole range of new revenue opportunities. But it hasn't been easy – changes at the top have to be communicated to smaller local papers as well as readers in order to keep them coming back.