Newspaper Companies Make Another Big Investment in a Circular Startup | Street Fight

News

Newspaper Companies Make Another Big Investment in a Circular Startup

1 Comment 27 April 2014 by

882865_252217251580246_613671162_oTwo decades ago, the newspaper industry made a joint strategic investment in Cars.com – a move that represented a rare departure from the myopia and in-fighting,which came to define the media landscape throughout the 1990’s. Today, the automotive classifieds site is on the block, but newspapers have come together again to turn their collective attention to the decline of another one of its golden calves: the Sunday circular.

Gannett, Hearst, Advance Digital, and others have invested another $14.5 million in Wanderful Media, a service that digitizes and distributes the millions of merchandizing ads that go out every weekend in local papers across the United States. The deal, which brings the startup’s total funding to over $50 million, highlights the newspaper industry’s struggle to find an answer to a depreciating revenues after technology companies have picked off many of its valuable assets.

The new capital will help Wanderful build out its mobile product, which launched on Android and iOS last year, and expand its reach into small businesses, which have traditionally been left out of circulars, according to CEO Ben T. Smith IV.

Smith, who sold his previous company MerchantCircle to Reply! in 2011, believes that the mobile app will help bring Wanderful’s product from a digitized version of a print product to a truly native mobile service, complete with its own dynamics.

The local media industry has seen circular revenues decline over the past decade, but at slower rates than other ad products. According to data from Borrell Associates, local media companies will generate $6.24 billion in revenue from advertising circulars in 2014, a little shy of a quarter off of its peak in 2006. However, overall advertising revenues have halved over the same period, largely due to much sharper declines in classifieds.

Smith attributes the softer declines in circular revenue to the relative strength of media as a discovery mechanism, and the comparative weakness of a newspaper as a search tool. He argues that the experience of flipping through a physical newspaper still beats the web experience in terms of finding and discovering new goods.

“The circular business hasn’t shrunk as much as other media products because it was hard getting that discovery experience right,” said Smith. “However, as circulation numbers have changed and consumers have moved to the web, that audience — the people who are sitting at home and don’t know what they want yet — hasn’t been redeveloped.”

To redevelop that audience, the company is betting heavily on mobile. Smith believes that the contextual capabilities implicit in mobile — namely, location — can provide the necessary tools to add a new dimension to the merchandising business which the web simply could not.

In many ways, the relationship between circulars and classifieds underscores a broader shift towards discovery in the search market. Google, and a host of affiliate listings sites, exploded in the early 2000s by making the objective local dataset — name, address, phone number — of a business searchable in an instant. With the explosion of Yelp, the technology industry, and the advertisers which support it, has moved to other forms of search, working to help users not only complete an action, but make a decision as well.

Steven Jacobs is Street Fight’s deputy editor.

  • Sharktooth

    So, circulars are the future of newspapers? You have to be kidding… At least Classified Ventures made money… this is a waste of time.

Big Things Coming in Local in 2015!


Join us in New York, San Francisco and Denver for Street Fight's industry-leading conferences. Top speakers, great networking, valuable insights, and killer parties.
Click here for dates and details!

Newsletter

Get hyperlocal industry headlines in your inbox every morning. Subscribe to the Street Fight Daily newsletter.


See how brands compare in local presence across areas such as local SEO, data accuracy, social engagement and more. Presented by Where2GetIt and Street Fight. Click here to see the battle!

Free White Paper: Pay-Per-Call’s Role in Improving Marketing ROI

Call campaigns can make the phone ring — or alienate prospective customers. Learn how to get it right: Download "Pay-Per-Call's Role in Improving Marketing ROI."

Produced by Street Fight Insights for Soleo.

Free White Paper: Contextualization

Learn how to deliver better, revenue-driving consumer experiences. Download "Contextualization: Leveraging Location-Based Technology and Mobile to Drive Success for Brands."

Sponsored by Artisan Mobile.

Follow Us

Get the latest Street Fight news, information and analysis via Twitter and Facebook.

The Commerce Graph

The “Commerce Graph” is a new framework we have developed to think about the future of physical exchange. The model offers an alternative to the dominant narrative about the commerce landscape that frames digital networks as an adversary of physical exchange.

The $20 Billion Mobile Marketing Opportunity

Strategies and insights into the landscape of targeting options and how they deliver foot traffic and sales for SMBs.
Check out our 2013 report and get your copy today!

Twitter

© 2014 Street Fight.

Powered by WordPress. Hosting by Page.ly