What started as a shot in the dark for ADVO in 1999 has taken off with the firm now up to 29 alliances with major newspaper publishers to co-distribute advertising via free-standing inserts and the company in talks to forge more partnerships.
About four years ago ADVO formed a team called Strategic Business Development to explore the possibilities and benefits of teaming with a newspaper to distribute FSIs.
“Going into this we didn't know if a single newspaper would even agree to talk to us, never mind entering into an alliance with us, because newspapers and ADVO have been extremely competitive,” said Myron Lubin, executive vice president and president, Diversified Business Group at ADVO Inc., Windsor, CT.
The group reached its first agreement in 2000 with the Denver Newspaper Agency, which publishes The Denver Post and Rocky Mountain News under a joint operating agreement. MediaNews Group and E.W. Scripps Co. equally own Denver Newspaper Agency.
ADVO has established 28 more alliances since, the most recent being 11 newspaper partners in Northern California, including three Knight Ridder titles and eight from MediaNews Group's Alameda Newspaper Group. Those deals were reached in October. ADVO also has newspaper alliances with Gannett, the Poynter Institute and Tribune Co. in certain markets.
Though joining forces with competitors is not always wise, Lubin cited reasons why merging the ADVO ShopWise FSIs with newspaper inserts is a win for both sides.
“We see the newspapers and ADVO as part of an industry that is involved in delivering print advertising to the home,” he said. “We believe that the two best delivery platforms in America are the ADVO ShopWise program that is delivered almost entirely by the United States Postal Service and daily newspapers, and from there came the thought that the two best delivery programs would have synergies.”
A big motivator was the idea of sharing the cost of distribution. By combining the programs, the ADVO ShopWise FSI and the newspapers' advertising inserts ride along together with the newspaper to subscribers' homes each week. In non-subscriber households within the market, the newspaper FSI rides along with ShopWise into consumers' mailboxes.
Lubin noted that at midweek, most newspapers probably don't even cover half the market, so this lets them do so at a shared cost.
Within the alliances ADVO and the newspapers maintain separate ad sales teams, so there is a chance of overlap in which advertisers would choose which to place their ads with. However, Lubin does not see that as a big problem because ADVO usually contains more national advertisers and the newspapers have more local content.
That richness of content is another plus of the alliances, he added.
Still, he admitted that it might not make sense in every market.
“Each newspaper has its own personality, and each alliance is different,” Lubin said.
An executive from one of ADVO's biggest newspaper partners shared his take on the mutually beneficial nature of the alliances.
“From our perspective, advertisers prefer the paid daily newspaper environment, and for non-subscribers they use the program that has been the most successful and the brand that they like and are accustomed to is ADVO's ShopWise,” said Jerry Grilly, executive vice president/COO of MediaNews Group Inc., Denver. “The combination of our paid daily and their delivery method was deemed the most effective.”
ADVO hopes to add newspaper alliances in three to four more markets yearly and is in talks with at least one now, Lubin said.