Every week, I get a ton of newspaper circulars (you know the dozen or so pages of product advertisements stuck inside the papers). And, every week, I throw them out, without as much as a glance. I'm not the only one, I'm sure. And newspaper publishers know this, as well as the retailers who've been spending $4 billion a year on print circulars.
After all, today's consumers are increasingly discovering new products on social discovery sites, like Pinterest, because of the aethestically pleasing way items are presented and the social nature of the site.
Seeing this as the wave of the future, 12 major newspapers have come together to form a new company, called Wanderful, which is a platform that displays advertisements in a much more engaging and social way. At the moment, 250 newspaper sites owned and operated by the newspapers have incorporated Wanderful, with up to 600 to be released by the end of this year. And, in the first quarter of 2013, Wandeful plans to be released on tablets and mobile devices.
"If you look out three to four years, we think a lot of shopping can be happening on tablets," said Ben Smith, who was brought in as CEO of Wanderful this past April, adding that the platform will look similar to Pinterest. Smith was most recently at MerchantCircle, a company he founded and eventually bought by Reply for $60 million in cash last year.
The good news is that tablets enable consumers to still have that lean-back experience they have flipping through the print circulars while sitting on their couch or standing next to their kitchen counter, with coffee in hand and a bagel in the other.
Retailers, who are taking a serious look at Pinterest, don't want to lose the customers they're getting through newspaper circulars. So now they're saing to the newspapers: "You are our local discovery shopping platform, we want you to solve this," said Smith.
Indeed, there's a lot at stake for both newspapers and retailers. For newspapers, advertising on print circulars have brought in billions annually. For retailers, they may slowly lose their relevance if other new retailers are being discovered and attracting the audience on social platforms, like Pinterest.
But Smith, not surprisingly, sees retailers having the biggest reason to be concerned.
"The 42 top retailers that spend with newspapers want local discovery shopping on tablets," said Smith. "They pushed their newspaper partners to create this company."
How it came together
Los Gatos, Calif-based Wanderful came together last November with $22 million in financing from top media publishers, such as Advance Digital, A. H. Belo Corp, Community Newspaper Holdings Inc., Cox Media Group, The E. W. Scripps Company, Gannett Co., Inc., GateHouse Media, Inc., Hearst Corporation, Lee Enterprises, MediaNews Group, The McClatchy Company, and The Washington Post.
Of the publishers, eight (including Hearst, Washington Post, Gannett) are considered major partners with an equal stake in Wanderful. Together they make up majority ownership of the startup. The remaining four media partners have a minority stake.
With so many partner owners, how does Smith manage? "I’m the CEO and I report to the board," he said, suggesting he'll run the company as independently as any startup, with strategic partners. But having the newsapers together is an advantage for the retailers, said Smith.
Retailers don't want to deal with different local mobile shopping strategies potentially pursued by each newspaper, said Smith. This would mean having to learn multiple platforms rather than one that can be national on day one. "Retailers don’t want to deal with 15 different experiences from newspapers," said Smith. "They want to make their media buy on a national basis."
To this end, Wanderful is a much more streamlined offering. In addition, because more people are discovering products through this social way and on mobile, retailers may also be able to attract new customers.
As for economics, Wanderful will sell to the 42 major national advertisers and will sell some advertising space to its major newspaper partners, who will then mark up the prices and sell to regional advertisers as well as small- to medium-sized businesses.