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Daily News Deal Expands Ad Insert Coverage to Non-Subscribing Homes

Daily News Deal Expands Ad Insert Coverage to Non-Subscribing Homes


Staff Reporter

In a deal that underscores new realities in the publishing business, the Los Angeles Newspaper Group is joining up with the nation’s leading direct marketing company to distribute a combined package of advertising inserts to subscribers and non-subscribers alike.

Beginning Aug. 13, the Daily News of Los Angeles and seven other local papers in the group will distribute ADVO Inc.’s ShopWise packet to subscribers each Wednesday, while the remaining households in those circulation areas will receive the same packet in the mail. Both organizations will sell ads into the packet.

The deal allows ADVO to save on distribution costs while reaching the same number of households. For the Los Angeles Newspaper Group, a unit of Media News Group Inc., it represents a new ad vehicle with wider distribution to sell into, as well as the promise of a beefed up insert section.

In the past, direct mail companies have been fierce rivals of newspapers for local pre-print ad dollars. But in recent years ADVO has been forging alliances with newspapers in a number of cities, including Media News papers in Denver and Connecticut.

“The two of us together have produced bigger shares of pre-print advertising than either of us could do on our own,” said Dean Singleton, vice chairman and chief executive of Media News Group. “It’s a big revenue generator and a very profitable source of advertising.”

The deal heightens the competition for advertising between the region’s two largest newspapers, the Daily News and Tribune Co.’s Los Angeles Times, which runs its own direct marketing operation out of a $50 million facility in Irwindale.

Until May, the Daily News served as one of the distribution vehicles for Times Direct, Tribune’s local direct marketing program. But when the ADVO deal was announced, the Times ended its arrangement with the Daily News several months before the pact was due to expire.

Singleton said it wouldn’t be a major loss. “That program was just very weak, with not a lot of advertising,” he said.

Times’ officials did not return calls seeking comment.

Although she declined to state a dollar figure, Tracy Rafter, senior vice president of advertising and marketing for Los Angeles Newspaper Group, said pre-print advertising represents more than half of new advertising sales at its papers, including the Long Beach Press Telegram, San Gabriel Valley Tribune, Pasadena Star-News, Whittier Daily News, San Bernardino County Sun, Redlands Daily Facts and Inland Valley Daily Bulletin.

Although there are dozens of direct marketing outfits in the area, the three leaders are ADVO, Times Direct and the Penny Saver, owned by Harte-Hanks Inc. of San Antonio, Texas.

The ADVO deal represents the first such arrangement between a direct marketer and a local newspaper, but more could be on the way, according to Ozair Esmail, president of the Los Angeles Direct Marketing Association.

“These deals have been popping up all over the place in the last three years or so,” Esmail said. “The Daily News is looking for extra value to bring to their customers and ADVO can lower its distribution costs.”

Chris Hutter, vice president of investor relations for Windsor, Conn.-based ADVO, said newspaper partnerships represented a small but fast-growing segment of the company’s overall business.

“You have to find a way to join forces in a way that’s beneficial (for the partners) and the end user, the consumer,” Hutter said. “We will reach 2 million households (in Southern California) and our advertisers will have the ability to closely target their ads.”

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