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Compiled by Ray Young (RPM) and John Kelly (Daily Clips)
Wednesday March 8, 2017
Electronics/Appliances Retailer Files Chapter 11; Finds Buyer
Indianapolis-based Hhgregg has filed for bankruptcy.
The move came just days after the struggling chain announced a big wave of store closings.
In a statement, Hhgregg said it has reached an agreement with an anonymous party to purchase its assets, which will allow
the company to exit Chapter 11 debt free “with significant improvement in liquidity for the future stability of the business.”
Terms of the agreement were not disclosed.
“We’ve given it a valiant effort over the past 12 months,” said Robert J. Riesbeck, Hhgregg's president and CEO. “We have
conducted an extensive review of alternatives and believe pursuing a restructuring through Chapter 11 is the best path
forward to ensure Hhgregg’s long-term success.”
The retailer's remaining 132 store locations will operate in the ordinary course of business throughout the restructuring
process. The 88 stores slated for closing will wind down operations by mid-April, under the previously disclosed plan.
Hhgregg, which expects to emerge from Chapter 11 in approximately 60 days, said it remains “fully committed” to its 132
remaining stores.
“We have solidified our senior management team and everyone is dedicated to restructuring our business model for future
profitability and growth,” continued Riesbeck. “Through these strategic steps, we plan to come out of this debt free and more
agile as we serve our valued customers and vendor partners, and continue to be a dominant force in appliances, electronics
and home furnishings.”
The retailer has obtained a committed $80 million debtor-in-possession financing.
Hhgregg has been losing money for the past two years. It reported a 22.2% drop in same-store sales for its most recent
quarter.
http://www.chainstoreage.com/article/electronicsappliances-retailer-files-chapter-11-finds-buyer
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Report: Midwestern Retailer to File Chapter 11 A value-oriented regional department store chain could be the latest retail casualty. Gordmans Stores Inc. is preparing to file for bankruptcy, Bloomberg reported, saying the filing could occur as soon as this month. Founded in 1915, the Omaha-based retailer operates 106 stores in 22 states. Gordmans has racked up losses in five of the last six quarters. At the end of January, the company announced a workforce “consolidation” and streamlining to better compete in the “sluggish retail environment.” http://www.chainstoreage.com/article/report-midwestern-retailer-file-chapter-11
RadioShack Looks Like It’s Going Bankrupt Again The parent company of troubled electronics retailer RadioShack look set to file for Chapter 11 bankruptcy protection for the
second time as soon as Tuesday as it looks to unload even more stores.
The parent, General Wireless Operations, has already begun closing 200 stores, the Wall Street Journal reported citing
sources, and the company is negotiating with Sprint and others about shuttering more. A spokesman for General Wireless
could not immediately be reached.
When RadioShack, based in Fort Worth, Texas, first sought bankruptcy in February 2015, it sold some 2,400 of its U.S.
stores to General Wireless, an affiliate of Standard General, which is a hedge fund that led a rescue loan for the retailer the
year before. General Wireless has since set up "stores within stores" at 1,750 of those locations for Sprint where the
wireless network operator sells its service and smartphones.
According to the Journal, RadioShack’s current management is betting the retailer can be viable long term as a smaller
chain. As recently as 2013, there were 5,000 or so RadioShack stores in the U.S. Ninety-seven-year-old RadioShack had
been the preeminent electronics chain for decades, selling CB radios and cables and connectors, but the store had trouble
finding its niche in the smartphone era.
The liquidation of Circuit City Stores in 2009 was expected to give other electronics retailers some breathing room, but
Amazon.com kept eating away at their market share. Best Buy (BBY, +1.46%) has found its way through the wreckage and
stabilized its business, but hhgregg, a smaller furniture and electronics chain, filed for bankruptcy on Monday and said it
would close one third of its stores.Electronics were also a weak category during the holiday season in the absence of a hot
new smartphone or gadget: Target (TGT, -1.46%) said comparable sales of the items fell sharply during the period, while
Best Buy reported a decline in U.S. comparable sales.
http://fortune.com/2017/03/07/radioshack-bankrupt-again/
Dick’s Sporting Goods Details Expansion; Tops Q4 Earnings, Sales The struggles — and exits — of former rivals has proved a boon for Dick’s Sporting Goods, which reported fourth quarter
sales and earnings on Tuesday that beat the Street.
The company also announced aggressive store expansion plans.
In 2017, Dick’s plans to open approximately 43 Dick’s Sporting Goods stores, and relocate approximately seven stores. It
also expects to open approximately nine Golf Galaxy stores and eight Field & Stream stores this year, largely adjacent to
new or relocated Dick’s stores. (The openings include former Sports Authority and Golfsmith locations that the company
plans to convert to Dick’s and Golf Galaxy stores.)
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For the quarter ended January 28, Dick’s reported net income of $90.2 million, or $0.81 per diluted share, down from $129
million, or $1.13 per share, in the year-ago period. During the quarter, the company incurred pre-tax charges totaling $93
million, which included a $46 million to write-down the value of inventory that does not fit within its new merchandising
strategy, and $47 million related to its acquisitions of former Sports Authority and Golfsmith stores.
Net sales for quarter increased 10.9% to approximately $2.48 billion, in line with expectations.
Same-store sales increased 5.0%. Same store sales for Dick’s namesake brand increased 5.3%, while Golf Galaxy
increased 13.2%.
Online accounted for 17.9% of total net sales in the quarter, compared to 15.7% in the year-ago period. For the year, e-
commerce was 11.9% of total net sales, compared to 10.3% for the previous year.
"We are very pleased with our strong fourth quarter results, as we delivered a 17% increase in non-GAAP earnings per
diluted share driven by strong comp sales and gross margin expansion,” said Edward W. Stack, chairman and CEO. “We
realized meaningful market share gains and saw growth across each of our three primary categories of hardlines, apparel
and footwear. In 2016, we capitalized on opportunities in the marketplace, and further solidified our leadership position by
enhancing the shopping experience in our stores, building brand equity and successfully relaunching our e-commerce
business on our own web platform."
In 2017, Dick’s will implement a new merchandising strategy to rationalize its vendor base and optimize its assortment to
deliver a more refined offering for our customers
Stack continued, "In 2017, we will continue to be aggressive and evolve our business. We will implement a new
merchandising strategy. “We are in the process of reviewing our entire vendor base, which will be segmented into strategic
partners and transactional vendors, with tertiary vendors being eliminated,” Stackhouse said. “This strategy, combined with
our efforts to enhance our digital capabilities, will enable us to stay ahead of consumer trends and differentiate us from the
competition."
Analyst Neil Saunders, managing director of GlobalData Retail, was encouraged by Dick’s vendor rationalization plans.
“In our view this is a sensible step, not least because although Dick’s offering is comprehensive, it can also come across as
a little jumbled and undisciplined,” Saunders commented. “Some pruning should remedy this, and we believe it will reduce
costs as well as deepening relationships with strategic partners which will allow it to create differentiated products. The latter
will be important as Dick’s starts to compete more with branded specialists like Under Armour.
As of January 28, 2017, Dick’s operated 676 Dick’s Sporting Goods stores, 91 golf specialty stores and 27 Field & Stream
stores.
http://www.chainstoreage.com/article/dicks-sporting-goods-details-expansion-tops-q-earnings-sales
Fry’s Electronics: How this Tech Retailer has Survived the Fall of Brick-and-Mortar Before Amazon.com (AMZN), there was Fry’s Electronics.
The 32-year-old retailer, which peddles electronics at 34 stores in the US, remains a quaint holdout in an era when e-
commerce rules and orders can arrive in hours by drone.
Fry’s locations, mostly in California, lack the gorgeous austerity of an Apple (AAPL) store. Its website is a straightforward
grid of product ads filled with what appears to be old-school Microsoft Word clip art.
Yet Fry’s has succeeded where now-defunct competitors like Circuit City and CompUSA have failed. Just this week,
electronics retailer hhgregg filed for bankruptcy amid declining sales.
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But, unlike hhgregg, Fry’s serves up a deep inventory of tech products that goes beyond mass-market items. Sure, Fry’s
sells HDTVs and digital cameras, but it also caters to the hardcore tech hobbyist who wants to pick and choose the parts to
build an entire personal computer down to that seventh-generation Intel Core i5-7500 processor.
Fry’s has what Best Buy doesn’t
“Best Buy only sells a small selection of expensive goods that are mostly low-grade,” says TJ Pallas, a 30-year-old hardware
developer and tech producer who splits his time between Chicago and Dallas and often travels for work. “Fry’s is real
electronics. I can build new things from parts from Fry’s. If I’m working on site, I usually need something way sooner than a
truck can get it.”
Sure, Pallas could shop on Amazon. But for the specialized hardware he’s looking for, he’s skeptical about shopping online.
“There’s also something to be said for holding and looking at a thing before it gets integrated into a system. If we order the
wrong thing off Amazon, we could be hosed. ‘Go to Fry’s and get exactly this and get back here,’ is pretty bulletproof,” he
said.
Yahoo Finance spoke to several shoppers in the San Francisco Bay Area who were drawn to the chain’s quirky store
designs, each of which sports a different theme. The San Jose location, for example, is loosely modeled after a Mayan
temple, replete with corridors and arches inside. The Palo Alto store channels the Wild Wild West with spoked wagon
wheels, faux railroad tracks and a restaurant inside called the Iron Tail Café.
“It’s more playful,” explained Patrick Chung, a Palo Alto–based venture capitalist who loves the “cowboy” vibe of his local
Fry’s. “It feels like a mom-and-pop, not a corporate conglomerate.”
Lauren Hockenson, a social media manager at a San Francisco LGBTQ bar, shops at Fry’s not only for that playful vibe, but
also for its deep-pocket discounts. “It’s an experience, and they actually do a really good job honoring discounts,” she said.
“That’s how I saved so much money buying headphones: Amazon had a daily deal, and I got my headphones for $60 off the
price at Fry’s. Pretty awesome.”
Hockenson and her boyfriend Jordan, a writer for the tech site VentureBeat, also purchased all the parts they needed last
year to build a custom personal computer swift enough to work with the Oculus Rift virtual reality headset.
A survivor in the age of Amazon
Surprisingly, Fry’s Electronics continues to perform well in the age of Amazon. The brick-and-mortar chain, which did not
respond to Yahoo Finance’s request for comment, reported $2.15 billion for its fiscal 2015 revenues.
http://finance.yahoo.com/news/frys-electronics-how-this-tech-retailer-has-survived-the-fall-of-brick-and-mortar-
145540323.html
SMI: TV and OOH Take Dollars from Digital
Standard Media Index (SMI), today unveiled updated figures for January 2017. SMI total market closed saleschart2January
2017 with +5 percent increase on a year-on-year basis. Spend for the month was the highest volume of spend recorded for
a January since SMI started tracking spend in 2009, highlighting that the ad market continues to be quite healthy.
Digital Ad Spend Continues to See Growth Slow
For the second month in a row, advertising spend on digital platforms only saw single digit growth compared to the same
time period in 2016. The +6.3 percent increase is in stark comparison to the 15-20 percent growth rates the industry had
become accustomed to at the beginning of 2016. SMI began seeing this trend toward the end of last year, and based on
January spend, it’s clear that the industry is in the middle of another shift – this time back to more traditional advertising.
Out-Of-Home Transformation Drives Up Revenue
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Digital’s slower than expected growth is compounded by a resurgence in out-of-home advertising which saw +9.7 percent
growth in January 2017 fueled by +43 percent growth from telecommunication companies and triple digit growth in spend
from consumer electronics and quick serve restaurants. Much of January’s overall increase can be attributed to Billboards
which grew +29 percent in the month. This growth in OOH follows three straight quarters of growth in 2016, and +115
percent increase in spend from automotive companies on the year.
Television Is Far From Dead
Overall, the January 2017 television market saw a +5.7 percent increase – continuing the upward trend SMI saw in 2016.
Cable accounted for a bulk of the increase with +8.2 percent year-over-year in January while Broadcast saw +2.8 percent
increase on the year. When you exclude sports programming, Broadcast TV remained flat with just +0.2 percent growth on
the year but Cable remains strong with +7.5 percent increase thanks to an increase in spend on entertainment and news
programming, +5.9 percent and +16.8 percent, respectively.
Conversely, when you break out just sports programming Broadcast increased spend by +6.3 percent and Cable grew by
+11.1 percent. Again, highlighting that sports programming, and especially live sports, is what is fueling TV industry growth.
Unsurprisingly, on its own, entertainment programming declined by -1.6 percent in broadcast and only grew +2.9 percent
overall in National Television market.
“SMI’s latest data reflects the fact that leading marketers, including Coke and P&G, have firmly come to the conclusion that
linear TV is still the powerhouse of ROI. A lot of digital experimentation last year didn’t deliver the expected results and
advertisers are flooding back to tried and trusted mediums, and that includes Out of Home which is going through a real
renaissance,” says James Fennessy, CEO of SMI. “Digital’s growth continues to slow and when removing Google and
Facebook from the equation we see the sector delivering an anemic growth rate of just 2 percent. The NFL was the savior
for Broadcast with the new president continuing to deliver big time for the cable news networks.”
http://mediasalestoday.com/smi-tv-ooh-take-dollars-digital/
Mall Retailers are Competing on Speed to Stay Relevant
Traditional retailers are finally picking up the pace.
During fourth-quarter earnings reports last week, speed was top of mind for companies like Kohl’s, American Eagle
Outfitters, Gap Inc. and L Brands. In an increasingly competitive retail environment, the pressure is on for brands to tap into
of-the-minute fashion trends and get new items on the sales floor faster.
The heat is thanks to fast-fashion retailers like Zara, H&M and Topshop that churn out trendy pieces in a matter of weeks,
thanks to efficiently streamlined production cycles. It’s affecting luxury fashion, too, as these fast-fashion companies are
ripping and reproducing trends from the runway months before they go on sale. As a result, department stores are pushing
vendors to adopt a see-now-buy-now, in-season production cycle.
On Thursday, Kohl’s CEO Kevin Mansell spoke to what he calls the company’s “speed initiative.” This year, 40 percent of
Kohl’s proprietary brands will operate on a faster production cycle, going from concept to sales floor in three months, rather
than the typical six. Last year, it was 25 percent, with the sped-up brands concentrated in the juniors department. Mansell
said that in the fourth quarter of 2016, those brands saw a single-digit lift in comparable sales.
“Women’s apparel is definitely a focus in this effort,” said Mansell during a call with investors. “We’re going to use that as a
blueprint in trying to reimagine everything from our organizational structures in various areas, including our stores, to the
way we approach our business overall. So speed and agility is probably the number one strategy we have.”
Faster production time is becoming table stakes. And it’s not a trend that’s being pushed within the industry, as much as
retailers probably want to curse Zara — it’s customer behavior that’s guiding retailers’ hands.
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“Speed has always been the bane of the fashion cycle,” said Erich Joachimsthaler, CEO of branding agency Vivaldi
Partners. “It’s not just Zara, it’s how we all shop these days. We live in a Snapchat world, where the consumer no longer
buys in anticipation, but for a particular demand.”
Mall brands, around a lot longer than Snapchat or Zara, have had to reinvent. American Eagle, L Brands (which owns
Victoria’s Secret, among others) and Abercrombie & Fitch all spoke to faster production cycles as a way to compete in the
current market.
“Our women’s business is strong as we’re accelerating. We’re going to rely on this process around increasing our speed to
market and get even faster,” said American Eagle global brand president Chad Kessler, during a call with investors.
Gap, a retailer that has been hit particularly hard by shifting consumer behavior, is shortening production lead time to
reassert relevance. At the end of February, the company reported a 2 percent lift in comparable sales for the quarter, but a
dip of 7 percent for the year, to $4.38 billion. CEO Art Peck spent a long time on the subject of lead time on a call with
investors, as the company works to shift its production cycle from an average of 10 months to 8-10 weeks. Right now, a third
of Gap’s products across brands (Gap, Old Navy and Banana Republic) can be produced within one quarter.
“I call it de-risking our product model,” he said. “Time is the enemy in this business, and this allows us to buy differently,
chase trends differently and manage inventory differently.”
Peck went into some detail around how shortening production lead times is actually being done, saying that the company
was switching to a single demand-based buying platform, which will consolidate the 18 different tools that Gap currently
uses across inventory, pricing, assortment building and in-season management.
“It helps us to get the right product in the right place at the right time,” said Peck. “If you don’t win at product, you don’t win at
anything.”
A knee-jerk production cycle isn’t entirely risk-free. According to Joachimsthaler, companies like Gap have to ensure the
items they’re hurrying to produce aren’t duds.
“If the selection of the cycles and new collections are not innovative or interesting, it doesn’t matter how fast you’re putt ing it
out,” he said. “Zara has accounted for this since the beginning. Gap has not.”
http://www.glossy.co/fashion-calendar/mall-retailers-are-competing-on-speed-to-stay-
relevant?utm_medium=email&utm_campaign=glossydis&utm_source=daily&utm_content=170306
J.C. Penney Lays off an Undisclosed Number of Corporate Employees
J.C. Penney said it has eliminated some positions at its corporate headquarters, following an announcement last month that
it plans to shutter up to 140 stores.
In an emailed statement to the Dallas Business Journal, the Plano-based retailer said it could not confirm how many jobs
had been cut or in what departments. It added that there has been “no formal layoff event.”
“ Since we’ll be operating in fewer locations, it becomes necessary to adjust corporate staff relative to the company’s store
portfolio,” said Joey Thomas, a spokesman for J.C. Penney (NYSE: JCP). “Although I don’t have a number available to
share, it is part of our normal course of business for leaders to ensure their respective teams are optimally staffed, so any
position eliminations would vary by department.”
The job cuts come after J.C. Penney announced Feb. 24 plans to shutter between 130 and 140 of its stores, or roughly 13 to
14 percent of its portfolio.
Those locations contributed less than 5 percent in annual sales and no profit dollars to the company in 2016, J.C. Penney
added. Closing the stores is expected to generate annual savings of roughly $200 million, though the company expects to
incur $225 million in pre-tax charges during the first half of 2017.
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A list of what stores will be closed is expected to be issued in mid-March after workers have been notified. The company has
not said how many employees will be affected.
Also being shuttered are two distribution centers in Lakeland, Florida, and Buena Park, California. The Florida facility is
expected to close in early June, with operations transferring to a logistics facility in Atlanta.
The company is already working on selling the California hub.
J.C. Penney CEO Marvin Ellison said the company aligned news of the closures with the offering of a voluntary early
retirement program for home office, store and supply chain employees who meet criteria based on age and years of service
to the company.
Roughly 6,000 associates are eligible for the plan, and must accept on or before March 17.
Shares of J.C. Penney closed at $5.96 on Monday. Over the past 12 months, the stock is trading down nearly 50 percent.
http://www.bizjournals.com/dallas/news/2017/03/06/j-c-penney-lays-off-an-undisclosed-number-of.html?ana=yahoo
Kroger Details Expansion of Home Delivery Service
Kroger Co. is expanding its test of grocery home delivery using Uber drivers to several markets around the country. It’s the
first time Kroger has offered home delivery in numerous markets.
“We’re testing with Uber delivery in several locations with plans to expand in 2017, where our customers can order through
ClickList and choose to have their groceries delivered by a local Uber driver,” Kroger CEO Rodney McMullen said during a
conference call on Thursday to discuss Kroger’s fourth-quarter earnings.
Cincinnati-based Kroger (NYSE: KR), the nation’s largest operator of traditional supermarkets, has dramatically expanded
its ClickList online order and customer pickup service over the past year and a half. It launched that service in summer 2015
at its Liberty Township store. It added more than 420 locations last year and now has more than 640 stores offering that
service through ClickList or the ExpressLane service that about 140 Harris Teeter stores in the Southeast offer.
Kroger has offered home delivery using its own vehicles in the Denver area for years. It never expanded that service, with
McMullen saying customers tell Kroger they generally prefer picking up their groceries because they can set a time to get
them rather than leaving delivered groceries on their doorstep for an indefinite amount of time.
But Amazon.com has begun offering home delivery of groceries in some bigger cities, while other grocers have contracted
with delivery services to provide the same service in select markets.
Kroger expanded home delivery for the first time beyond Denver last year when Harris Teeter launched a test market using
Uber drivers to delivery groceries to customer’s homes in the Washington, D.C., area.
Kroger officials haven’t commented on that service, but it must be going well. Kroger is now rolling out a similar service
using Uber to a number of markets and has plans to expand that further this year.
“As our customers change and evolve, we are taking steps to meet them where they are and, more importantly, where they
are going,” McMullen said.
A Kroger spokesman said the Uber delivery service isn’t available in Greater Cincinnati at this point.
Kroger isn’t just using that model for home delivery.
“We have a couple of other home delivery tests as well,” McMullen said on the conference call.
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I wrote last week that a Kroger manager in Tennessee hinted at Kroger’s home delivery service expansion.
Kroger is also offering its Simple Truth natural and organic products through its Vitacost.com vitamin and supplement
website. That essentially makes Simple Truth available for home delivery anywhere around the country because all
Vitacost.com products are shipped to customers’ homes. McMullen pointed out that New York City is Simple Truth’s No. 2
online sales market and Kroger doesn’t have any supermarkets there.
It’s all part of a broader Kroger initiative to give customers digital options. I profiled Kroger’s digital operations center in Blue
Ash last month.
“We are building digital experiences today so that customers can engage and shop for anything, anytime, anywhere with us
in the future,” McMullen said on the conference call. “We’re making meaningful investments in digital. We feel great about
these investments because customers tell us they are important to them.”
http://www.bizjournals.com/cincinnati/news/2017/03/06/kroger-details-expansion-of-home-delivery-
service.html?ana=e_ae_set1&s=scroll&ed=2017-03-06&u=xQeDzsnDNIz7tZRd3rOZapkwQDb&t=1488836953&j=77572531
'Significant Acceleration' of In-House Media-Buying, Analyst Cites Programmatic
A significant number of the world’s largest advertisers have shifted their media-buying in-house thanks to programmatic
media-buying technology, according to an analysis by a leading Wall Street equities firm.
Describing the analysis as a “recent check with industry contacts,” Pivotal Research Group analyst Brian Wieser published a
report to shareholders this morning, noting that 15 of the top 200 advertisers have taken media-buying away from their
agencies and brought it in-house because of their ability to buy it programmatically.
“This appeared to us as a relatively significant escalation from the last time we explored the topic,” Wieser wrote, though he
did not disclose when his last benchmark was conducted.
“But how significant a change was this finding,” he said, adding, “Not quite as much, as we discovered many of them
continue to work with agencies for most of their related needs.”
Wieser explained that in-house “buying exists along a continuum, with a range of responsibilities divided up between
marketer and agency.
“Overall, the impact of this trend is possibly slightly negative for holding companies because it leads some marketers to drive
more decision making than might have otherwise occurred. As time progresses, we expect to hear of more marketers
participating in such activities. But at the same time, we also expect that the depth of involvement many of them will have
with agencies may expand as well.”
http://www.mediapost.com/publications/article/296453/analyst-finds-significant-acceleration-of-big-
ad.html?utm_source=newsletter&utm_medium=email&utm_content=headline&utm_campaign=101083&hashid=6aw
Mobile Apps Viewed by More Small Businesses as a ‘Best Practice for Serving Customers’
MMW was briefed over the weekend on the findings of a new report that suggests just how important mobile apps have
become to small businesses.
Small and medium-sized businesses (SMBs) are moving rapidly toward adopting mobile apps, according to the research in
question from Clutch, a research, ratings, and reviews platform for business services.
Currently, 42% of SMBs have built their own mobile app, but Clutch’s survey indicates that SMBs increasingly view them as
a worthwhile tool to improve business operations and return on investment.
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Two-thirds (67%) of SMBs surveyed said they plan on having a mobile app by the end of 2017, a benchmark growth rate of
over 50% over the course of the year.
SMBs gave various reasons for building mobile apps as well as identified features they particularly value. Most of those
features directly relate to mobile apps’ impact on improving business, particularly their ability to provide solid return on
investment (ROI).
“People won’t just go download your app because your business has an app,” said Cameron Banga, Project Manager and
Co-Founder of 9magnets, a mobile app development company. “I think businesses are finding that having an app doesn’t
increase sales, but the customer service experience on mobile is definitely increasing customer satisfaction.”
https://mobilemarketingwatch.com/mobile-apps-viewed-small-businesses-best-practice-serving-customers-
70983/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+MobileMarketingWatch+%28Mob
Amazon and Pinterest Threaten to Shake Up the Search Ad Market
For a $37 billion market, search advertising has been rather sleepy for years.
That’s because Google has long dominated both internet searches and related ad spending. In fact, most search advertisers
spend the vast majority of their budgets with Google, perhaps sprinkle in a bit of Microsoft’s Bing, and call it day.
But that could be changing, thanks to Amazon and perhaps Pinterest. That’s welcome news for search advertisers, who
hope for more options for clients, as well as better products and pricing that could be spurred by more competition.
To date, “there hasn’t been a tremendous amount of innovation in search,” said Scott Shamberg, U.S. president of
Performics, a direct response-focused division of Publicis Media.
For years, there hasn’t been much fluidity in terms of user behavior. Google commanded roughly 64% of desktop searches
in December, according to comScore, followed by 23% for Microsoft’s Bing—rankings that have hardly budged in years.
Google recorded over 12 billion desktop searches in January, versus less than one billion on Amazon.
The domination in behavior also translates to advertising. Google is expected to pull in 76% of the search ad spending in the
U.S. this year, versus about 8.3% for Microsoft and less than 1% for Amazon, says eMarketer.
And on mobile, the digital ad buying firm Merkle estimated that Google was responsible for a staggering 96% of all search-
ad clicks on mobile devices during the fourth quarter.
Thus, the entry of Amazon and others into the sector, “very much has the potential to change things,” Mr. Shamberg said.
But change won’t happen overnight.
In January, Forrester Research analyst Collin Colburn published a report on the search ad market. He said expects a
“potentially pretty big shift over the next five years” in terms of consumer and advertiser behavior.
Seven or eight years ago, “any question, any need you had, turned to a search engine,” he said.
Now, particularly on mobile, people might turn to Amazon to look for apparel, Pinterest to look for home furnishing ideas, or
a site like Trivago for travel plans. Each of these searches is “taking one more search away, and starting to erode Google’s
dominance,” Mr. Colburn said. We’ve seen Google’s volume decline over last few years.”
Google didn’t respond to requests for comment.
Certainly, Google’s recent $22.4 billion ad revenue quarter, driven largely by search advertising, would seem to affirm that
the company’s dominance is hardly collapsing. But as Amazon enters any market, competitors take notice. The company’s
footprint in digital advertising overall has been expanding, and many in the industry see it as a sleeping giant.
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Amazon isn't about to roll out a full-fledged consumer search destination. But is has spent the past few years quietly rolling
out three different search ad products designed to help people find more things to buy on Amazon.com.
Amazon’s “Product Display Ads” feature product images and text that relate to people’s searches. For example, a person
searching for “sleeping bags” might see ads for camping products like tents.
These search ads direct people to product pages on Amazon; unlike classic search ads, they don’t send people to other
sites on the web.
“In the past 12 to 18 months we’ve really been focusing on search,” said Seth Dallaire, Amazon’s vice president of global
advertising sales at Amazon. “It’s still really early days for us.”
Mr. Dallaire noted that search is a mature ad market, and many advertisers and specialty search agencies have built “super
sophisticated” buying operations using thousands of keywords and product databases to power ads.
Thus, getting these advertisers to shift spending often means having to get plugged into their ad-buying software—and, in
turn, receiving a vital real estate presence on whatever digital dashboard they use to make decisions on where to spend.
“We’re still building a lot of the capabilities and tools some of these big buyers expect of us,” Mr. Dallaire.
Scott Linzer, vice president of owned media (i.e. paid advertising rather than organic marketing) at the Hearst-owned digital
agency iCrossing, said that “for certain clients, [Amazon’s search ads have] made material impacts on their spending.” One
reason they like Amazon’s emergence is that Google’s search ads can get pricey, depending upon competition at a given
moment.
That’s part of Pinterest’s sell, as well. The company just rolled out search ads last month. These ads appear when people
conduct searches such as ”living room ideas” and are more image centric than classic text links on a search engine.
“We don’t have as dense of demand as Google right now,” said Jon Kaplan, Pinterets’s global head of partnerships. “You
might see a pretty steep discount.”
Prices for search ads will vary by product category and time of year, but theoretically the fewer advertisers bidding for these
ads on Pinterest early on, the fewer instances that ad prices will be driven higher.
Mr. Kaplan said that Pinterest is already gaining traction in the market. He recently announced that Pinterest would plug its
search ad technology into the buying platform for Kenshoo, a firm that helps retailers like Macy’s and Home Depot spend
millions on search ads. “We were at their partner conference, and got a rousing round of applause,” he said. “I don’t know if
they’d had a new partner on their dashboard in a decade.”
Both Pinterest and Amazon believe they can help search advertisers reach people before they have made up their minds on
products. It remains to be seen if targeting those undecided shoppers with ads will perform as well as Google’s have for so
long—considering that so many people who conduct Google searches know exactly what they want.
As for Amazon’s emergence over the past two years, “the true mystery is, really can there be a third player here?” asked
Todd Bowman, director of search engine marketing at Merkle. “We are prepping our clients for that reality.”
https://www.wsj.com/articles/amazon-and-pinterest-threaten-to-shake-up-the-search-ad-market-1488798004
Todd Frantz Named Vice President and General Manager of Central Missouri Newspapers Inc.
Todd Frantz is the new vice president and general manager of Central Missouri Newspapers Inc., which publishes the
Jefferson City News Tribune, Fulton Sun and California Democrat.
Frantz, who will assume the position Monday, has more than 30 years of experience in media.
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"I am excited to be given the leadership opportunity with Central Missouri Newspapers," Frantz said. "I am proud to be
joining the talented group of employees at CMNI and am looking forward to getting to know people in the community. I look
forward to continuing the high-level of journalism, customer service and comprehensive marketing solutions that CMNI
offers."
Frantz most recently served as general manager of the Hot Springs, Arkansas, Sentinel Record, a publication of Palmer
Newspapers, a division of WEHCO Media. CMNI is also owned by Palmer Newspapers. Previous to joining WEHCO, Frantz
was general manager and sales director at Empire-Tribune and Glen Rose Reporter in Texas. He also had been executive
advertising director at the Daily Herald in Provo, Utah. Previous to that, he was president and publisher of three newspapers
in northern California.
Frantz said his wife, Mafer, and daughter, Isabella, will be moving to Jefferson City in late April or early May.
Terri Leifeste, who has been general manager of CMNI for four years and is president of Palmer Newspapers, has been
named general manager of another Palmer Newspapers publication, the Texarkana Gazette.
As president of Palmer Newspapers, Leifeste will continue to have ties to CMNI and Central Missouri.
"I'm not just walking away from Central Missouri," Leifeste said. "I will still oversee operations of CMNI, and we're bringing in
a quality person in Todd, whom I've worked with for some time as his supervisor at Hot Springs. Together, he and I will build
upon the successes and strengths of our incredible newspapers in Central Missouri."
The promotions were announced Wednesday to employees in meetings in Jefferson City, Hot Springs and Texarkana by
Nat Lea, chief executive officer and president of WEHCO Media, Jeff Jeffus, president of WEHCO Newspaper Division,
Leifeste and Frantz.
Lea said of the promotions: "We have been proud of the work Terri has done in Central Missouri. She is a talented leader
and very discerning in choosing the people who work with her.
"I am pleased that she picked Todd to succeed her in Jefferson City. I have watched Todd as he has grown in our business
and know him to be a thoughtful, confident and competent manager."
Jeffus added: "I've known and worked with Terri for more than 25 years. Her commitment to community journalism and
understanding of the impact and connection that a newspaper can have with a community is exceptional. We are confident
that Todd will build upon the foundation of good community journalism that Terri has fostered during her time in Central
Missouri."
Leifeste said of her time in Central Missouri: "I have so enjoyed my time in Mid-Missouri and treasure the connections I've
made within the community through civic and nonprofit ventures.
"While I will certainly miss the daily interaction with CMNI staff, who welcomed me as family when I joined the team four
years ago, I look forward to the opportunities that lie ahead in Texarkana and in WEHCO. I am certainly proud to be part of a
company that has such high values of journalistic integrity and active participation in the communities that it serves."
http://www.fultonsun.com/news/local/story/2017/mar/02/new-gm-newspapers/663742/
U.S. Department of Labor Overtime Rule Litigation Update
As we have previously informed the readers of this column, the U.S. Department of Labor immediately appealed the
nationwide injunction to stop the implementation of the agency's final overtime rule. That appeal was filed with the U.S.
Court of Appeals for the Fifth Circuit.
In the original briefing schedule, briefing was to be completed on Jan. 31, 2017. Prior to that date, the Department of Labor
had filed a motion to extend by 30 days the due date for its reply brief – until March 2. The court granted that motion.
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On Feb. 17, the Department of Labor filed another motion to extend by an additional 60 days the time for filing its reply brief.
The Department of Labor's reason for requesting the second extension was to "allow incoming leadership personal
adequate time to consider the issues ..."
On Feb. 22, the court granted the Department of Labor's motion, making May 1 the new due date for the reply brief. This is
very good news. By May 1, there will certainly be a new secretary of labor, who will then have the authority to stop or
withdraw the appeal and accept the decision of the lower court. Let us hope that happens.
Using its authority under the Congressional Review Act, there is still a second possibility that Congress could pass a
resolution disapproving of the rule. The bill would then go to President Trump for signature, which he certainly would do.
This is yet another track for stopping the overtime rule.
http://snpa.org/stories/Zinsergram,4128772
The 22 Newspapers that Matter Most to Wall Street
The national newspaper industry is dominated by three papers: The New York Times, USA Today and The Wall Street
Journal, from New York Times Co., (NYT), Gannett Co. Inc. (GCI) and News Corp. (NWSA), respectively. There are several
large newspapers that are standalone companies, either public or private. However, most of the balance of the nation's
largest dailies are owned by three public companies: Gannett, Tronc Inc. (TRNC) and McClatchy Co. (MNI). And a few large
papers owned by each of the three public companies are critical to their futures.
Although the three public newspaper chains all own a large portfolio of properties, each has a small number that represent a
critical mass of overall corporate revenue. If some of these falter, at any of the companies, overall earnings become
pressured.
Papers that do not suffer from the sort of quarter-to-quarter financial pressure public newspaper companies do include some
of the largest local newspapers in America. The Minneapolis Star Tribune is owned by a local billionaire, Glen Taylor. The
Boston Globe is owned by a billionaire as well, successful hedge fund manager John Henry. The Washington Post is owned
by Amazon.com founder Jeff Bezos. Local billionaires own or control the New York Daily News, Las Vegas Journal News,
Philadelphia Inquirer/Daily News and Salt Lake Tribune as well.
The Dallas Morning News is owned by A.H. Belo Corp. (AHC), which does not own any other large papers.
There are the 22 papers that are most important, financially, to the public company newspaper industry.
Gannett's largest properties are the Arizona Republic (based in Phoenix), Louisville Courier-Journal, Detroit Free Press,
Cincinnati Enquirer, Milwaukee Journal, Indianapolis Star, Nashville Tennesean and recently purchased Bergen Record.
ALSO READ: tronc Shows Financial Improvements as Media Landscape Changes
McClatchy's big papers are the Miami Herald, Kansas City Star, Sacramento Bee, Charlotte Observer, (Raleigh) News and
Observer and Fort Worth Star-Telegram.
Tronc's papers are the Chicago Tribune, Los Angeles Times, Orlando Sentinel, Sun-Sentinel, Baltimore Sun and San Diego
Union-Tribune.
A small foundation for such a large industry.
http://finance.yahoo.com/news/22-newspapers-matter-most-wall-155039799.html