Gannett buys WordStream to smarten up digital marketing offerings

In an aggressive move aimed at augmenting its digital marketing solutions, USA Today parent Gannett (GCI) acquired Massachusetts-based WordStream for up to $150 million. As per the agreement, the McLean, Virginia-based media holding company will pay $130 million in cash initially and pay $20 million additionally over the next two years if WordStream achieves certain revenue milestones. The transaction will be funded through Gannett’s existing credit facility.

In the fast-growing market for internet marketing software, companies upgrade their capabilities regularly to retain clients who are constantly looking for effective tools to enhance return on investment. The prevalence of smartphones and the emergence of social media as one of the most preferred advertising platforms are luring more players to the field, aggravating competition.

WordStream’s suite of marketing tools, designed for small and medium enterprises to optimize their online advertising campaigns, will be integrated into Gannett’s existing data-driven digital marketing suites ReachLocal and SweetIQ, enabling the latter to offer a comprehensive solution to local and regional clients. WordStream’s impressive track record over the past years and its proven technology make the deal a safe bet for Gannett.

Gannet will pay $130 million initially, and pay $20 million more in future if WordStream achieves certain revenue milestones

Experts are of the view that a large number of small and medium businesses that are currently in different stages of transition into the cloud space will adopt different types of digital marketing techniques in the coming years, for pushing products and services, further boosting the prospects of online marketing solutions.

“This acquisition marks another critical milestone in Gannett’s digital transformation, enhancing our ability to support businesses and agencies in our local markets with the intelligent, data-driven marketing solutions they need to drive growth,” said Gannet CEO Robert Dickey.

The transaction, tentatively scheduled to close in the second quarter, is expected to add to Gannett’s earnings in the first full year of operations. WordStream is estimated to generate $55 million in annual revenue and $16 million in adjusted EBITDA during that period.

After adding 40% over the last 12 months, shares of Gannett gained more than 1% in premarket trading Friday.