Meredith Builds Up a Sideline in Marketing

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Over the past few years, the magazine publisher has bought up a series of digital-ad agencies, forming a full-service marketing shop. Called Meredith Integrated Marketing, the operation has created custom publishing, email, social media and mobile campaigns for major marketers, including Kraft Foods, Chrysler and Wells Fargo. It recently recruited digital-ad veteran Martin Reidy to lead its marketing arm, and says it is on the prowl for more acquisitions.

Meredith increasingly competes head to head for business with big advertising companies, which also have been pouring resources into developing digital marketing and consumer-research capabilities. Chrysler, for instance, recently picked Meredith to solicit prospective consumers via direct mail, email marketing and social media. Omnicom Group's BBDO previously handled that work.

Such business has provided new streams of revenue for Meredith, and is proving to be something of a lifeline amid the industrywide decline in print-advertising revenues. As its magazine-ad revenue plunged 15% from a year earlier to $530.2 million in the fiscal year ended June 30, revenue tied to Meredith's integrated-marketing business rose 13%. The unit has revenue of roughly $175 million, according to a person familiar with the matter.

"Look at the marketing and media landscape today, you are seeing a dramatic reshaping," says Jack Griffin, president of Meredith's National Media Group. "I don't think there is any way around the fact that companies like ours that are media-and-marketing companies have to be proficient in and capable at this craft."

"Meredith is pretty far ahead of everybody else," says Linda Gridley, chief executive of New York investment bank Gridley & Co., which specializes in mergers and acquisitions in the marketing and Internet industries. "It's an area that multiple media companies are now looking at."