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Register, Others Look to Fill PennySaver Void

Competitors are extending welcome mats to clients once loyal to PennySaver USA LLC and its former sales staff, as the free Brea-based weekly ad publication wraps up its fate in bankruptcy court.

Orange County Register parent Freedom Communications Holdings Inc. held a job fair at its headquarters in Santa Ana less than two weeks after PennySaver let go of 678 employees without notice.

“We’ve been through our own difficulty over the last couple of years, and there is nothing more unsettling than suddenly finding yourself unemployed,” said Steve Churm, chief revenue officer at Freedom. “We immediately reached out to folks we know at PennySaver, particularly on the sales, marketing and production side, and reassured them that we would welcome their interest in us. We got four or five people who I think can really strengthen our team.”

Some of PennySaver’s advertisers also are turning to the Orange County Register to fill a void left by the sudden loss of the familiar direct-mail shopper that was delivered to some 9.1 million homes throughout California until few months ago. PennySaver had 800 editions targeted to markets as small as the Balboa Peninsula or the northeast side of Costa Mesa—a selection of zones that gave local advertisers a relatively cheap buy for targeted distribution.

“We tried to make ourselves available as a bridge to help those companies find a place for their marketing message,” Churm said. “It hasn’t been a strong uptick, but we’ve certainly answered multiple calls from people inquiring about the Register and some of the things we have to offer in terms of marketing.”

The Register offers less expensive advertising rates in a roster of community newspapers than it does in its daily edition.

Churm said the weeklies—including the Laguna Niguel News, Irvine World News, Rancho Canyon News, San Clemente Sun Post News and Saddleback Valley News—are well suited for “smaller product providers and service companies.”

“As a major regional newspaper company, both with the Register and the Press Enterprise (in Riverside), we can offer opportunities to businesses of all sizes,” he said. “In the case of the typical PennySaver advertiser, we have community weekly papers that are serving almost all of the 34 communities here in Orange County as well as six zoned sections of the Press Enterprise. So I think there is a fit for the PennySaver advertiser, particularly if the budget is more limited.”

‘Scrambling’

Other publishers also are moving to fill any vacuum left by PennySaver’s demise.

“Advertisers are scrambling for things to replace what they were getting from PennySaver,” said Gary Mulloy, chairman and chief executive of coupon publisher Money Mailer.

“We are seeing a positive uplift in contacts from clients right now, and it’s helping our business. It’s an opportunity for us to bring a number of people into our business that perhaps haven’t tried it before. It probably is going to be a long-term benefit for us.”

Money Mailer, owned by Chicago-based investor Madison Industries, employs about 150 at its headquarters in Garden Grove and has another 450 working for its franchises. It sends out envelopes stuffed with advertisements and coupons each month to blocks of 10,000 local households, targeting homeowners with high income. It annually delivers to some 17 million households across the U.S. Its Southern California reach stretches from Santa Clarita to San Diego.

“A lot of our franchisees are being contacted by businesses, as well as our franchisees reaching out to businesses that they know are now without” PennySaver, Mulloy said. “It’s a competitive business that we are a part of, but it is a business that is critical to the retail merchants that we serve. We are the primary advertising product that they use to drive traffic to their retail locations, and it’s not a medium that is drying up and going away.”

Valpak

Valpak, another competitor, has seen a 5% to 7% uptick in business since PennySaver shut down its operations on May 22. The St. Petersburg, Fla.-based company, owned by Cox Media Group, has 170 franchises and 650 employees. The coupon publisher reaches 2.7 million homes in Southern California and a total of 40 million homes across the nation and 20 billion coupons sent out each month.

Rick McElwain, Valpak’s executive vice president of franchising for the U.S. and Canada, said there were telltale signs of “some issues” at PennySaver, including “getting calls from salespeople looking for jobs” and “content and page counts decreasing.”

“In these days and times—in terms of media sales and print sales—it really has become a multifaceted sale, and you have to bring more to the table than just a print product,” McElwain said. “Valpak has a variety of print and digital products that consumers want and that are relevant, and content that can be served anywhere, any time. It’s an increasingly mobile world, and because of that, people are not just looking for deals in their mailbox anymore. They are searching online, and it’s important that you diversify your product base and include [social media and Google AdWords] to meet the needs of” current-day advertisers.

Shake-Up

PennySaver in February said it will cut its weekly print volume by 22% to 7 million, and invest in the company’s digital media properties. It also replaced recently hired Chief Executive Liz Gaier with Ron Myers and shut down The Monthly Mailer publications in Hermosa Beach that it acquired in May 2014. A month later it ceased its operations in Vista, laying off 131 employees and consolidating printing to its Brea and Mira Loma facilities.

The shake-up came a year after OpenGate Capital LLC in Los Angeles bought PennySaver for $22.5 million in 2013. The private equity firm declined to fund the shopper publication’s payroll late last month, prompting the company to shut down and file for Chapter 7 bankruptcy.

OpenGate executives did not return calls seeking comment last week.

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