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Postmedia and Indochino Trading $40 Million in Ad Space for Slice of Revenue

With print advertising revenue on a steady and sharp decline, Postmedia has partnered with custom suit-seller Indochino in a new multi-million dollar deal.

Canada’s largest newspaper chain has committed $40 million worth of print and online advertising space to Indochino over the next five years in exchange for a portion of the brand’s Canadian revenue. Through the marketing partnership, Postmedia also has the option to purchase the Vancouver-based company’s stock at current prices.

Indochino announced Postmedia-owned papers will promote its brand’s custom suits and shirts to its 13.4 million monthly unique digital visitors and 8.3 million weekly print readers through print, digital and native advertising.

“We’re proud to be symbiotically aligned with Canada’s largest newspaper company, which provides credible sources of news via its digital and print network to two in three adults,” said Indochino CEO Drew Green, in a release.

Green called the partnership “mutually beneficial” and said it’ll to have a profound impact on Indochino’s Canadian growth. He added the deal will boost his company’s marketing activity while cutting the cost of one of Indochino’s largest expenses.

“Both sides have a vested interest in making the partnership work, which optimizes the chance of success and greatly reduces risk. It’s a winning formula and one that I hope will pave the way for similar ventures in other markets,” he said.

The once online-only company today has eight brick-and-mortar showrooms in Canada. Indochino said the partnership between the emerging brand and a long-established company is giving them key access to large markets including Toronto, Ottawa, Vancouver, Calgary and Edmonton.

“This is a great opportunity for two companies to leverage each other’s strengths in order to grow their businesses,” said Postmedia president Andrew MacLeod. “We believe it’s a perfect fit.”

Although just announced, the partnership has been inked since February 2017. Indochino said the agreement is already tracking above revenue performance benchmarks, stating Canadian orders are up 63 per cent year-over-year and net revenue growth of 77 per cent.

Although Postmedia represents 200 newspaper brands across the country, shrinking readership has forced the company to explore alternative revenue streams.

Last quarter, advertising revenue for the newspaper company was down $14.7 million, a 15 per cent drop compared to the year prior. However, Postmedia has leveraged the opportunity for its massive reach through online advertising that saw digital revenue up $3.4 million.

This isn’t Postmedia’s first time swapping advertising space for part of a company’s revenue. Last January, the national newspaper company struck a $50-million deal with fintech company Mogo that’s set to span three years.

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