Media Briefing: A snapshot of the digital media economy at the start of earnings season

On this week’s Media Briefing, media editor Kayleigh Barber examines the state of the digital media economic system as main tech platforms report quarterly earnings and promoting and commerce companies stay in flux.

Companies on the brink

The important thing hits:

  • IAC’s Dotdash Meredith noticed an 18% lower in its professional forma digital income in June 2022 in comparison with June 2021.
  • Platforms like Google, Twitter and Snap are already reporting decrease income than anticipated, blaming “macroeconomic headwinds” as a major purpose for down advert income. 
  • Media advisors and analysts say they’re seeing warning indicators however are ready to see how a lot of a success sure promoting classes take earlier than proclaiming a recession. 

Not all media analysts are able to name it a recession, however there are many purple flags popping up within the digital promoting economic system. 

Earlier this month, IAC issued its June Monthly Metrics report revealing its media subsidiary Dotdash Meredith had an 18% lower in professional forma digital income in June 2022 in comparison with June 2021 — professional forma measures Dotdash’s comparable income from earlier than and after its acquisition of Meredith final December. For context, this lower adopted a smaller 3% year-over-year decline in professional forma digital income in Might.

Representatives from Dotdash Meredith declined to talk additional in regards to the causes for why professional forma digital income was down in June, stating that the corporate doesn’t escape the assorted companies — commerce, programmatic promoting, branded content material, licensing and others — in its month-to-month or quarterly earnings studies. 

Whereas one firm doesn’t communicate for the entire of the business, it does beg the query if Dotdash Meredith is alone in experiencing a lower in income on the midway level of the yr. And past that, how a lot the financial slowdown of 2022 mirrors the pandemic-induced recession of 2020.

“That was a fast restoration [in 2020]. Q2 was tough however then Q3 bounced again. I don’t know if this one’s going to be so fast. It’ll for certain take us into 2023,” mentioned one publishing exec.  

Programmatic ebbs and slows

The programmatic open market is experiencing dips in CPMs in comparison with the weekly averages it noticed in 2021. In line with Operative’s STAQ Benchmarking Knowledge, the primary week of June 2022 had a mean CPM of $1.58, almost $0.20 decrease than the typical CPM the identical week in 2021. By the primary week of July, nonetheless, common CPMs fell to $1.41, the second lowest CPM of the yr after the week of January 2, 2022. That was greater than $0.20 decrease than the identical week’s common in 2021. 

“There’s at all times a dropoff [in programmatic ad prices] on the finish of the quarter and begin of the brand new quarter,” mentioned one other publishing govt. “The drop we noticed was not horrible. It was there. It wasn’t greater than anticipated, however I believe the restoration from the drop is slower than anticipated.”

Large Tech sees weak advertiser demand

The official second-quarter earnings studies for a lot of public media firms received’t be out till August. At that time, they may assist additional unpack simply how important of an impression the financial slowdown has had on the digital media business, however within the meantime, a number of the main platforms are already reporting that 2022 just isn’t the expansion yr executives as soon as hoped for. 

  • Meta reported its first-ever income decline in its Q2 earnings report of a 1% lower year-over-year to $28.8 billion. The corporate additionally predicts that its whole income can be decrease in Q3 within the vary of $26-28.5 billion because of the “continuation of the weak promoting demand setting we skilled all through the second quarter, which we consider is being pushed by broader macroeconomic uncertainty.”
  • Google’s “18-month run of blistering growth” is over, in line with The Info, after second-quarter income for the search engine’s mum or dad firm Alphabet was solely 13% year-over-year versus the 20-plus % progress it noticed for the previous six quarters. 
  • Snap opened its letter to investors by saying: “The second quarter of 2022 proved more difficult than we anticipated.” Income for the social media platform firm was additionally up 13% year-over-year, however “income progress has considerably slowed,” and “we’re additionally seeing growing competitors for promoting {dollars} that at the moment are rising extra slowly,” the letter learn. 
  • Twitter’s Q2 income decreased by 1% year-over-year to $1.18 billion, 11% under the estimated 10.5% growth, in line with CNBC. The corporate blamed its down income on the unsure standing of Elon Musk shopping for the social media platform, however its promoting income elevated by solely 2% year-over-year, totaling $1.08 billion. The rest of its income comes from its subscription enterprise Twitter Blue, which totaled $101 million, representing a lower of 27% year-over-year. 

“It’s not a slam dunk to pronounce [a recession] at this time. There are many warning flags, although,” mentioned Todd Krizelman, CEO of MediaRadar. “Google’s [second quarter] outcomes bolstered what we see, which is, some segments have slowed down however others are going like gangbusters.” 

Up and down advert classes

Krizelman is right in saying that what’s happening within the business just isn’t a blanket assertion. Similar to in Q2 2020, sure promoting classes are experiencing decreases whereas others are rising. 

  • Journey is up 82% year-over-year within the first six months of 2022 versus the identical interval in 2021. This class expands from airways and baggage firms to helicopter constitution flights and native ice rinks, Krizelman mentioned.
  • In the meantime, all meals promoting, together with CPG manufacturers, is down about 2% within the first half of 2022 in comparison with 2021. Wine, beer and spirits can be down a whopping 21% year-over-year, per MediaRadar. 
  • Magnificence is up 20% with folks going out and about extra, and residential furnishings is up 12% as many main retailers at the moment are sitting on a surplus of merchandise after provide chain points have been resolved, Krizelman mentioned. 
  • Eating places and bars are down 11% in advertising spend as they return to a state of normalcy post-COVID and the pet class is down 9% after the surge of individuals adopting canines and cats within the early months of the pandemic has lastly waned. 

With the classes in flux — and with many “up” classes being totally different in 2022 than those up in 2020 — promoting businesses and advert tech distributors are additionally readjusting their predictions for income progress this yr.

Monetary advisory Macquarie Group launched a set of analysis from its purchasers within the media and leisure, advert tech and promoting classes revealing the decreases in predicted annual income for 2022 as of June. 

On the mid-year level, Macquarie discovered the typical income progress charge predicted for the complete yr of 2022 decreased from 9.9% to 9.7% year-over-year for media & leisure, from 23.2% to 21.4% for advert tech and from 6% to five.1% for promoting. Whereas this won’t appear to be a drastic dip — the aforementioned stats would all mark year-over-year will increase, in any case — it’s necessary to acknowledge that many firms throughout the business are reconciling with the truth that preliminary progress targets is not going to be met this yr.

No enterprise is secure, not even commerce  

Advert income just isn’t the one space of publishers’ companies which are in danger. Earlier this week, Shopify laid off 10% of its staff — roughly 1,000 workers — as “shoppers resume outdated purchasing habits and pull again on the net orders that fueled the corporate’s latest progress,” in line with a report by The Wall Road Journal.

This development of shopper conduct, after all, threatens publishers’ e-commerce companies as effectively, and if a recession results in customers spending much less altogether, the entire business can be in a vicious cycle. In July, the U.S. shopper confidence index fell for the third consecutive month.

“A [gross domestic product] slowdown will result in an advert slowdown, which can impression all people,” mentioned Tim Nollen, a director and senior analyst for the media, leisure, promoting & advert tech division of Macquarie. The U.S. will report GDP progress — or lack thereof — for Q2 on Thursday. – Kayleigh Barber

What we’ve heard

“[Podcast revenue] will most likely get to 50% [of total revenue this year]. Plenty of that will depend on how the opposite strains are rising. We’ve three strains of enterprise: digital enterprise, audio enterprise, and subscription enterprise that we’re leaning into fairly exhausting.”

Slate CRO and president Charlie Kammerer

The post-cookie id image is a freeze body

A little bit greater than a yr in the past, Google’s choice to delay its deprecation of third-party cookies in its Chrome browser put publishers’ post-cookie preparations in one thing of a holding sample. A yr later, they’re nonetheless in it (and is perhaps for an additional couple of years).

“We’re undoubtedly in a holding sample ready to see what comes subsequent,” mentioned one publishing govt.

To be clear, publishers haven’t been sitting on their fingers whereas ready. They proceed to develop their first-party knowledge capabilities and assess different identifiers like Unified ID 2.0 — as they have been doing earlier than Google’s postponement. However they’re nonetheless ready for the purchase aspect to determine on which different IDs advertisers will help. “That’s the sticking level, and I don’t know what we are able to do to maneuver them alongside,” mentioned a second publishing govt. 

Nicely, that’s not the one sticking level. Publishers stay leery of the potential for all this alternate ID effort to be for naught (or not less than not but).

“You’ve gotta ask if Google goes to really kill the cookie,” mentioned the primary publishing govt on Tuesday. 

The following day, Insider reported that Google plans to postpone its third-party cookie deprecation deadline once again, this time to 2024… not less than, and Google confirmed as much in a company blog post stating, “we now intend to start phasing out third-party cookies in Chrome within the second half of 2024.” Cue Wilson Phillips: I do know that there’s ache, however you maintain on for yet another day… — Tim Peterson

Numbers to know

4.4 million: Variety of podcasts that have been distributed on Spotify through the second quarter of 2022.

84%: Share share that got here from unregistered non-subscribers throughout 670 publishers’ websites which have subscription fashions.

$87 million: Enterprise worth of 3BlackDot, a gaming-centric media firm that has been bought by its CEO from Webedia.

27: Variety of Twitter Areas occasions that The New York Occasions has held this yr, as of its July 8 occasion on U.Okay. prime minister Boris Johnson’s resignation.

$60 million: Quantity of income that Newsweek generated in 2021.

Digiday experiments with NFTs

Digiday launched a particular editorial undertaking known as Token to Play, together with 10 tales exploring the challenges and alternatives related to NFTs in media, advertising and gaming & esports. Along with this editorial bundle, we’ve additionally created 10 NFTs of robotic avatars as artwork and are utilizing this drop as a possibility for experimental journalism the place we attempt our hand at creating and minting NFTs to get a greater grasp of those digital belongings to tell future reporting. Try the undertaking right here.

What we’ve coated

Instagram makes some significant beneficial properties with publishers:

  • Digiday+ Analysis surveyed 72 writer professionals in June about the place Instagram matches into the social technique.
  • 58% of respondents mentioned they’re investing just a little or a average quantity on unique Instagram content material.

Learn extra about Instagram right here.

BDG’s comedy content material studio attracts advert {dollars} to its parenting vertical:

  • The BDG Comedy Studio has generated not less than $10 million in income since BDG acquired it via its buy of Some Spider Studios in September.
  • The comedy studio has labored with 22 totally different advertisers, roughly 90% of whom are new to BDG.

Learn extra about BDG right here.

How Slate’s Charlie Kammerer is prioritizing frequency to spice up podcast income:

  • The podcast writer is producing shorter seasons of its exhibits that may be launched extra often.
  • “Slowburn,” “Decoder Ring” and “One Yr” are transferring from one season per yr to 2 or three.

Hearken to the newest Digiday Podcast right here.

Publishers hope NFTs will enhance occasion income, however gradual adoption of blockchain tech leaves attendees uncertain:

  • Blockworks and CoinDesk have provided NFTs as VIP tickets or freebies for attendees.
  • Nonetheless, even crypto fanatics haven’t precisely raced to take the publishers up on the provides.

Learn extra about NFTs as occasion income right here.

NFT holders may turn out to be the brand new membership mannequin however may threaten different income streams:

  • Blockworks, Playboy and Time have fashioned communities out of the individuals who have bought their NFTs.
  • Nonetheless, the one-time purchases may preclude or disrupt different income streams.

Learn extra about NFTs as membership fashions right here.

What we’re studying

Media execs prep for a recession:
Media executives say their companies have but to take a nosedive, however they’re girding up for the financial downturn to accentuate, corresponding to by slowing hiring and placing on a courageous face, in line with Vainness Truthful.

Layoffs at Vox Media:
Talking of media firms getting ready for a recession, Vox Media has laid off 39 workers and slowed hiring to move off any additional financial downturn, in line with Axios.

The New Yorker’s archive editor controversy:
The New Yorker fired its archive editor Erin Overbey final week after she spoke out in opposition to the publication, alleging the publication had subverted her work after she had known as out The New Yorker for an absence of variety and fairness, in line with The Day by day Beast.

MEL Magazine goes under again:
A yr after Recurrent Ventures acquired MEL Journal following the branded content material publication’s shutdown by unique proprietor Greenback Shave Membership, its new mum or dad firm has shut down the outlet and laid off its complete workers, in line with Observer.

The Washington Post reinforces its return-to-office policy:
Put up staffers haven’t been psyched in regards to the information group’s mandate that workers work from the workplace three days per week, however the Put up’s management is holding its floor whereas permitting for some exemptions, in line with Politico.

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