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Media Briefing: Advertising and commerce ebb while subscriptions flow in publisher’s Q2 earnings reports


On this week’s Media Briefing, media editor Kayleigh Barber analyzes the most recent quarterly earnings stories from BuzzFeed, IAC’s Dotdash Meredith, Information Corp’s Dow Jones, Gannett, The Enviornment Group and The New York Occasions.

The important thing hits: 

  • Half of the publicly traded publishers on this roundup noticed a lower in whole income or professional forma income within the second quarter. 
  • Single-digit proportion declines had been customary in publishers’ digital promoting income. 
  • Commerce is down for BuzzFeed whereas digital subscriptions are up for information publishers. 

If the primary quarter of the yr confirmed indicators of uncertainty concerning the state of digital promoting and publishers’ commerce companies, the second quarter all however confirmed that these income streams are being straight impacted by the state of the economic system. In reality, “headwinds” to promoting attributable to the “difficult macroeconomic surroundings” had been persistently quoted in earnings calls by the publishers’ chief executives and chief monetary officers, echoing what many execs from platforms, like Twitter and Meta, mentioned of their firms’ earnings stories final month. 

Diving additional into publishers’ second quarter earnings stories, although, the blame won’t be all on the economic system at giant however somewhat which income streams firms like BuzzFeed, Gannett, IAC’s Dotdash Meredith, Information Corp’s Dow Jones, The Enviornment Group and The New York Occasions have determined to hedge their bets on within the pursuit of income diversification.

About half of the publishers included on this roundup skilled a lower in whole income earned within the quarter, with the offender specifically being promoting. The opposite half skilled development in income year-over-year, due to subscription income or, in some circumstances, ongoing acquisitions resulting in extra advert income flowing in than that they had in years prior. 

For many of these media firms that participated within the M&A race — BuzzFeed, IAC and The New York Occasions — professional forma income was used to get a clearer comparability of how these companies carried out pre- and post-acquisitions. The Enviornment Group, regardless of a number of acquisitions, didn’t report professional forma income in its Q2 earnings, although the corporate did notice that its acquisitions of The Spun and Athlon accounted for 53% of its year-over-year digital promoting income development within the quarter. – Kayleigh Barber 

Headwinds have begun touchdown blows 

IAC’s Dotdash Meredith skilled a 7% decline in professional forma digital income (which encompasses promoting, commerce, digital subscriptions and different varied companies) from $234.5 million in Q2 2021 to $253.1 million in Q2 2022. 

Through the firm’s earnings call on Aug. 9, Dotdash Meredith CEO Neil Vogel positioned half the blame for that on the macroeconomic surroundings and half on the corporate’s determination to demonetize and transfer a few of its newly acquired Meredith manufacturers onto Dotdash’s proprietary tech stack in the course of the quarter.

The promoting classes which have been experiencing “concentrated issues,” in keeping with Vogel, are retail, meals and CPG and sadly for IAC, “the Meredith property that we purchased over-index on these classes based mostly on the manufacturers that they’re,” he added in the course of the firm’s Q2 earnings name. 

Past the macroeconomic impacts to promoting, Vogel additionally attributed the decline in digital income to the corporate taking longer than anticipated emigrate the Meredith properties over to the Dotdash tech stack. Proper now, about 75% of the corporate’s whole site visitors is coming by way of what he referred to as Dotdash’s “efficiency websites,” however 1 / 4 of that viewers continues to be not being effectively monetized. This has triggered “a bit of little bit of a knock-on impact” main the corporate “right into a harder interval with out our full arsenal of instruments,” he added. 

Digital promoting income decreased by 2.4% yr over yr for The New York Occasions, which attributed this to “the impression of the difficult macroeconomic surroundings, a discount in marketer spend on promoting adjoining to information protection, and provide constraints in programmatic promoting associated to decisions we made to drive extra viewers to our apps,” mentioned CFO Roland Caputo in the course of the firm’s earnings name on Aug. 3.  

However, the corporate’s print promoting income elevated by about 15% with reside leisure and luxurious advertisers rising their spend within the quarter, Caputo mentioned. This elevated the Occasions’ total promoting income by 4% within the quarter year-over-year.

Not all boats are going beneath  

Information Corp’s earnings report included its full fiscal-year earnings, which ended on June 30 and indicated that Dow Jones skilled its highest-ever development fee in promoting income since its 2007 acquisition — up 20% — as a result of a 22% year-over-year enhance in digital promoting income and a 19% year-over-year enhance in print promoting income.

Digging deeper into the fourth quarter information, the expansion trajectory stays with advert income rising by 13% yr over yr, or $13 million. Digital promoting particularly grew by 16% yr over yr and contributed 58% of the entire promoting income within the quarter, in comparison with 56% within the prior yr interval, in keeping with Information Corp’s earnings report.

In the meantime, The Enviornment Group — which publishes Sports activities Illustrated, The Avenue and Parade, amongst others — noticed its digital promoting income enhance by 114% yr over yr to $24.7 million, which is primarily attributable to the addition of advert income and sellable stock from the acquisitions of The Spun (June 2021) and AMG/Parade (beforehand generally known as Athlon and closed April 2022), according to the company’s latest quarterly earnings filing with the Securities and Exchange Commission

Whereas the corporate didn’t disclose professional forma income comparisons, it did break down income generated from its varied titles. The Spun recorded $4.5 million of digital advert income and AMG/Parade recorded $2.5 million. In the meantime, The Avenue introduced in $1.6 million, Sports activities Illustrated made $872,000 and the legacy enterprise earned $1.8 million.

The Enviornment Group additionally attributed this development to “site visitors enhancements of 82% and over 40% development in show CPMs,” in keeping with a press launch. The bump in show CPMs is considerably shocking as Operative’s STAQ Benchmarking Information reported that within the second quarter of 2022, the common price of CPMs within the programmatic open market (based mostly on every week’s common) was $1.58, down from $1.74 in the identical interval the yr prior.

BuzzFeed additionally reported a rise to its promoting enterprise, with revenues rising 11% year-over-year to $53.2 million. Nonetheless, excluding Advanced’s contribution, BuzzFeed’s advert income declined by 5% yr over yr, and the corporate noticed a 3% decline in total advert pricing within the interval.

That mentioned, BuzzFeed’s CFO Felicia DellaFortuna mentioned the corporate is beginning to really feel “pricing stress” on its owned and operated stock from these macroeconomic traits. And since BuzzFeed’s content material “continues to be closely leaning into branded promotional content material… we do anticipate, with the macroeconomic headwinds, for the branded promotional content material to be most impacted in Q3.”

Commerce isn’t king 

Sticking with BuzzFeed for a second, the once-prized commerce enterprise took a fair deeper hit within the second quarter than it did within the earlier quarter. Whereas Q1 nonetheless skilled development (albeit off course), Q2 noticed a 22% decline in commerce income year-over-year to $13.3 million.

These declines had been anticipated towards the elevated spending in the course of the pandemic, in keeping with DellaFortuna, however the identical sample from final quarter’s earnings report emerged, exhibiting that decreased Fb site visitors triggered a lower in viewers to the corporate’s buying content material. The timing shift of Amazon’s Prime Day occasion from Q2 in 2021 to Q3 in 2022 additionally performed a component. 

Dotdash Meredith attributed a part of its lower in digital income this quarter to a softening of client demand impacting affiliate commerce income and efficiency advertising income, which encompasses monetary companies merchandise. 

Digital subscriptions are holding regular 

The New York Occasions has been on a campaign to extend its digital subscription enterprise for years, lately repositioning its categorization of this enterprise from the variety of whole subscriptions to the variety of particular person subscribers it has in its ecosystem. And with the acquisition of The Athletic final yr, it’s solely furthering its dedication to rising this enterprise. 

It seems that this technique has been working for the corporate as a result of, regardless of a lower in promoting income, the corporate’s whole income was $555.7 million for the quarter, a 7.9% enhance year-over-year in professional forma income. Its digital subscription income elevated to $238.7 million, up 25.5% year-over-year. That enhance got here from including 180,000 digital-only subscribers within the quarter. 

Dow Jones’ whole print and digital subscriptions enterprise elevated by 29%, or $97 million, with digital subscriptions accounting for 68% of the entire income stream within the quarter. Whole subscriptions to Dow Jones’ client merchandise reached about 4.9 million, up 9% from the prior yr whereas digital-only subscriptions to Dow Jones’ merchandise grew 14%. In comparison with the primary three months of the yr, Dow Jones added about 100,000 subscriptions.

The Wall Avenue Journal grew 14% year-over-year to three.7 million common whole subscriptions within the quarter, nevertheless, this was flat with the variety of whole subscriptions within the first quarter of 2022, in keeping with its Q3 earnings report. Regardless of that, digital-only subscriptions elevated from 3 million within the Q3 to three.1 million in This autumn, representing a shift in how subscribers are preferring to obtain their information. 

Gannett, too, has been prioritizing its digital subscriptions enterprise for the previous yr, which reached a complete of just about 1.9 million paid digital-only subscribers on the finish of the second quarter of 2022. Whereas that income stream elevated 35% to $32.5 million, digital subscriptions solely account for 4.3% of the corporate’s whole Q2 income. Print subscriptions accounted for 32.3% of whole income within the quarter, or $242 million, in keeping with Gannett’s earnings report, which was down 15.4% from Q2 2021. 

There may be nonetheless a protracted option to go for Gannett to get its digital subscription enterprise as much as the extent of significance that print sits at. The corporate’s shortcoming on this entrance led it to lay off at least 80 employees from its newspapers final week.

What we’ve heard

“We’ve come to rely far much less on programmatic open income than we did two or three years in the past. We’re seeing among the softness in these CPMs.”

The Washington Put up chief income officer Pleasure Robins on the Digiday Podcast

 

Regardless of Gannett’s layoffs, native information shops are hiring

Gannett’s newest layoffs mustn’t essentially function a barometer for the native journalism job market.

A few of the affected Gannett journalists took to social media to announce their departures. However amid the slew of layoff bulletins was a vivid spot: Gannett workers’ tweets had been met with plenty of responses from workers at different native information shops at the moment hiring. They shared open roles, job postings and firm job boards, starting from newspapers owned by giant for-profit organizations like McClatchy and Hearst Newspapers, to non-profit information shops like Cardinal Information in Virginia and family-owned organizations like The Advocate.

“There’s this fascinating dichotomy in our business proper now, the place you proceed to see dramatic contractions with legacy information and layoffs nonetheless occurring, after which in our world, which is small- to medium-sized impartial digital information organizations each nonprofit and for-profit,” mentioned Mary Walter-Brown, founder and CEO of Information Income Hub. She added, “There are dozens of open positions in lots of the newsrooms we work with.”

Whereas job listings on the positioning JournalismJobs.com had been gradual the primary week of August (typical for this time of yr, in keeping with founder Dan Rohn), “this week has been actually busy,” he mentioned, with 47 job postings on Tuesday. “Gannett’s latest layoffs haven’t impacted our consumer base, particularly newspaper firms,” Rohn mentioned.

  • The Advocate, with the assistance of donors, has been in a position to develop its investigative workforce and protection of the surroundings within the final yr, mentioned Rene Sanchez, editor and vp of Information for The Occasions-Picayune, The Advocate and NOLA.com.
  • Previously yr, McClatchy has grown its information workforce by about 10%, mentioned Kristin Roberts, chief content material officer. (Editors at its Sacramento Bee and Fort Price Star-Telegram publications tweeted about open positions final week). Service journalism desks had been arrange in a number of newsrooms about two years in the past, modeled after the success of this protection by the Philadelphia Inquirer. This technique has helped McClatchy develop its viewers by double-digit percentages for 4 consecutive quarters, Roberts mentioned, resulting in extra alternatives to monetize this bigger viewers and re-invest in its newsroom.
  • The non-profit Cardinal Information — which covers the politics, economic system and tradition of Southwest and Southside Virginia — launched final yr with 12 donors. Now with over 1,300 donors and “beneficiant grants,” the digital website is within the strategy of hiring three reporters with the extra funding, mentioned government editor Dwayne Yancey. “We solely rent somebody when we have now a assured three-year funding stream,” he added.

In the meantime, the variety of nonprofit information shops is rising. The Institute for Nonprofit Information now has over 400 members, from 350 in 2021 and 140 in 2017.

“There are a selection of INN member information websites which have grown considerably in Gannett cities. To not exchange them precisely however to positively complement Gannett protection,” director Sue Cross mentioned, pointing to shops like The Ithaca Voice and LkldNow. – Sara Guaglione

Numbers to know

48%: Share share of surveyed writer executives who anticipate third-party cookies to proceed for use in Google’s Chrome browser till 2025 or later.

13%: Share enhance yr over yr in digital advert income that Condé Nast recorded within the first half of 2022.

29%: Share enhance yr over yr in digital advert income that Bloomberg Media recorded within the first half of 2022.

>50%: Share share of BuzzFeed’s advert transactions within the U.S. that use its first-party information product Lighthouse.

What we’ve lined

How TikTok’s advert revenue-sharing program TikTok Pulse works:

  • In Might, TikTok introduced a program to run adverts towards the highest 4% of movies on the platforms and share the income with the movies’ creators.
  • TikTok Pulse successfully operates as a post-roll advert program.

Watch an explainer video about TikTok Pulse right here.

How The Washington Put up’s Pleasure Robins is utilizing classes from 2020 to deal with the present financial slowdown:

  • The Put up has seen the tech, finance and auto advert classes soften, whereas journey, leisure and pharma have been robust.
  • Programmatic advert CPMs have additionally softened, although the Put up is insulated by its direct-sold enterprise.

Take heed to the most recent Digiday Podcast right here.

How media firms like The New York Occasions, BuzzFeed and Gannett are managing prices in an financial downturn:

  • The New York Occasions is chopping again on advertising spend, whereas BuzzFeed is chopping again on workplace area.
  • BuzzFeed is slowing hiring, and Gannett is shedding workers.

Learn extra about media firms’ price chopping right here.

BuzzFeed expands first-party information product Lighthouse to worldwide markets:

  • BuzzFeed’s first-party information product will now be out there within the U.Okay., Canada, Australia and Latin America, along with the U.S.
  • Campaigns utilizing Lighthouse will begin operating internationally on Sept. 1.

Learn extra about BuzzFeed’s Lighthouse growth right here.

Publishers and advert execs develop cynical of third-party cookie deprecation:

  • Publishing executives are skeptical that Google will undergo with disabling third-party cookies in its Chrome browser.
  • Publishers assume, if the third-party cookie does go away, it would assist Apple and harm advert tech firms.

Learn extra about third-party cookie deprecation right here.

What we’re studying

The Roe reversal’s effect on publisher traffic:
Publications serving feminine audiences, together with Jezebel, The nineteenth and The Minimize, have seen site visitors surge in reference to the Supreme Court docket overturning Roe v. Wade, in keeping with The New York Occasions.

The platform newsletter downturn:
Substack and Meta have began to restrict the variety of writers they pay to distribute newsletters by way of their respective platforms, in keeping with Insider.

Publishers game traffic:
Blavity, Advanced and Los Angeles Occasions are among the many publishers operating adverts in cellular recreation “Subway Surfers” to drive site visitors to their respective websites, in keeping with Advertising Brew.

Publishers play games:
Publishers like The New York Occasions, The New Yorker and Vulture are utilizing video games, corresponding to crossword puzzles, to assist them maintain on to subscribers, in keeping with Nieman Lab.

Apple’s original podcasts play:
Apple’s TV studio has spent as much as $10 million on investing in unique podcasts for its podcasting platform that would finally be tailored into films and TV reveals, in keeping with Bloomberg.



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