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Media Briefing: Advertising and commerce ebb while subscriptions flow in publishers Q2 earnings reports

In this weeks Media Briefing, media editor Kayleigh Barber analyzes the most recent quarterly earnings reports from BuzzFeed, IACs Dotdash Meredith, News Corps Dow Jones, Gannett, The Arena Group and THE BRAND NEW York Times.

The main element hits:

  • 1 / 2 of the publicly traded publishers in this roundup saw a reduction in total revenue or pro forma revenue in the next quarter.
  • Single-digit percentage declines were standard in publishers digital advertising revenue.
  • Commerce is down for BuzzFeed while digital subscriptions are up for news publishers.

If the initial quarter of the entire year showed signs of uncertainty concerning the state of digital advertising and publishers commerce businesses, the next quarter all but confirmed these revenue streams are increasingly being directly influenced by hawaii of the economy. Actually, headwinds to advertising due to the challenging macroeconomic environment were consistently quoted in earnings calls by the publishers chief executives and chief financial officers, echoing what many execs from platforms, like Twitter and Meta, said within their companies earnings reports last month.

Diving further into publishers second quarter earnings reports, though, the blame is probably not all on the economy most importantly but instead which revenue streams companies like BuzzFeed, Gannett, IACs Dotdash Meredith, News Corps Dow Jones, The Arena Group and THE BRAND NEW York Times are determined to hedge their bets on in the quest for revenue diversification.

About 50 % of the publishers one of them roundup experienced a reduction in total revenue earned in the quarter, with at fault namely being advertising. Another half experienced growth in revenue year-over-year, because of subscription revenue or, in some instances, ongoing acquisitions resulting in more ad revenue flowing in than that they had in years prior.

For some of these media companies that participated in the M&A race BuzzFeed, IAC and THE BRAND NEW York Times pro forma revenue was used to obtain a clearer comparison of how these lenders performed pre- and post-acquisitions. The Arena Group, despite several acquisitions, didn’t report pro forma revenue in its Q2 earnings, although company did remember that its acquisitions of The Spun and Athlon accounted for 53% of its year-over-year digital advertising revenue growth in the quarter. Kayleigh Barber

Headwinds have begun landing blows

IACs Dotdash Meredith experienced a 7% decline in pro forma digital revenue (which encompasses advertising, commerce, digital subscriptions along with other various businesses) from $234.5 million in Q2 2021 to $253.1 million in Q2 2022.

Through the companys earnings ask Aug. 9, Dotdash Meredith CEO Neil Vogel placed half the blame for that on the macroeconomic environment and half on the companys decision to demonetize and move a few of its newly acquired Meredith brands onto Dotdashs proprietary tech stack through the quarter.

The advertising categories which have been experiencing concentrated problems, in accordance with Vogel, are retail, food and CPG and unfortunately for IAC, the Meredith assets that people bought over-index on those categories in line with the brands they are, he added through the companys Q2 earnings call.

Beyond the macroeconomic impacts to advertising, Vogel also attributed the decline in digital revenue to the business taking longer than likely to migrate the Meredith properties to the Dotdash tech stack. At this time, about 75% of the companys total traffic is coming through what he called Dotdashs performance sites, but 25 % of this audience continues to be not being efficiently monetized. It has caused a small amount of a knock-on effect leading the business right into a tougher period without our full arsenal of tools, he added.

Digital advertising revenue decreased by 2.4% year over year for THE BRAND NEW York Times, which attributed this to the impact of the challenging macroeconomic environment, a decrease in marketer devote to advertising next to news coverage, and offer constraints in programmatic advertising linked to choices we designed to drive more audience to your apps, said CFO Roland Caputo through the companys earnings ask Aug. 3.

However, the companys print advertising revenue increased by about 15% with live entertainment and luxury advertisers increasing their spend in the quarter, Caputo said. This increased the days overall advertising revenue by 4% in the quarter year-over-year.

Not absolutely all boats ‘re going under

News Corps earnings report included its full fiscal-year earnings, which ended on June 30 and indicated that Dow Jones experienced its highest-ever growth rate in advertising revenue since its 2007 acquisition up 20% because of 22% year-over-year upsurge in digital advertising revenue and a 19% year-over-year upsurge in print advertising revenue.

Digging deeper in to the fourth quarter data, the growth trajectory remains with ad revenue increasing by 13% year over year, or $13 million. Digital advertising specifically grew by 16% year over year and contributed 58% of the full total advertising revenue in the quarter, in comparison to 56% in the last year period, in accordance with News Corps earnings report.

Meanwhile, The Arena Group which publishes Sports Illustrated, THE ROAD and Parade, amongst others saw its digital advertising revenue increase by 114% year over year to $24.7 million, that is primarily due to the addition of ad revenue and sellable inventory from the acquisitions of The Spun (June 2021) and AMG/Parade (previously referred to as Athlon and closed April 2022), based on the companys latest quarterly earnings filing with the Securities and Exchange Commission.

As the company didn’t disclose pro forma revenue comparisons, it did breakdown revenue generated from its various titles. The Spun recorded $4.5 million of digital ad revenue and AMG/Parade recorded $2.5 million. Meanwhile, THE ROAD earned $1.6 million, Sports Illustrated made $872,000 and the legacy business earned $1.8 million.

The Arena Group also attributed this growth to traffic improvements of 82% and over 40% growth in display CPMs, in accordance with a news release. The bump in display CPMs is somewhat surprising as Operatives STAQ Benchmarking Data reported that in the next quarter of 2022, the common cost of CPMs in the programmatic open marketplace (predicated on each weeks average) was $1.58, down from $1.74 in exactly the same period the entire year prior.

BuzzFeed also reported a rise to its advertising business, with revenues increasing 11% year-over-year to $53.2 million. However, excluding Complexs contribution, BuzzFeeds ad revenue declined by 5% year over year, and the business saw a 3% decline in overall ad pricing in the time.

Having said that, BuzzFeeds CFO Felicia DellaFortuna said the business is beginning to feel pricing pressure on its owned and operated inventory from those macroeconomic trends. And because BuzzFeeds content continues to be heavily leaning into branded promotional content we do expect, with the macroeconomic headwinds, for the branded promotional content to be most impacted in Q3.

Commerce isnt king

Keeping BuzzFeed for an instant, the once-prized commerce business took a straight deeper hit in the next quarter than it did in the last quarter. While Q1 still experienced growth (albeit off target), Q2 saw a 22% decline in commerce revenue year-over-year to $13.3 million.

These declines were expected contrary to the elevated spending through the pandemic, in accordance with DellaFortuna, however the same pattern from last quarters earnings report emerged, showing that decreased Facebook traffic caused a reduction in audience to the companys shopping content. The timing shift of Amazons Prime Day event from Q2 in 2021 to Q3 in 2022 also played a component.

Dotdash Meredith attributed section of its reduction in digital revenue this quarter to a softening of consumer demand impacting affiliate commerce revenue and performance marketing revenue, which encompasses financial services products.

Digital subscriptions are holding steady

THE BRAND NEW York Times has been on a crusade to increase its digital subscription business for a long time, recently repositioning its categorization of the business from the amount of total subscriptions to the amount of individual subscribers it has in its ecosystem. Sufficient reason for the acquisition of The Athletic this past year, its only furthering its commitment to growing ecommerce.

It would appear that this plan has been doing work for the business because, despite a reduction in advertising revenue, the companys total revenue was $555.7 million for the quarter, a 7.9% increase year-over-year in pro forma revenue. Its digital subscription revenue risen to $238.7 million, up 25.5% year-over-year. That increase originated from adding 180,000 digital-only subscribers in the quarter.

Dow Jones total print and digital subscriptions business increased by 29%, or $97 million, with digital subscriptions accounting for 68% of the full total revenue stream in the quarter. Total subscriptions to Dow Jones consumer products reached about 4.9 million, up 9% from the last year while digital-only subscriptions to Dow Jones products grew 14%. When compared to first 90 days of the entire year, Dow Jones added about 100,000 subscriptions.

The Wall Street Journal grew 14% year-over-year to 3.7 million average total subscriptions in the quarter, however, this is flat with the amount of total subscriptions in the initial quarter of 2022, in accordance with its Q3 earnings report. Even though, digital-only subscriptions increased from 3 million in the Q3 to 3.1 million in Q4, representing a shift in how subscribers are preferring to get their news.

Gannett, too, has been prioritizing its digital subscriptions business for days gone by year, which reached a complete of almost 1.9 million paid digital-only subscribers by the end of the next quarter of 2022. While that revenue stream increased 35% to $32.5 million, digital subscriptions only take into account 4.3% of the companys total Q2 revenue. Print subscriptions accounted for 32.3% of total revenue in the quarter, or $242 million, in accordance with Gannetts earnings report, that was down 15.4% from Q2 2021.

There’s still quite a distance to choose Gannett to obtain its digital subscription business around the amount of importance that print sits at. The companys shortcoming with this front led it to lay off at the very least 80 employees from its newspapers the other day.

What weve heard

Weve arrived at rely much less on programmatic open revenue than we did several years ago. We have been seeing a few of the softness in those CPMs.

The Washington Post chief revenue officer Joy Robins on the Digiday Podcast

Despite Gannetts layoffs, local news outlets are hiring

Gannetts latest layoffs shouldn’t necessarily serve as a barometer for the neighborhood journalism job market.

A few of the affected Gannett journalists took to social media marketing to announce their departures. But amid the slew of layoff announcements was a bright spot: Gannett employees tweets were met with several responses from employees at other local news outlets currently hiring. They shared open roles, job postings and company job boards, which range from newspapers owned by large for-profit organizations like McClatchy and Hearst Newspapers, to non-profit news outlets like Cardinal News in Virginia and family-owned organizations just like the Advocate.

Theres this fascinating dichotomy inside our industry at this time, where you keep up to see dramatic contractions with legacy news and layoffs still happening, and inside our world, that is small- to medium-sized independent digital news organizations both nonprofit and for-profit, said Mary Walter-Brown, founder and CEO of News Revenue Hub. She added, You can find a large number of open positions in lots of of the newsrooms we use.

While job listings on the webpage JournalismJobs.com were slow the initial week of August (typical because of this season, in accordance with founder Dan Rohn), this week has been really busy, he said, with 47 job postings on Tuesday. Gannetts recent layoffs haven’t impacted our clientele, especially newspaper companies, Rohn said.

  • The Advocate, by using donors, has had the opportunity to expand its investigative team and coverage of the surroundings within the last year, said Rene Sanchez, editor and vp of News for The Times-Picayune, The Advocate and NOLA.com.
  • Previously year, McClatchy is continuing to grow its news team by about 10%, said Kristin Roberts, chief content officer. (Editors at its Sacramento Bee and Fort Worth Star-Telegram publications tweeted about open positions the other day). Service journalism desks were create in multiple newsrooms about 2 yrs ago, modeled following the success of the coverage by the Philadelphia Inquirer. This plan has helped McClatchy grow its audience by double-digit percentages for four consecutive quarters, Roberts said, resulting in more opportunities to monetize this larger audience and re-invest in its newsroom.
  • The non-profit Cardinal News which covers the politics, economy and culture of Southwest and Southside Virginia launched this past year with 12 donors. Now with over 1,300 donors and generous grants, the digital site is along the way of hiring three reporters with the excess funding, said executive editor Dwayne Yancey. We only hire someone whenever we have a guaranteed three-year funding stream, he added.

Meanwhile, the amount of nonprofit news outlets keeps growing. The Institute for Nonprofit News now has over 400 members, from 350 in 2021 and 140 in 2017.

There are many of INN member news sites which have grown significantly in Gannett towns. Never to replace them exactly but to definitely supplement Gannett coverage, director Sue Cross said, pointing to outlets just like the Ithaca Voice and LkldNow. Sara Guaglione

Numbers to learn

48%: Percentage share of surveyed publisher executives who expect third-party cookies to keep to be utilized in Googles Chrome browser until 2025 or later.

13%: Percentage increase year over year in digital ad revenue that Cond Nast recorded in the initial 1 / 2 of 2022.

29%: Percentage increase year over year in digital ad revenue that Bloomberg Media recorded in the initial 1 / 2 of 2022.

>50%: Percentage share of BuzzFeeds ad transactions in the U.S. that use its first-party data product Lighthouse.

What weve covered

How TikToks ad revenue-sharing program TikTok Pulse works:

  • IN-MAY, TikTok announced an application to perform ads contrary to the top 4% of videos on the platforms and share the revenue with the videos creators.
  • TikTok Pulse effectively operates as a post-roll ad program.

Watch an explainer video about TikTok Pulsehere.

THE WAY THE Washington Posts Joy Robins is using lessons from 2020 to take care of the existing economic slowdown:

  • The Post has seen the tech, finance and auto ad categories soften, while travel, entertainment and pharma have already been strong.
  • Programmatic ad CPMs also have softened, although Post is insulated by its direct-sold business.

Pay attention to the most recent Digiday Podcasthere.

How media companies just like the NY Times, BuzzFeed and Gannett are managing costs within an economic depression:

  • THE BRAND NEW York Times is reducing on marketing spend, while BuzzFeed is reducing on work place.
  • BuzzFeed is slowing hiring, and Gannett is laying off employees.

Read more about media companies cost cuttinghere.

BuzzFeed expands first-party data product Lighthouse to international markets:

  • BuzzFeeds first-party data product will now be accessible in the U.K., Canada, Australia and Latin America, as well as the U.S.
  • Campaigns using Lighthouse begins running internationally on Sept. 1.

Read more about BuzzFeeds Lighthouse expansionhere.

Publishers and ad execs grow cynical of third-party cookie deprecation:

  • Publishing executives are skeptical that Google will proceed through with disabling third-party cookies in its Chrome browser.
  • Publishers think, if the third-party cookie does disappear completely, it can help Apple and hurt ad tech companies.

Read more about third-party cookie deprecationhere.

What were reading

The Roe reversals influence on publisher traffic:

Publications serving female audiences, including Jezebel, The 19th and The Cut, have observed traffic surge regarding the the Supreme Court overturning Roe v. Wade, based on the NY Times.

The platform newsletter downturn:

Substack and Meta have began to limit the amount of writers they pay to distribute newsletters through their respective platforms, in accordance with Insider.

Publishers game traffic:

Blavity, Complex and LA Times are on the list of publishers running ads in mobile game Subway Surfers to operate a vehicle traffic with their respective sites, in accordance with Marketing Brew.

Publishers play games:

Publishers just like the NY Times, THE BRAND NEW Yorker and Vulture are employing games, such as for example crossword puzzles, to greatly help them retain subscribers, in accordance with Nieman Lab.

Apples original podcasts play:

Apples TV studio has spent around $10 million on buying original podcasts because of its podcasting platform which could eventually be adapted into movies and Television shows, in accordance with Bloomberg.

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