Essential Fourth-Quarter Stats for Agencies and Media Companies

This iteration focuses specifically on agencies and media companies in the 2019 fourth quarter.

• Publicis: The decision announced by Google will have a significant impact on the entire marketing ecosystem: agencies, publishers, clients and customers. The truth is we still don’t know at this stage what will replace cookies at Google Chrome, so I have to be cautious in what I’m telling you, but there are some certainties that I can share with you at this stage. First, when it comes to Publicis, this announcement implied limited risk and a far bigger opportunity, thanks to the acquisition of Epsilon. The data gathered by Epsilon is actually very diverse. It’s online and offline. It’s behavior and social demographics. It’s intent and transaction. Let’s go into facts. Epsilon can see more than 55% of a noncash transaction in the U.S. You are what you buy. They have gathered 200 million individual IDs, which is a base to create customer relationships, and, out of those 200 million individual IDs, they are going up to 7,000 attributes to look at how people behave. This why any decrease in subordinate-party cookies will not materially impact Epsilon’s rich data sets.
• IPG: Two-thirds of Acxiom business is just managing first-party data. With respect to cookies, I know everyone’s writing about it. We’ve been worried about the cookies and the regulatory environment with respect to Google now for years, and we’re building up ways to work around it. We’re highly confident we will have a solution in place to address that issue. And we’re working closely with Google and the other providers to make sure that in fact happens.
• Omnicom: With respect to your first question regarding cookies, honestly, we’ve been expecting this for some time now. It’s not new news to us. It will make targeting a little bit more challenging than it was in the past. Then it certainly will make Google stronger. But in anticipation of it, that’s why we work so diligently on the creation of Omni and the enhancements that we made to it.
• WPP: As far as cookies are concerned, I think the first thing that is important to understand the background. There’s increasing concerns from consumers and regulators about data and about data leverage. And a feeling that third-party cookies were a way for people to hover up data, if you like, across the internet in a way that wasn’t compliant with what people expected. I think it’s right that we’re controlling this, and consumers need to consent to what’s going on with their data. I think what’s happened with cookies is symptomatic of a larger trend within society: The people want to have greater control over their data and how that’s being used. And this is just one example of it. Secondly, we have to understand what’s happening. So Google announced that they’ll stop supporting third-party cookies inside Chrome. That’s a position that’s already been taken by Safari. And if you look at prices in programmatic auctions on Safari, they’re lower than they are on Chrome, already, because there’s less data, there’s less value in those impressions. So I think programmatic media will be negatively impacted by this change. And that will make life harder for intermediaries, ad networks, affiliate networks, particularly people that rely on conversion tracking and cost per attribution, or cost-per-click pricing. Now, at the same time, Google has said that they’re going to build functionality into the browser that will allow the basic premises of what we need in terms of ad tracking; ad tracking, frequency capping, much of what we need to run a media campaign will be part of the browser, whether that will be an industry standard, a Google standard, we don’t know yet. Probably, I think it’s most likely to be a Google standard, though we’d like it to be an industry standard, and we’re working closely with Google and what these standards will be. In terms of the impact for the industry, I think it’s going to be better for those companies that have logged-in users, so that’s Google, Facebook, premium publishers, people with mobile applications. It will, to some extent, reduce the value of data generally in the ecosystems. It’s harder to execute and makes life tougher for intermediaries and people that don’t have third-party relationships. For data owners, particularly those that rely on cookies to value that data, I think it’s going to make life sort of tougher. But what will make that even tougher is sort of the general trend towards regulation of how we use data. For WPP overall, programmatic that’s heavily cookie dependent is a relatively small part of our business.

• Meredith: Digital advertising revenue grew in the high single digits, driven by growth in traffic, impressions per visit, rates, along with strong video performance. Traffic to our digital properties grew to nearly 155 million monthly unique visitors, and All Recipes had 50 million unique visitors over the Thanksgiving holiday. Nonpolitical spot advertising is currently pacing up slightly compared to the prior year. Beginning to see more meaningful political-related advertising dollars for markets in presidential primary states. Creating more video—the market for digital-video-related advertising is expected to grow 30% faster than nonvideo display advertising and accounts for more than half of the total digital display ad spending in 2020 according to eMarketer. We are seeing early and strong results from our video production work, with video views and revenues across our owned and operated sites up in the double digits in our fiscal second quarter. Integrating relevant commerce experiences into our brands to drive affiliate and consumer revenue. We work with more than 400 retailers to drive premium, high-quality leads and buyers to their online stores. Building an integrated digital platform and strengthening our data and audience-targeting tools. The new platform brings together the legacy Meredith and Time Inc. digital assets to a common content management system, front-end templates and a proprietary data insights platform. We expect this new platform will offer a more personalized experience that drives engagement for our consumers at scale, richer audience insights, contextual targeting for our advertising partners and faster speeds and greater efficiency for us across our digital network.
• Fox: Had the largest revenue day in TV history generating around $600 million of gross revenue and providing an unmatched platform for over 100 advertisers from the Super Bowl pregame through The Masked Singer. And we delivered extraordinary ratings for our advertising, distribution and NFL partners. And our advertising markets, both national and local, are buoyant, as illustrated by the current scatter market where we see pricing well over 20% higher than upfront levels. The upfront was up 10%, and scatter is now up over 20% on top of that. National networks categories that are leading this intensity include financial, insurance, the streamers, technology and foreign auto. The Fox News audience is increasingly sought after by more and more advertisers as they look to reach a large engaged audience, particularly across Middle America. In aggregate, total regular season football viewing on Fox, NFL and college football combined was up 14% over 2018.
• Viacom: Pluto TV with over 22 million monthly active users in the U.S., up 75% year over year, and we expect to exit 2020 with approximately 30 million MAUs domestically. Advertising remains very strong with scatter premiums in both broadcast and cable with 25% to 35% above upfront. Broadly speaking, the issue remains supply, not demand, and related to that we are all seeing strong and growing demand for premium digital video. Strategy of combining linear with our advanced marketing solutions. It is really resonating in the market, and, as promised, it is delivering robust growth despite impression headwinds. It is allowing us to dramatically outperform all cable competitors.
• News Corp./Wall Street Journal: Now seeing the early benefits from our long battle for equitable treatment by the dominant tech platforms. In particular, our deals with Apple and Facebook are beginning to yield financial dividends, and we welcome their respect for the premium journalism produced by the talented professionals in News Corp. There are also positive signs that Sundar Pichai at Google has a thoughtful appreciation for the profound social influence of high-quality journalism.
• New York Times: Ended 2019 with approximately 4.4 million digital subscriptions, as well as 850,000 print subscriptions for a grand total of 5.3 million. This week, we begin to roll out a price rise to a subset of our tenured digital-only new subscription base. We warned in our last call that the big spurt in digital advertising, 32% year over year, which we saw in the fourth quarter of 2018, would make the fourth quarter of 2019 a tough quarter for us, and we guided to a decline in the mid-teen percentages. In fact, we did a little bit better than that posting an 11% year-over-year decline. The past few years in digital advertising have been generally tough for premium publishers, with the major digital platforms taking nearly all of the growth in the market and the shifts from desktop to mobile and from direct-sell to open-market programmatic both accelerating. We achieved that by reducing our reliance on generic digital display and developing distinctive new offerings in areas like branded content and marketing services and podcasting, as well as by improving our product offering and performance on mobile. The pressures on the broader industry are likely to continue in the coming years and will continue to transform our advertising business to respond to those. We’re successfully forging large-scale partnerships with the world’s leading brands and building revenue from audio and other new sources like last year’s brilliantly successful Food Festival. This year, we’ll launch formal new first-party-data-based advertising solutions to create new privacy-safe ways of reaching our engaged and valuable audience. We’re ahead of many of the world’s other publishers in all of this, we believe, but the pivot will take us time to complete. We expect to return to year-over-year revenue growth from our digital advertising business by the second half of 2020. But this growth rate will be relatively subdued and below that 7% CAGR for those and some subsequent quarters as the balance of the business shifts.
• Disney/DTC: More than 10 million sign-ups for Disney+ by the end of the fourth quarter of 2019, and, as of Monday, Feb. 2, we were at 28.6 million paid subscribers. About 20% of the Disney+ subscribers came from Verizon. ESPN+: We ended the quarter with 6.6 million paid subscribers, and, as of Monday, Feb. 2, we were at 7.6 million. Hulu ended the quarter with 30.4 million paid subs, and, as of Monday, Feb. 2, the number was 30.7 million. For Hulu, most of the subscribers have the ad-supported version, and revenue per user came out even higher than the ad-free version.
• Disney/Advertising: ESPN’s domestic linear advertising revenue was down 4.5% in the quarter because of lower average viewership, primarily for NBA and college football regular-season games, which more than offset an increase in viewership from Monday Night Football. When you look at ad revenue across all ESPN domestic ad platforms, which include digital and addressable advertising revenue reported, then ESPN’s total domestic ad revenue in the first quarter was roughly comparable to the prior year. So far this quarter, ESPN’s domestic linear cash ad sales are pacing up 2% compared to last year. Total broadcasting ad revenue was lower in the quarter, driven by lower political advertising at our owned stations and a decline at ABC.
• IAC/DotDash: Don’t need any more verticals, lot of opportunities in our existing verticals. All of our acquisitions that we’ve done in that business are very small; they get a lot of attention because the media likes to cover media. The other area that’s been growing fastest is our performance marketing, where we’re not just selling the impressions—and we’ve done a very nice job selling impressions—but also selling transactions. Most of the big platforms blocking cookies, and what cookies do is they just put a mark on a user’s computer just to identify that user in one way or, or identify some traits of that user. And so that’s been historically an important tool for a lot of advertisers. That tool is not nearly as important to DotDash because we don’t need it. Hugely proud of the repeat rate on advertisers. We entered 2020 with a good base of advertisers; those advertisers are significantly repeating, and now we’re adding new advertisers to grow on top of that.
• J2: While the M&A pipeline is robust and we spent over $400 million in calendar 2019, we have not closed on a material acquisition in the last four months. This, of course, is part of the normal ebb and flow of our acquisition program, and we are pleased with the potential of our current pipeline of deals.
• iHeart Radio: Like radio, podcasting provides companionship to the listener through intimate relationships developed with our podcast host. Advertisers are seeing real impact from a medium that is driven by the power of its host and host-read ads. Radio has unparalleled reach and engagement in contrast to declines in ad-supported TV and is beginning to drive a shifting of media mix from other sectors toward audio. The overall podcasting revenue pie in the United States in 2019—the estimates are all third-party ranges—but there are probably $400 million to $420 million, $430 million. There’s ranges out there for 2020 that go from, I think, $800 million, $850 million, that I think Pricewaterhouse has, to like $1 billion that Forrester has out there.
• Gannett: As of the end of 2019, we had over 800,000 paid digital-only subscribers and nearly $51 million in pro forma. The digital-only circulation revenue category grew 46% on a pro forma basis in 2019, and we expect it will grow another 35% to 40% in 2020. On the product front, we completed redesign of USA Today on web and added several mobile features to modernize the design and significantly improved page load speeds. We also launched our first pilot of a marketplace business in Asbury Park. You can expect to see us launching more of these business models designed to directly connect our local buyers and sellers in the coming quarters. Digital advertising and marketing services revenues decreased 1.6% on a same-store basis at Legacy Gannett and 0.4% on a same-store basis at Legacy New Media.
• Comscore: Let me touch on Google’s recent announcement that it would phase out third-party cookies by 2022. We believe this works to our advantage. As you know, we are focused on privacy, and our evolving census-based network is designed to meet those demands. Also we measure consumer behavior through our unique digital panel where consumers have already opted in and share their media interactions across platforms. This combination of our panel and census networks gives Comscore distinctive and unique advantage, and we can provide a full measurement solution, while protecting consumer privacy.
• Nielsen: Our digital transformation is our top priority, and we are investing where the market is headed to deliver solutions across both audience and outcome. For example, Google continues to adopt Nielsen total ad ratings in their work with marketers to demonstrate the incremental reach of YouTube. We will also begin to use our national TV data in their planning suite to help advertisers guide cross-platform investments across YouTube and television. Panels are a very consumer-friendly, privacy-friendly way to inform precise noncoverage models the visibility on how consumers are behaving. I would say there are good opportunities here. I also think we need to continue to engineer it, which is why we see us investing right now just to stay ahead of these changes.
• Verizon/Verizon Media Group: $2.1 billion in revenue, flat year over year.  NFL livestream traffic up significantly year over year, and MGM sports-betting partnership launched. I am still amazed that they have so much advertising revenue.
• AT&T/Warner Media: Turner Advertising revenue decreased because of lower audience delivery at Turner’s domestic entertainment networks. That was partly offset by higher pricing. Xandr had $607 million, up just 7% year over year. Made the strategic decision to give HBO Max exclusive streaming rights for top programs including Friends, Big Bang Theory and other popular shows. In the past, we would have sold these externally.
• Comcast/NBCU: Advertising revenue in the quarter decreased 19.1% because of a comparison to record political spending in the prior year period. Excluding political, advertising revenue in the fourth quarter was consistent with the same period last year. Though saw improved MSNBC performance. Broadcast advertising, adjusting for political, would have been up low single digits, reflecting strong NFL results and the benefits of higher upfront pricing, partially offset by ratings declines. Anticipate robust political advertising in the back half of the year.