Axios Local Slows Its Rapid Expansion After Missing Revenue Goals

The nationwide network of free, local newsletters from Axios, called Axios Local, has slowed its rapid expansion, citing the need to grow its existing readership and monetization capabilities before launching into new markets, according to a person familiar with the matter. After Axios Local launches in San Diego in July, its sixth new market of the year and 30th overall, it will not expand any further in 2023 and is still determining whether it will enter any new markets in 2024, Axios’ chief business officer Fabricio Drumond confirmed. “We think it is time better spent and investments better made to unlock a more substantial presence in these markets before further expansion,” Drumond said. “Once we do that, we will have a bigger canvas to play with.” In November 2021, the division pledged to eventually reach 100 markets, but it has never offered a timeline for doing so. At its current pace of roughly 10 markets per year, meeting that goal would require nearly a decade. ‘100 is the Minimum’—Axios Local Expands to 11 New Cities The revision in strategy reflects an evolving understanding of the commercial and editorial challenges of standing up a nationwide stable of local newsletters. By slowing its growth, the publisher hopes to build out both its monetization suite and readership. The pause comes amid a depressed advertising climate, although demand for Axios Local has not appreciably flagged, according to Drumond. Nonetheless, the program fell short of its revenue projections last year. In 2021, its first year, the program entered 14 markets and generated around $4 million in revenue, according to a person familiar with its finances. In 2022, it entered 10 markets and netted a total of $8.6 million—short of its $10 million forecast. So far this year, Axios Local has booked $7.5 million in revenue, although it is not currently profitable. Across all markets, it has 1.55 million free subscribers, up roughly 500,000 from last summer, according to Drumond. The venture, whose ambitious scope helped Axios secure its $525 million sale to Cox Enterprises last August, represents perhaps the most substantial attempt from a single company to reverse the yearslong decline of local news in America. Adding audience and revenue through new products Since launching in December 2020 with the acquisition of the Charlotte Agenda, Axios Local has grown rapidly. Between 2021 and 2022, the publisher expanded into 24 cities, hiring at least two journalists in each outpost to produce a daily newsletter that blends aggregated and original reporting. In March, the general manager of Axios Local and founder of the Charlotte Agenda, Ted Williams, left the company, though he currently serves in an advisory role. In its latest bid to yield more revenue, the division has begun rolling out additional newsletter products. In five markets, Axios Local has begun sending a Thursday evening newsletter that features activities for the weekend ahead, while other audiences have begun receiving Saturday and Sunday editions. These products, which join a fledgling membership program, a series of City Guides and limited in-person events, aim to bolster the total revenue the publisher can generate per market—a key factor informing its expansion strategy. Currently, Axios Local generates the vast majority of its revenue from local, regional and national advertisers. The publisher also aims to reach at least 100,000 free subscribers per outpost, according to Drumond. It has achieved that milestone in six cities so far, including in its blueprint market Charlotte and Denver. While Axios Local has been affected by softening demand in the advertising economy, the downturn is not responsible for the pause in its nationwide rollout, according to Drumond. He cited the relative lack of in-market competition, combined with the brand recognition of Axios, as meaningful tailwinds. “We knew it would take time for these markets to grow,” Drumond said. “We are a for-profit organization, and we want to do this sustainably.”