Post-Pandemic, Most Publishers’ Ad Revenues Have Fully Rebounded

Despite a tumultuous year, publishers’ digital advertising revenues fared surprisingly well in 2020, according to a new study from Boostr. The survey, which analyzed the financial data of 54 primarily digital U.S.-based media companies and collected insights from 200 industry executives, found that the majority of publishers experienced overall growth in their advertising revenue by the end of the year. In fact, the study found that for the top 25% of publishers, 2020 resulted in windfall revenue gains. As a result, Boostr reported a "re-forecast" of U.S. digital ad spend for 2021 at $191 billion, nearly $14 billion above previous estimates just 12 months ago. By the fall of 2020, 67% of publishers reported that their revenue had rebounded; by the end of the year, that number rose to 94%. These gains, however, have been felt unequally: The median publisher emerged from the year on financial footing similar to pre-pandemic levels, while the bottom quartile have struggled to regain profitability. The pandemic also reshaped the deal-making process between publishers and advertisers: As the total number of deals dropped, the value of those deals and the number of their advertising products rose. The length of the average sales cycle also shortened 6%, meaning publishers are now conducting fewer deals for more money and with more included products on an expedited timeline—a level of complexity that favors well-equipped teams. How the pandemic affected publishers’ ad revenues When the pandemic struck in March, publishers almost universally embarked upon a two-month stretch of decimated revenues. Bustle Digital Group president and CRO Jason Wagenheim remembers the day—March 19—when his team realized that the publication would lose eight figures of revenue within 72 hours. What the Pandemic Means for Publishers "I think relationships, at that particular moment, mattered more than ever," Wagenheim said, "because we had direct lines to our top clients and agency partners to find ways to work together to mitigate the hemorrhaging that was happening." While the story of this industry-wide nosedive has become a grim memento mori, the Boostr analysis paints a decidedly less dramatic portrait of the damage done. By the fall of 2020, 67% of publishers reported that their revenue had rebounded; by the end of the year, that number rose to 94% percent. The median publisher struggled in Q2 and Q3, posting losses of 29% and 5%, respectively. In Q4, the median experienced a surge of 28%, finishing the year with overall advertising revenue growth of 2%. As a result, the media landscape that emerged resembles the K-shaped recovery that has become commonplace in post-pandemic economics: the top quartile thriving, the majority surviving and the bottom quartile struggling. “The report highlights the fact that there wasn't one recovery,” said Boostr CEO Patrick O’Leary. “There have been different recoveries for different kinds of publishers, and some have not rebounded in the same way that the top 25% have.” BDG embodies a top-performing publisher At BDG, revenue trends mirrored the industry at large. At the onset of the pandemic, the executive team laid off 7% of the BDG workforce in an attempt to staunch its financial losses and keep the company afloat. In March, leadership forecast three possible scenarios—best, worst, and most likely—and adjusted their strategy accordingly. While BDG struggled initially, deal-making conversations began returning around July 4, Wagenheim said. By the end of Q3, the publisher saw results that surpassed the predictions its leadership team had created for its “best-case” scenario. The commercial conversations that arose in July began materializing by Q4, leading BDG to a final quarter that was up 25% year-over-year, a remarkable improvement even in a non-pandemic year. At the end of the year, the publisher had experienced 5% year-over-year advertising revenue growth. This momentum has spilled into 2021, where the publisher has seen 26% growth in ad revenue, a trend that appears likely to continue into the second quarter. BDG owes its recovery, at least in part, to the traffic acquisition pipelines it has built into its infrastructure, said Lee Goldberg, the cofounder and president of digital marketing at Happy Cog. "Strong investments in inbound traffic acquisition, through both organic and paid search, as well as through leveraging their own first-party data to drive traffic distinguished publishers who recovered from the publishers who didn’t recover," Goldberg said. How the pandemic changed publisher-client dealmaking In response to uncertainty, publishers like Bustle relied more heavily on the strength of their relationships with clients, eschewing new ventures to focus more intently on existing partners. By the end of Q3, the publisher saw results that surpassed the predictions its leadership team had created for its “best-case” scenario. The number of deals dropped 3%, a figure largely driven by a 12% year-over-year decrease in the second quarter. However, this decrease was offset by a 4% year-over-year increase in deal size. In working more closely with longtime advertising partners, publishers also struck contracts that included more products. As a result, the number of deals that included multiple products increased by 37%; top performers showed a 48% increase in multi-product deals, compared to a 12% increase among bottom performers. The average length of a sales cycle also decreased by 6%, a shift that occurred primarily in Q1 through Q3. Now, 36% of publishers report a two-month sales cycle, with a 29-day spread between top and bottom performers. At BDG, these factors combined to produce fewer sales for more money in an abbreviated period of time, Wagenheim said—a cocktail of realities that benefits brands with strong relationships with advertisers. The publisher maintained 72% client retention, the number that might be the most indicative of a publisher’s success or failure in 2020, Wagenheim said. “Client retention is the number one metric of vitality of any successful sales organization,” Wagenheim said, “in a crisis even more so.” Digital Advertising Revenue Grew 21% and Surpassed TV Ad Spend Last Year