Takeaways From Top Publishers’ Earnings Reports

Several dominant digital media publishers––BuzzFeed, Dotdash, The New York Times and The Wall Street Journal––all disclosed the state of their financial health this past week, and taken together the findings reveal some of the key trends shaping the industry. While the four companies face similar market challenges, they differ in the strategies they have employed to navigate them. For instance, whereas The Times and The Journal have invested heavily in their subscription products, BuzzFeed has doubled down on its path to profitability by advertising against an ever-growing audience. And while The Journal has focused on attracting subscribers through its news offering, The Times drew in nearly half of its new paying readership through its Cooking and Games products. Dotdash, meanwhile, has seen success through programmatic advertising, affiliate marketing and product licensing, with less concern for capturing first-party data than its competitors. Below are four of the major themes defining the current state of play in the media industry, as well as the strategies publishers have employed to solve their shared problems. Post-Pandemic, Most Publishers’ Ad Revenues Have Fully Rebounded Digital subscription growth is slowing The Times and The Journal both gained digital subscribers in the last three months, though in smaller increments than previous quarters. The slowing pace of subscriber acquisition has affected media organizations across the industry, hitting politics-forward publishers like The Atlantic particularly hard. The Times added 142,000 new digital subscribers since March, while The Journal gained just short of 100,000, bringing their total digital subscriber counts to 8 million and 2.7 million respectively. For The Times, its acquisition numbers were its lowest since 2018, and The Journal has seen equally plodding growth, inching from 2.46 million to 2.63 million to 2.7 million over the last three quarters. The Times has mitigated the problem by leaning more heavily on its non-news subscription offerings, which were responsible for almost half of its new subscribers this quarter. Cooking and Games now have around 1 million subscribers each, and a forthcoming subscription product for Wirecutter will only bolster its appeal. The Journal, on the other hand, lacks a comparable offering, an omission that might make its future growth more challenging. The digital ad market is booming After plummeting in the immediate aftermath of the pandemic, the digital ad market has come roaring back, and well-positioned publishers have reaped the benefits. In the first quarter of 2021, BuzzFeed grew its advertising revenue by $7.3 million, or by 23%, compared to the year previous. At The Times, second-quarter digital advertising revenue increased 79.6%, to $71.0 million, while The Journal saw its advertising revenue climb 45% year-over-year to $32 million. Revenue comparisons to the first half of 2020 can paint a misleadingly rosy picture, but the numbers show improvements even when compared to the more realistic figures of 2019. At The Times, for instance, digital ad revenue still increased 22.4% compared to Q2 2019. Dotdash, which also released its quarterly earnings this week, experienced similar gains, growing its revenue by 64% year-over-year to $73 million, an acceleration of 48% in Q1 2021. Other major publishing groups, such as BDG, have seen similar gains, evidence that, after an initial adjustment period last year, the digital advertising ecosystem seems to have found its footing once again. Mergers and acquisitions help build audience and capture first-party data quickly The looming disappearance of the third-party cookie and publishers’ need for increased scale has led the media industry into an acquisition frenzy. BuzzFeed, which acquired HuffPost last year, recently announced it would acquire Complex Media as part of its SPAC merger, and CEO Jonah Peretti said that the company would be primed for future acquisitions following its public exit. While subscriptions-oriented publishers have a less pressing need to inflate their audience size, the prospect of adding subscribers through mergers and acquisitions still appeals. Dow Jones, the parent company of The Journal, acquired Investor’s Business Daily in March for $275 million and oil and gas index OPIS for $1.2 billion earlier this month. And while The Times has yet to make any major acquisitions, it reportedly has nearly $1 billion on hand and has actively shopped for potential targets, including The Athletic. Other publishers, like BDG, have used mergers and acquisitions to expand their audience scale overnight, while private equity players like Recurrent Ventures have used the strategy to build a media business from the ground up. Non-ad, non-subscription revenues continues to grow Thanks to the volatility of the digital ad market and the saturation of the subscriptions world, publishers have increasingly sought out less contested revenue streams. Commerce, in particular, has proven especially lucrative for companies like BuzzFeed, whose social listening strategies allow it to track consumer interest then develop products that satisfy it. In the first quarter of 2021, BuzzFeed increased its commerce revenue by $6.3 million, or 78%, and it predicts that by 2024, the line item will comprise 31% of its overall revenue. Likewise, licensed products and affiliate revenue has been a major source of revenue generation for Dotdash, whose brands, such as home and lifestyle title Spruce, lend themselves well to commercial partnerships. Affiliate links alone make up between 30% - 40% percent of its advertising revenue, Dotdash CEO Neil Vogel told Adweek, and they generated $28.4 million in revenue this quarter.

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4 Takeaways From Top Publishers’ Earnings Reports This Week

Here’s what we can learn from BuzzFeed, Dotdash, The New York Times and The Wall Street Journal

Mark Stenberg

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Mark Stenberg