Fourth-quarter fallout

The key hits:

• Publishers’ programmatic and direct-sold display ad businesses are in a position to benefit from advertisers’ wavering approach to Q4 ad spending.
• “It’s one of the most challenging Q4’s I’ve ever experienced,” said one media exec.
• Increasing ad inventory is one solution for publishers to sell more turnkey ad campaigns that don’t need long lead times. 

The holiday season is not so cheery this year for publishers’ advertising teams. 

Advertisers seem to be getting cold feet about where and when they execute their remaining 2022 budgets. While publishers are benefitting from the pivot toward more programmatic and turnkey display ad products, the pressure is on to deliver these campaigns faster in shorter intervals and in higher quantities than they typically know how to accommodate.

Vox Media’s quarterly sell-through rates have not been impacted by the slow release of budgets, but visibility into the publisher’s fourth quarter results are coming later than usual. “Instead of having visibility into what November and December is going to be in September or October, we’re getting that visibility in October or November,” said Vox Media chief revenue officer Ryan Pauley. 

The ever-shortening sales cycle

All of the publishers interviewed for this story agreed that their sales cycles have been virtually cut in half over the past couple of months — on average, dropping from 90 days to six weeks, which is reminiscent of the pandemic, according to Pauley. In some cases, the turnaround times, specifically for turnkey ad spots like direct-sold display and video ads, are even shorter.

“Clients [have] sent us RFPs [in] early October and wanted to run that same week or start only a couple of weeks later. And usually we were working with that same partner and planning quarters out,” said Maggie Milnamow, CRO of Insider, who declined to share specific advertiser names. 

The run times for Insider’s campaigns have also been shorter than usual as well, clocking in at about two to four weeks in this quarter versus longer runs that span multiple months or quarters.

Publishers’ programmatic businesses are in a positive position

Seth Hargrave, CEO of media buying agency Media Two Interactive, said his clients have been favoring programmatic advertising through programmatic private marketplaces and programmatic guaranteed deals as well as other quick-turn ad slots in the first part of Q4 because political advertising has drastically reduced the amount of connected TV and streaming inventory available and increased CPMs for the remaining spots to a degree where they don’t want to compete. Largely, publishers have benefited from that, based on where Hargrave is seeing ad spend going. However, he said this is only expected to last another week or so until after the election, at which point CTV will be brought back into the mix.

Meanwhile, UM Worldwide’s U.S. chief marketplace officer Stacey Stewart said in a recent episode of the Digiday Podcast that some of her clients cut back on upfront commitment to look for more lower-funnel options that could quickly drive revenue.

“Most of the dollars are accounted for. They’re just accounted for in places that have more flexibility. But most dollars are accounted for at this point,” Stewart said. 

Not all publishers are in a race to win all of the remaining 2022 budgets, however. 

Betches Media is in a position of growth this year — overall revenue is up 40% year-over-year, according to Spiegel — enabling the sales to be less focused on squeezing out every dime possible in Q4. There is also financial incentive to nurture the longer term campaign opportunities in 2023 that are no longer possible to execute in Q4.

“For [clients] who spend over $250,000, our renewal rate is double what it would be over our baseline of all of our partnerships. So for me, I always want to be focused on bigger partnerships as a long term revenue strategy,” Spiegel said. 

More, cheaper ad inventory 

Most publishers who spoke to Digiday for this story said they aren’t worried about having an abundance of leftover ad inventory this quarter, but some are increasing the amount of turnkey ad space that is available for purchase between now and the end of the year.

One publishing exec who spoke on the condition of anonymity, said they increased the number of mid-roll ad spots in their podcast from one to two or three per episode, as well as increasing the number and types of ads in its newsletters.

“We’re looking at some of the newsletter-first organizations and how they’ve been able to really skin the buffalo and use every single piece of that newsletter. We’re taking some of that to heart,” said the media exec. This means in addition to top of masthead sponsorships and a native ad inclusion, there will also be product recommendation modules with paid placements and other sponsored ad spots.

Axios reported earlier this week that Insider was moving 60 of its typically paywalled writers out from behind the paywall, thus increasing traffic and creating more inventory to sell ads against. Insider’s CRO Maggie Milnamow told Digiday that this decision was not made with the advertising business in mind, but was a strategic move for its subscriptions business to find ways to better monetize content that wasn’t converting readers to subscribers as well as other paywalled stories.

“We’re not enabling millions of [people] to see [those] stories,” said Milnamow. So while this “was not an effort to increase advertising, what it will will do is it will enable more scale next year, which was great for us,” she added.

At Vox Media, manufactured inventory, like adding ad slots to a web page or podcast or increasing the frequency of ad refreshes, isn’t a part of the strategy this quarter to capture more end-of-year spend, but Pauley said his team has been working much more closely with the editorial and commerce teams to sell sponsorships on gift guides or holiday packages in the faster than typical turnaround times. 

“We might get a campaign today that needs the launch in a week-and-a-half for a holiday gift guide sponsorship and so making sure that we’re all aligned on working on these tighter timelines [is important],” according to Pauley. “That prep is happening a little more in advance than it has needed to in the past because we would have already had those campaigns in the door by this point.”

What we’ve heard

“We haven’t had to change our strategy at all, [but] I think we’ve made a couple of smart, prioritization calls about where we want to invest. We’re really focused on B2B and corporate reputation advertising. From an advertiser and partnership perspective, they’re… under a lot of pressure to drive positive brand reputation.”

— Rachel Oppenheim, CRO of Semafor, on the latest episode of the Digiday Podcast about how the company is strategizing for an advertising-only monetization strategy in the current economic climate.

The New York Times Company’s Q3 2022 earnings report

The New York Times Company’s business is still growing year over year, due in large part to increases in digital subscription revenue as it continues to push its subscription bundle offering. The company now has more than a million bundle subscribers.

Digital ad revenue grew in Q3 2022 compared to the same period last year, primarily due to higher direct-sold advertising at The New York Times Group (which does not include The Athletic) and the addition of ad revenue from The Athletic, which started serving display ads at the end of the quarter. The company saw fewer programmatic ad impressions this quarter, however, according to evp and CFO Roland Caputo in an earnings call Wednesday morning.

The key details:

• Total revenue was $547.7 million, up 7.6% compared to Q3 2021.
• Operating profit increased to $51 million, up 9.3%.
• Digital-only subscription revenue was $243.9 million, up 22.8%.
• Digital ad revenue was $70.3 million, up 4.9%, representing 63.6% of the company’s total ad revenue.
• Total digital subscribers reached 8.59 million, with the addition of 180,000 digital-only subscribers.

Pushing the bundle

This was the first full quarter that The Athletic was part of The Times’ subscription bundle, which includes access to all of its digital news products, Games, Cooking and Wirecutter.

Cross-promotion and prominently featuring subscriptions on The Times’ news products has helped grow bundle subscribers, like adding the Wordle game to the main feed of The Times’ news app, said president and CEO Meredith Kopit Levien in the earnings call.

Bundle subscribers pay roughly 50% more than news subscribers, she said. The New York Times is currently offering a $1 per week subscription to its news product, compared to $1.50 per week for its bundle.

Cost savings

Last quarter, The New York Times Group made some major cuts to its sales and marketing costs, with a decrease of 22.7% from Q3 2021 to $64.7 million. This was due to lower media expenses — or the cost to promote the company’s subscription business — which decreased 44.7% to $30.6 million.

NYTCO also slowed headcount growth across the company, which has more than 1,700 newsroom employees, Kopit Levien said.

What’s to come

NYTCO improved its outlook for full-year 2022 results and expects adjusted operating profit to be between $320 million and $330 million. The New York Times Group’s digital-only subscription revenue is expected to increase by about 20% in Q4 2022 from Q4 2021. Ad revenue, however, is expected to decrease by about 10% due to “continued macroeconomic headwinds,” Kopit Levien said.

There are plans in the works to “further open up” The Athletic’s hard paywall to “substantially increase awareness and free sampling,” Kopit Levien added, but she also suggested a price increase on individual products in the coming months to “drive more people to take our bundle.” – Sara Guaglione

Numbers to know

31%: The percentage of 66 publisher professionals who said they expect holiday ad sales will decrease this year versus last year.

7: The number of books that Vox Media’s Eater will produce through a licensing deal with Abrams, starting with a book of restaurant recipes in 2023. 

$3.8 million: The amount of revenue that Defector, the employee-owned sports and culture website, earned in its second year, with 95% of the money coming from subscriptions.

What we’ve covered

Bloomberg Media exerts more control over its programmatic advertising as part of ‘a philosophical shift’:

• Bloomberg Media won’t rule out getting rid of more ad tech middlemen after parting ways with Taboola.
• Premium publishers like Bloomberg Media have the context and audience marketers need to sustain personalized advertising at scale at a time when both are more difficult to come by from third-party cookies.

Learn more about Bloomberg Media’s programmatic shift here.

Hearst wants Gen Z’s social shoppers to use its new commerce platform, FirstFinds:

• Hearst’s new commerce platform, FirstFinds, wants to solve the social media shopping problem once and for all.
• FirstFinds is inspired by how Gen Z shoppers discover products they want to buy on social media, but Hearst wants to find a way to shorten the time between discovering a product, learning more about it and ultimately buying it, which is a clunky process on social platforms and often requires a user to leave the app in favor of a Google search.

Learn more about the publisher’s new shopping platform here.

News aggregators aren’t growing like they used to, but publishers still see their value:

• Three years ago, publisher analytics firm Chartbeat saw news aggregators becoming the fastest growing traffic referral source. But with the share of traffic from aggregators dipping, that’s not so much the case anymore.
• Traffic driven by news aggregators has gone down from 18-20% in 2020 to about 14% in 2022, according to Chartbeat data. 

Learn more about this trend in referral traffic here. 

Insider video ad revenue grows from onsite, direct-sold deals:

• Insider’s video strategy shift to focus on longer form series seems to be paying off.
• Insider is making more money than last year from its videos on its website and is seeing particular growth from direct-sold video ads, where advertisers commit to spend a certain amount and buy ads across Insider’s owned & operated and other platforms like YouTube.

Learn more about Insider’s video strategy here. 

‘Google is really nailing us’: Publishers re-shift commerce strategies after platform releases flurry of algorithm updates:

• Google released three algorithm changes over the course of a month that affected content rankings, specifically of product reviews.
• Already facing a number of challenges in the commerce revenue department, several publishers expressed that they’re still trying to fully unpack to what extent these algorithm changes have impacted their search traffic.

Read more about how publishers are adjusting to the latest algorithm changes here.  

What we’re reading

To combat the economic slowdown, Insider is changing its subscription strategy:

Insider will restructure its newsroom to bring more content in front of its paywall, according to Axios, meaning that about 60 paywalled writers will have their work moved in front of the publication’s paywall.

The Hill’s former owner raised $40 million to launch a new media startup:

Media entrepreneur Jimmy Finkelstein has set out to create a media company that’s part The Washington Post, part Daily Mail, called The New Statement, according to Semafor. 

Publishers are considering whether or not to pay for their journalists’ Twitter verification:

CNN said it’s highly unlikely it will pay for its reporters’ Twitter verifications, but Insider reported that Puck’s leadership is planning to pay upwards of $20 a month to keep their blue checks.

Google’s ad business is funding disinformation around the world:

Despite publicly committing to fight disinformation, a ProPublica analysis documented how Google’s sprawling automated digital ad operation placed ads from major brands that spread false claims on such topics as vaccines, COVID-19, climate change and elections.

CVC might back Group Black’s bid for BDG:

CVC Capital Partners would provide Group Black with the equity needed to acquire BDG, owner of Bustle, Gawker and Elite Daily, if Group Black ultimately decides to move forward with an offer, Axios reported.