This week’s Media Briefing recaps the major events and trends from the summer as the season comes to a close.
The key hits:
- The M&A game is still on.
- Digital advertising feels the impact of the economic downturn.
- Publishers are eyeing cost-cutting opportunities in preparation of another potential recession, though hiring is not yet at a standstill.
- Google pumps the brakes on removing third-party cookies from its Chrome browser once again.
- Some digital media companies have begun mandating a return to office, but not all employees are thrilled.
Labor Day in the U.S. has come and gone, and with it marks the informal end of summer. As execs start evaluating 2023 budgets and assess the somewhat unexpected damages that took place in Q2 2022, it seems like a good time to recap the events from the past few months in the digital media industry for those who disconnected with some PTO.
One of the larger trends we followed the past couple of months was the macroeconomic headwinds to digital advertising, which was commonly blamed amongst publishers and platforms as the reason their ad revenue was down in Q2. Acknowledging that these potential dips in revenue might persist beyond the summer, some publishers started evaluating different money-saving measures.
Meanwhile, with COVID worries subsiding, many media companies started pushing for a return to office despite protests from their employees. And in the last few weeks of the season, we saw a bit of M&A activity, which had largely slowed down in the first half of the year, compared to 2021. On top of all this, Google once again announced it was pushing back its deadline for removing third-party cookies from Chrome, but for many large publishers, this makes little difference to their ad sales strategy.
Below is a refresher of five trends and events from the summer to review before your next strategy meeting:
A timeline of late summer M&A deals
Some media conglomerates are still eyeing digital media companies as worthwhile investments even after AT&T spun off the WarnerMedia portfolio to Discovery earlier this year and Verizon Media sold HuffPost to BuzzFeed, Inc. in Nov. 2020.
Meanwhile, digital publishers are looking for technology businesses — AKA recurring revenue streams from software-as-a-service products — to scoop up to continually diversify their revenue models.
- Aug. 8: Cox Enterprises acquired five-year-old publisher Axios for $525 million. This comes less than a year after Axios’s president and co-founder Roy Schwartz declared that “it’s too early at this point to sell the business or to merge it with something that would be larger than we are,” but given the price it sold for outpaces the company’s projected 2022 revenue by five times, it seems the deal was too good to pass up.
- Aug. 23: Yahoo acquired algorithm-driven news rating company The Factual for an undisclosed amount. Using artificial intelligence, the company ranks and labels articles according to their credibility level based on four criteria. Yahoo News will implement the tech into its coverage but The Factual will also continue to earn revenue from licensing the tech product to other publishers.
- Aug. 30: Time acquired software licensing company Brandcast for less than $101 million, according to Axios. The company, now called Time Sites, gives the company a platform to create custom websites for clients, advertisers and internal projects.
Digital advertising takes a hit
Any time there is an economic downturn, advertising budgets are going to get tighter. But after the banner year that 2021 was, the tightening of the purse strings this summer felt more shocking than usual.
Publishers’ second-quarter earnings reports confirmed the suspicion that June 2022 was not a strong month for digital advertising, and the expectation shared among many media execs is that this revenue stream will be touch and go — quite literally — through the first part of 2023.
IAC’s Dotdash Meredith, The New York Times and BuzzFeed saw single-digit percentage decreases to their advertising businesses in Q2, though News Corp and The Arena Group reported increases in this area of business during the quarter.
The publishers aren’t alone in tracking decreased ad spend. Several platforms, including Twitter, Snap and Meta, reported ad revenue was down in the second quarter because of “macroeconomic headwinds.”
Cost-cutting as a precaution
Some cost-cutting measures from spring 2020 began resurfacing over summer 2022 in publishers’ business strategies when digital advertising revenue became less reliable and slowdowns in consumer spending led to less e-commerce revenue for some media companies.
Food52 is one publisher that’s enacted a bunch of cost-cutting measures. In June it laid off 15% of its staff, or 21 people, and moved its content team and part of its creative team to a 32-hour workweek, effectively cutting those employees’ take-home pay by 20%. This follows an earlier round of layoffs this past April in which 20 employees — primarily from the content, creative and marketing teams — were let go. While the first round of layoffs was meant to “manage the margin and supply chain challenges caused by Covid,” the second round was to address all of the changes to consumer spending and brace the business against a possible recession, according to company spokespeople.
Gannett, which reported revenue losses in its second-quarter earnings report in early August, laid off approximately 65 people, slowed hiring and reduced the budgets for third-party company contracts, freelance and travel, a spokesperson said.
Not all money-saving strategies have resulted in layoffs. Last month, Digiday reported that BuzzFeed, Inc. and IAC, owner of Dotdash Meredith, were slowing down hiring and only focusing on “critical” roles aimed at supporting top revenue lines. The New York Times, on the other hand, reported during its second-quarter earnings call that it is rolling back its marketing spending to save money.
A few publishers used this summer to downsize their notoriously expensive New York City-based office spaces, including WarnerMedia and BuzzFeed, Inc., which subleased hundreds of thousands of square feet of office space, and Dotdash Meredith put over 300,000 square feet of office space on the market earlier in the year.
The uphill battle of returning to the office
For the publishers that are still holding onto office space, getting employees to use it has proven to be a slight challenge.
The Washington Post was in hot water with The Washington Post Guild in June after the company’s leadership mandated staffers come into its office at least three times per week or face disciplinary action, according to a report by The Daily Beast. The fights between unions and media execs over in-office mandates have been going on long before the summer began, but were reignited by the BA.5 variant.
Other newly combined publishers, like BuzzFeed/Complex, Dotdash/Meredith and Vox Media/Group Nine, faced a puzzle of a challenge to try and bring together once completely independent staff for the first time after merging while remote.
Google delayed the cookie apocalypse … again
Google’s new deadline for removing third-party cookies from its Chrome browser is the end of 2024 giving publishers, advertisers and ad tech companies another two years to figure out a solution for measuring ad performance in a privacy-compliant way.
For some larger publishers who have honed their first-party data strategies, this gift of time is unneeded as third-party cookies play a marginal part of their ad businesses.
“When Google announced this push back to 2024, it was a minor blip on the radar,” said Vox Media CRO Ryan Pauley on an episode of the Digiday Podcast. “And I remember I saw the headline, but we didn’t scramble to understand what it would mean for our business the way that we did when the first delay came out — a push back to 2023.” Pauley added that in 2021, the lion’s share — three-quarters — of the company’s total impressions ran through the company’s first-party data solution Forte.
But for others, these continued delays are worrisome because it reduces the sense of urgency that previously was the light underneath the industry’s procrastinators — publishers, marketers and vendors alike.
What we’ve heard
“We know that dot-com is really where a lot of [commerce] action happens, but [we’re] thinking about how do we use the platforms as another marketing tool that’s helping drive [conversions]? And that’s testing TikTok versus Instagram versus leveraging creators and influencers. It’s [about] how we leverage peripheral triggers to help [complete] the [buying] process.”
— A media company CRO on how they’re using social commerce in their fourth-quarter commerce strategy
3 questions with The BBC’s Jonathan Aspinwall on rebooting its American politics podcast
The BBC’s sights are set across the pond this year: In February, the U.K.-based broadcast company announced plans to double its North American digital news team and expand its audience growth team to grow revenue opportunities outside of the U.K. Now, a key part of attracting more North American listeners is the revival of its American political podcast “Americast.”
Originally created in 2020, “Americast” released its first episode in six months on Aug. 31, featuring three new hosts and a different focus. The podcast went on hiatus after former hosts Emily Maitlis and Jon Sopel announced their exits from the BBC in February. North America correspondent Anthony “The Zurch” Zurcher is returning to the weekly podcast, while new hosts include North America editor Sarah Smith, former North America editor and “Today” presenter Justin Webb and disinformation and social media correspondent Marianna Spring.
As a public service broadcaster, the BBC is funded by a license fee in the U.K., which is paid annually by all households with a TV set and is under threat to be eliminated by the U.K. government. Outside of the U.K., the BBC operates a commercial business selling content, advertising and sponsorship deals. Growing the BBC’s listenership in North America and beyond is a play to also drive revenue – the broadcaster’s podcasts are monetized with ads through a deal with Acast.
Digiday spoke to Jonathan Aspinwall, the BBC’s senior editor of news podcasts, to hear why “Americast” — which has a majority of U.K. listeners — will focus on disinformation leading up to the U.S. midterm elections this November. – Sara Guaglione
This conversation has been edited and condensed.
Why is the BBC bringing back Americast?
The next year brings a huge range of engaging topics — the congressional midterms, the primaries and the campaigns leading up to them. All of that provides ready-made drama with the winners and losers, amongst so many of these interesting personalities. “Americasters” — as we call our listeners — were asking us to come back, but we wanted to make sure we had the right team in place. We see our hosts as these trusted friends who have a global perspective on what’s going on in America. That’s the central tenet of the podcast.
What’s different this time around, other than the new hosts?
The [disinformation focus] is what’s new, by having Marianna and her expertise on the podcast. Also, we have a broad range of hosts – two of them are in the States. We’re also doing an experiment with Pew Research Center, where we created undercover [fictional] voters who represent the political spectrum. We created five profiles – each one has a different name, interests, where they live. They have computer-generated photos. Each one has accounts on TikTok, Facebook, Instagram, Twitter [and YouTube]. Then we analyze in real time what information is pushed their way to see what content is recommended to U.S. voters on social media. It’s really pertinent ahead of the midterms, to see what people are exposed to.
Why focus the podcast on disinformation?
Americasters ask us a lot of questions. They really shape the pod. We’re finding that, increasingly, the questions they’re asking and the comments they’re making are about disinformation and what’s going on in social media and how that’s shaping American public opinion – the trends, the concerns. It’s our job to lift the lid and explore this.
We would also love to crack the U.S. market. I mean, we already are – but that’s really important to us. It’s a global podcast. But we worked out that internationally and in North America, people are hungry for information on impartiality, trust and disinformation. So we lined up our hosts to reflect that.
Numbers to know
6: The number of top editors that National Geographic laid off last week while reorganizing its editorial structure.
-18.4%: The average reduction of the top 100 publishers’ promotional prices for subscriptions over a two-month period from June to August 2022.
35%: The percentage of 55 publisher respondents in a new Digiday+ Research study who said their company hasn’t made any preparations for a potential recession.
What we’ve covered
Digiday+ Research: Most publishers agree a recession is coming, but a third haven’t done anything to prepare:
- The vast majority of publishers agree we’ll be in a recession within the next year.
- Despite that, more than a third of respondents to Digiday’s survey of 55 publishers said their company hasn’t done anything to prepare for a recession.
Read more about publishers’ recession outlooks here.
The definitive guide to what’s in and out in ad tech in 2022:
- Ad tech has seen a lot of changes so far this year, so we made a definitive list of what’s in and what’s out to help make sense of it all.
- For example, hype for data clean rooms is definitely out while confusion over data clean rooms is absolutely in.
Read more about the ins and outs of ad tech here.
How CBS News’ co-presidents Neeraj Khemlani and Wendy McMahon are stepping up their streaming news outlet:
- CBS News is adding more traditional TV talent to its streaming outlet.
- In the latest Digiday Podcast, CBS News and Stations co-presidents and co-heads Neeraj Khemlani and Wendy McMahon discussed the new nightly primetime news program and the streamer’s development since its November 2014 debut.
Hear Khemlani and McMahon on the latest Digiday Podcast episode here.
How one startup hopes to decentralize ad exchanges to benefit publishers and agencies:
- Two-year-old London startup Alkimi Exchange is proposing a decentralized version of the current ad exchange system.
- The company is beta testing with U.K.-based publishers and will launch in the U.S. and U.K. in October.
Read more about Alkimi Exchange here.
Media companies downsize office spaces in NYC:
- Media companies that continue to offer the flexibility of remote work are reconsidering office spaces that are going unused in expensive locations like New York City.
- WarnerMedia put over 450,000 square feet of office space in Midtown Manhattan on the market for sublease last quarter, meanwhile, Dotdash Meredith put over 300,000 square-feet of office space in the Financial District on the market in the first quarter.
Read more about publishers’ NYC-based office spaces here.
What we’re reading
Vice Media explores a content deal with MBC:
While the digital media company shops for a buyer, The New York Times reported that Vice is also exploring a deal with MBC, a media giant partly owned by the Saudi government, to create a new content partnership in the region.
Another top CNN personality is out:
John Harwood, who served as a White House correspondent for two-and-a-half years at the company, abruptly departed CNN last week, raising more questions about CNN’s editorial strategy, according to Poynter.
Axel Springer’s CEO has a different view of American media:
Less than a year after Mathias Döpfner’s company bought Politico, the CEO is concerned that American media has become too polarized, according to The Washington Post.
Federal privacy bill may have hit a dead end:
House Speaker Nancy Pelosi did not support the existing draft of the American Data Privacy and Protection Act, which means it could be indefinitely stalled in the House of Representatives, according to Adweek.