Media Briefing: News publishers prep for possible ad slumps as election season nears

election

This Media Briefing covers the latest in media trends for Digiday+ members and is distributed over email every Thursday at 10 a.m. ET. More from the series →

It’s anyone’s guess this election season

No one really knows how the ad market will look in the immediate run-up to the U.S. presidential election, but to avoid the possibility of lost revenue, news publishers are seeking alternative avenues to appeal to advertisers.

While Dow Jones is focusing on events and non-political content for its politically-averse advertisers, The Guardian set its sights on political and advocacy advertisers who want to show up against election coverage. 

Meanwhile, one publisher, who spoke on the condition of anonymity, said that some advertisers in the B2B tech category want to be “basically dark by October 1,” to avoid running any campaigns against election coverage. As a result, their visibility into Q4 has become murky when it comes to predicting ad revenue for full-year 2024. 

“The partners that I’m talking to are very nervous about what the media landscape is going to look like come mid-October into November. Everyone is so focused on brand safety … it seems like the big tech guys are trying to be offline and not promoting anything [by election day],” the publisher exec said. 

Prior to 2016, the presidential election season had served as a boon for ad revenue. But the past two presidential elections have seen similar patterns of advertisers wanting to press pause in the weeks leading up to the election, the executive said. And that’s likely to be the case again, given the highly charged political climate the U.S. finds itself in.  

Non-political alternatives

Josh Stinchcomb, global CRO of Dow Jones and The Wall Street Journal, said he’s heard this sentiment “a very little bit” from some clients about stopping ads by Oct. 1, but not enough that he has a measurable concern around the impact it could have on ad revenue in Q4. 

That’s because the business lens through which Dow Jones and WSJ cover news insulates the publisher from brand-safety concerns that plague general news, Stinchcomb said. 

“I will not be surprised if you see certain brands go dark. Normally, it’s for a very short period of time, just right around the election itself,” Stinchcomb added. But with one of the publisher’s “most successful” events, the CEO Council, happening in Washington, D.C. in December, he said he expects that any dollars paused on thought leadership or B2B advertising in advance of the election will be made up for later in the quarter.  

“There are other ways, certainly in The Journal, and I’m sure in other publications, to ensure that advertising doesn’t run adjacent to politics if that’s what the client wants,” said Stinchcomb. 

Doubling down on political dollars

Luis Romero, The Guardian’s svp and head of sales for North America, said he’s not heard directly from any advertisers in the B2B and tech categories about concerns over running ads adjacent to election coverage yet. In fact, he said these are two of The Guardian’s biggest ad categories. “We see renewals coming back, and we see opportunities to grow over those categories, but we haven’t heard anything about the election yet,” he said.

And yet, a publisher can never be too safe when it comes to insulating its business with any additional ad revenue it can get its hands on. This is part of the reason why Romero’s team is making a concerted effort to pursue political advertising dollars for the first time this year. 

“I’m setting a real focus on political dollars — A., because it makes sense [and] B., in hopes that if we do hear anything about [advertisers] holding back because of the election, we may be able to offset it with some political dollars,” Romero said. 

The price isn’t right

It doesn’t all come down to brand-safety concerns, however. At the end of the day, there may be concerns about the competitive pricing of election season that gives some advertisers pause. 

Seth Hargrave, CEO of ad agency MediaTwo Interactive, said the specific Oct. 1 date the first publisher mentioned feels more like a budget-driven decision versus a brand safety concern. “Those rates, especially the political category, can really start to spike as you get into or get up against the election,” he said. “So that last month, obviously there’s a lot of competition in marketing at that point in time.” 

Especially in direct-sold campaigns, Hargrave said it makes sense that some clients would declare they want to avoid advertising in such a competitive area (ie, a news publisher) now rather than later, especially if they’re contracting with publishers quarterly or monthly.  

Ultimately, Hargrave conceded that clients’ aversion to appearing in political coverage stems from a blend of pricing and brand safety concerns. But the deadlines to stop advertising against political coverage will be unique to each advertiser. 

And for the news and political publishers looking to persuade said politics-averse advertisers to stick around during election season, Hargrave said contextual targeting is the route to pursue. 

“There’s that thought process that everybody is there when it comes to political coverage during [election season], but for us, we are looking very specifically at aligning with content that is also aligned with whatever products or categories [our clients] are advertising at that point,” said Hargrave. “Contextual is going to be king in that regard.”

What we’ve heard

“… Given the strong profit growth we saw in Q1, we’re no longer expecting the growth to be weighted to the back half of the year.” 

–  William Bardeen, evp and CFO of The New York Times Co during the company’s Q1 2024 earnings call this week. More to come on publishers’ Q1 earnings in next week’s Media Briefing.

IAC CEO talks new OpenAI deal in Q1 earnings call

The hot topic during IAC’s Q1 earnings call on Wednesday was Dotdash Meredith’s new, three-part deal struck with generative AI tech company OpenAI. 

“We haven’t been shy about our belief that publishers should be compensated for use of their content and that attribution and transparent sourcing in generative AI products is critical to maintaining a healthy Internet ecosystem. This partnership addresses both fronts,” Joey Levin, IAC CEO, wrote in a May 7 letter to shareholders.

The key details:

  • Dotdash Meredith revenue was $390.5 million in Q1 2024, a 1% increase from $387.6 million in Q1 2023.
  • Total digital revenue – primarily made up of advertising, performance marketing and licensing revenue – was $209.3 million, a 13% increase from $184.8 million year-over-year.
  • Digital advertising revenue was $132.9 million, a 19% increase year over year from $111.8 million.
  • Christopher Halpin, CFO and COO of IAC, said the company expects to see at least 10% digital revenue growth each quarter this year.

Dotdash Meredith’s multi-year deal with OpenAI includes a licensing agreement to train OpenAI’s large language model on Dotdash Meredith’s content and to serve content and links to Dotdash Meredith’s sites in the generative AI chatbot ChatGPT. 

In addition to getting financial compensation from OpenAI to use Dotdash Meredith’s content, this deal could “hopefully” drive traffic from ChatGPT to the publisher’s sites, Levin said. One of the many concerns publishers initially had about ChatGPT was that it could lead to a decline in referral traffic.

Levin said Dotdash Meredith will also use OpenAI’s LLM to improve its first-party contextual targeting solution D/Cipher, by helping to map intent signals across “a much bigger portion of the internet” – and formats beyond text such as images and video – which Dotdash Meredith can sell to advertisers. 

The OpenAI deal is “not exclusive,” Levin said, suggesting the company could negotiate with other LLMs. “Hopefully that agreement is just the beginning of other opportunities for us in that AI ecosystem.”

This deal, amid the recent wave of licensing deals between publishers and OpenAI, may signal that media organizations are incentivized to negotiate their own, one-off arrangements. IAC chairman Barry Diller tried to create a coalition of publishers to negotiate with AI companies for payment in exchange for using their content, but those efforts eventually fell apart. 

It also comes in the wake of The New York Times’ lawsuit in December against Microsoft and OpenAI – an example of negotiations that didn’t pan out. The New York Times, which also released its Q1 2024 earnings on Wednesday, said it had spent $1 million on the lawsuit. – Sara Guaglione

Numbers to know

4-5%: The amount of money that The Guardian is aiming to save this year, which will include cuts to staffing-related costs in the form of a few “voluntary redundancies” among its journalists. 

75: The number of colleges participating in The Atlantic’s group subscription program, reaching more than 500,000 students. 

$3.3 million: The amount Condé Nast has agreed to allocate towards total wage increases for union staffers as part of the new contract that management and the union agreed upon in the hours leading up to the Met Gala on Monday.

What we’ve covered

WTF are data collaborations?:

  • There is no shortage of cookieless solutions being touted throughout the digital advertising industry, but a relatively new option popping up more in conversations is data collaborations.
  • But what exactly are data collaborations and why are they just now emerging as a viable targeting option in the digital advertising market?

Learn more about data collaborations here.

Publishers’ Privacy Sandbox testing enters a ‘holding pattern’:

  • Publishers could see the writing on the wall when it came to Google’s announcement that it was delaying cookie deprecation from Chrome yet again.
  • But as a result of the delay, they won’t be allocating resources to delve further into Google’s Privacy Sandbox — at least not until the company accelerates beyond the 1% deprecation level.

Hear from publishers about why they are slowing down their Privacy Sandbox investment here.

Publishers not ready to change social media strategies as TikTok ban looms:

  • Though the TikTok ban looks like it might actually happen sometime next year, execs from publications aren’t concerned about what this will mean for their audience development and monetization strategies around short-form vertical video.
  • “It’s too soon to pivot and to be making sweeping overarching changes,” said Wes Bonner, svp of marketing and audience development and head of social at BDG.

Read more about why publishers aren’t ready to make changes to their social video strategies  here.

What we’re reading

Nicholas Carlson is stepping down as editor-in-chief of Business Insider:

BI’s top editor announced this week that he’s stepping down from the newsroom’s helm and will become the new editor-at-large for the company, focused on longer-term projects, Semafor reported. The search for Carlson’s replacement is underway. 

Under new ownership, Refinery29 is getting back into the events business:

Acquired by Essence magazine’s corporate parent Sundial Media Group last month, Refinery29 is now taking over Beautycon, the country’s largest beauty trade show, according to Axios. Refinery’s newly appointed CEO Cory Haik is also planning to bring back 29Rooms, the publisher’s event series that’s been dormant since 2019.

Substack wants TikTokers:

Newsletter subscription platform Substack is trying to woo TikTok creators and is building up its video offerings to do so, according to Engadget. The company is unveiling a creator studio that will help TikTokers change their channels into Substack shows amid the looming TikTok ban. 

Google’s latest core algorithm update impacts publishers’ visibility scores:   

The search platform’s March 2024 core algorithm update targeted low quality and AI-generated content within search results, but publishers are seeing impacts to their own search visibility rankings as a result, according to the Press Gazette.

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