In this week’s Media Briefing, Digiday’s media team recaps the top trends and changes in the media industry that occurred in 2022.
- The year in review
- Vice Media may miss revenue targets, Google and Meta lose their grip on the ad industry and more
Digiday Media is taking next week off; the next edition of the Media Briefing will be published and sent out Jan. 5. Happy holidays!
The year in review
The key hits:
- The economic downturn made the final months of 2022 less fruitful for publishers’ advertising businesses than anticipated.
- Revenue diversification through other business lines might only get publishers in line with this year’s revenue goals, versus exceeding them.
- Publishers under pressure means more pressure on newsrooms, but unions are demanding fair pay more loudly than in years past.
- And if things get too bad, publishers are willing to pull the necessary levers to right the ship, including cutting costs via layoffs.
Publishers used 2021 as the launch pad for new businesses and growth opportunities, ranging from big shifts like merging with or acquiring competitors to smaller experiments with emerging technology like Web3 and NFTs. But that period of expansion and devil-may-care spending seemed to come to a halt by the second quarter of 2022 when the economy began to refreeze after the false spring.
“This year we saw the slowdown really happen in Q2. [Then] in Q4 this year, we didn’t have that influx like we normally do. [Those budgets are] getting pushed into Q1,” said Sherry Phillips, CRO of Forbes.
Reports are showing that this year didn’t seem to live up to the expectations publishers set for themselves after a successful 2021. Vice Media Group, for example, is pacing to be on par with 2021’s total revenue (around $600 million), missing its goal of $700 million by over $100 million, according to a report by The Wall Street Journal.
Not alone in needing to shift expectations, other publishers were caught off guard by how hard hit their advertising businesses were in the fourth quarter this year. “It’s one of the most challenging Q4’s I’ve ever experienced,” a media executive told Digiday in November.
Here’s a look at the top 2022 takeaways from Digiday’s media team.
Advertising takes continuous hits
Publishers have grappled with decreasing advertising revenue since the early months of 2022. News publishers began feeling the blows from brand safety concerns as early as February surrounding news of Russia’s invasion of Ukraine, and the subsequent supply chain issues. China’s Covid lockdown impacted other advertising budgets. And all the while, rising interest rates and an ever-looming potential recession, have led the advertising industry unable to catch its breath to finally have a good quarter this year.
“Advertising was very difficult. A lot of our normal, big partners pulled back in the back half. So we did fine this year, but I feel much more optimistic about what’s to come [in 2023] than what we’re coming out of,” said Riva Syrop, president of Apartment Therapy Media on a November episode of the Digiday Podcast.
Even the fourth quarter — historically the bellwether of the year — was lackluster as advertisers favored quick-hit programmatic campaigns and social media spots over branded content and custom offerings that typically come at a higher price.
“For the first half of the year, we were trending up on RFPs and proactive RFPs and the dollar amounts were up. Then in December, we were seeing smaller, more tactical buys. So those numbers were coming down a little bit. People really are planning month-to-month [or] week-to-week. It’s not quarter-by-quarter,” said Phillips.
As a result, publishers’ sales teams have needed to be as flexible — if not more — than they were during the pandemic to secure the limited advertising dollars available while ensuring these campaigns are executed in tight timelines.
“Execution really is everything. We have expedited timelines, our deals are much more complex, the sales cycle is much shorter than it’s ever been and competition is more fierce. If we’re not executing as well as we are able to for our clients, we’re not going to win business,” said Jason Wagenheim, CRO and president of BDG. “Clients are doubling down on partners that can execute and through tough times, that’s just more pronounced than ever.”
Setting stakes in non-advertising revenue
Events and commerce were two business areas that publishers invested in when digital advertising was floundering. And some media CROs were given oversight of non-advertising businesses this year as a way to find cross-functional revenue opportunities.
After the surge of publisher owned and operated commerce businesses built during the e-commerce boom of the pandemic came to a quiet end this year, other publishers, like Hearst, reemphasized creating new marketplaces and shopping platforms, seeing an opportunity from its Gen Z audience to make these businesses work.
Affiliate commerce revenue also seemed to net out OK, especially in the fourth quarter, despite worries that the economy would affect consumers’ propensity for shopping, therefore, that part of the business.
Despite the success of Apartment Therapy Media’s commerce and events strategy in 2022, next year’s outlook isn’t so pretty, Syrop said, adding that the organization is delaying the company’s tentpole events franchise Small/Cool to the second half of 2023 as a precaution for consumers and advertisers.
“My gut says, until we get into Q1 and really see how the year is going to shake out, I don’t know that brands are going to release budgets for things like experiential,” said Syrop.
Meanwhile, Forbes saw double-digit growth in its events business year-over-year, after holding more than 100 events in-person and hybrid, according to Phillips, who did not provide exact figures.
The days of mandated return to office plans and deadlines are behind us. Most publishers have already moved to requiring employees to come into the office a few days a week or are offering flexible work options to let people come in when they choose. Others are staying fully remote.
“RTO mandates? I think they’re dead,” said Peter Miscovich, an executive management consultant who focuses on the future of work at commercial real estate firm JLL.
While newsroom unions were active in pushing back on mandated RTO plans earlier this year, those actions have mostly quieted down. Employees have yet to experience widespread consequences for choosing to continue to work remotely.
But unions also shifted their focus to push their companies’ management to reach deals on union contracts. And to push for higher wages and better benefits, unions at The New York Times, Reuters, Hearst and Gannett have organized work stoppage strikes, protests and rallies.
The makeup of newsrooms looks different compared to last year as well. Media companies have improved the diversity of their workforces in 2022. Ten publishers that publicly share the demographics of their workforces have kept to their commitments in 2020 to reduce the ratio of white employees at their companies. – Sara Guaglione
Cutting costs when facing revenue loss
The hiring boom that the media industry underwent earlier this year has subsided in favor of cost management efforts in the back half of 2022, as publishers face a potential recession.
The least abrasive way publishers are cutting costs is by reducing their real estate footprint as they further embrace a hybrid work model. Warner Bros Discovery, BuzzFeed, Dotdash Meredith and iHeartMedia have all subleased or sold off unused space, moving into smaller offices more conducive to the new way of work. The Economist is moving to smaller offices in London and New York City.
“The old places were too big. They were built [for] a pre-hybrid environment. It’s to reflect the new office culture,” said Economist president Bob Cohn.
Others have taken more drastic measures. The Washington Post is preparing for layoffs, after shutting down its Sunday magazine as well as its Spanish-language podcast and opinion section. CNN and Morning Brew are planning layoffs as well. Last month, Outside, Vice Media Group and BDG let go of employees. Protocol shut down entirely and The Recount is reportedly near its end. Gannett has been eliminating hundreds of jobs since August.
Along with layoffs comes hiring freezes. Like many other publishers, The Economist is slowing down hiring.
“We’re being cost conscious across the business but we are not stopping anything we do. We are not closing down divisions. We are just managing costs because we know we are heading into difficult times,” Cohn said. – Sara Guaglione
What we’ve heard
“I do think that we’re going to see a really robust second half but we’re trying to keep those tentpole events spread out through the year because … that will help ensure revenue when we’re predicting a potentially softer market.”
– Sherry Phillips, CRO of Forbes
Numbers to know
$1.6 million: The amount of funds nonprofit investigative news outlet ProPublica received from Sam Bankman-Fried’s family foundation that it intends on returning. This was the first part of a $5 million grant.
24: The number of work stoppages across newsrooms in the U.S. this year.
58%: The percentage of 63 publisher pros who said their 2022 revenues are up compared with their revenues in 2021, per Digiday+ Research. This number is significantly lower than the 86% of publishers who predicted their revenues would grow in 2022.
What we’ve covered
Group Black’s Travis Montaque outlines company’s media M&A ambitions:
- Group Black has further indicated its ambitions with multiple reports this year that it’s looking to buy either BDG, Vice Media Group or Vox Media.
- During the latest episode of the Digiday Podcast, Montaque laid out how acquiring a scaled media company would fit into Group Black’s strategy.
Listen to the conversation with Montaque here.
Digiday+ Research: News Publisher Subscription Index:
- The challenge of constructing the best digital offering to entice readers to open their wallets is now a near-universal one for many media execs previously unfamiliar with subscription revenue.
- This report is the first piece to come out of our Digiday Subscription Index, a research framework that analyzes and ranks a set of publications across digital threshold experience, member benefits and pricing and plans dimensions.
Learn more about how different publishers are approaching their subscription businesses here.
Confessions of a holiday gift guide writer:
- Publishers’ fourth quarter commerce plans usually kick off as early as August, but that doesn’t make holiday weeks any less stressful.
- A commerce writer talks about their experience writing gift guides and holiday shopping stories while dealing with longer hours and fending off product pitches from eager publicists.
Learn more about the role of a commerce writer here.
Journalist Aaron Rupar on the ‘chilling effect’ of being suspended by Twitter:
- Aaron Rupar, a former Vox journalist who now works independently, was one of the journalists who had their Twitter accounts suspended last week.
- Digiday spoke with Rupar to hear his thoughts on his Twitter suspension and what it means for his work and business.
Learn about how Rupar handled this ban here.
What we’re reading
Vice Media is expected to earn $600 million in revenue this year, flat with 2021’s total revenue, versus the $700 million target it set earlier this year, reported The Wall Street Journal. This is a blow for the company as it pursues sale talks with Greek broadcaster Antenna Group at a valuation of about $1.5 billion.
Google and Meta will bring in less than half of all U.S. digital advertising revenue — 48.4% to be exact —this year for the first time since 2014, according to Axios.
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