Publishers’ Q1 ad revenue was better than forecasts, but not by much

For most of January, many publishers shared the very bleak experience of being behind 10-25% in their ad forecasts for the quarter. Now that March is over, publishers are surveying their wounds and finding that while ad revenue was indeed down, the numbers aren’t as bad as once predicted.

One publisher who spoke on the condition of anonymity said they ended the quarter down by a mid- to high-single-digit percentage, though they wouldn’t disclose an exact number. Another publisher told Digiday anonymously that they too saw a decrease in ad revenue year-over-year, but wouldn’t disclose the official drop. However, they added that “the last three months have been better than the preceding three months. And so, in aggregate, we’re moving, albeit somewhat slowly, in the right direction overall.” 

The first quarter ended up being pretty on par with expectations, and didn’t end up being “catastrophic by any stretch of the imagination,” according to Sean Griffey, CEO and co-founder of Industry Dive, though he declined to disclose hard revenue numbers or what his initial prediction was. He did say, however, that it was during the last couple weeks of the quarter that several “material” deals ended up being finalized, though he wouldn’t define this term from a dollar standpoint. 

Griffey wasn’t alone in experiencing a significant thaw in March. Insider’s head of global sales, Orlando Reece, entered a video interview with Digiday on March 30 saying that for whatever reason, that week had an explosion of deals coming in and he’d been bouncing from meeting to meeting with different advertisers.

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While Q1 ad revenue, sales cycles and payment windows appeared to be equally bad across the media industry, bright spots arose around consumer revenue streams, new tech experimentation and traffic patterns.

“We saw a flattening-out in March, which was a very welcome sign because the last nine months have been brutal, comparing on a year-on-year basis,” said one publisher who participated in a town hall session at the Digiday Publishing Summit at the end of last month, which was held under Chatham House rules, granting participants anonymity.

Last-minute deals

The in-quarter selling strategy that publishers used to try and level out the fourth quarter of 2022 didn’t seem to have the same make-up effect in Q1, however.

Deals that come in this late stage in the quarter can’t be earmarked as Q1 revenue, but instead are considered revenue for the second or third quarters when the campaigns can actually be executed, Griffey explained. Rather than dealing with advertisers running out remaining advertising budgets in quick-hit campaigns like they did during the fourth quarter, advertisers seemed to be waiting on budget approval for weeks, if not months, into the first quarter, leaving RFPs and contracts hanging in suspense.

Griffey likened it to hosting an open house and having a lot of nosey neighbors coming in for a look around, but those inquiries never materializing into sales. 

“I have never seen such a weird quarter as in lumpiness. You’d be up like, ‘Oh, we got this great deal in, let’s start working on it.’ And then everything got pushed, pushed, pushed, and now it’s in the second quarter,” Reece added.

The push and pull of programmatic 

It wasn’t just direct-sold, custom campaigns that publishers were having trouble selling for most of the quarter. 

In fact, Insider’s direct-side was up in Q1 year over year, according to Reece, “but our programmatic took a big dive in the first quarter. A lot of big programmatic sellers were not ready to go [at the start of the year, but] they are now.” 

Over the past three years, starting with the onset of the pandemic, but then exaggerated once again during the current economic downturn, a fourth publishing executive who spoke anonymously for this story said that there’s been a “huge shift” from direct-bought advertising to programmatic. 

Keeping those programmatic budgets coming directly in through the publisher’s sales team has been the primary goal, versus allowing it to flow through the open marketplace and hopefully end up back on their balance sheet, the exec said. To do this, the exec said their company is pitching media buyers and marketers on an incentive that unlocks added value offerings, like custom content or influencer-led ads, based on how much they spend on programmatic direct campaigns. 

It makes sense that publishers are prioritizing programmatic guaranteed (PG) and private marketplace (PMP) programmatic selling, because those CPM rates are substantially higher. During the week of March 26, the average PG CPM was $8.23 compared to $2.98 in PMPs and $1.57 in the open marketplace, according to Operative’s STAQ Benchmarking Data. 

“We found that that’s been a really strategic way for us to be able to continue to capture dollars, and to be able to do that through programmatic,” said the executive, who added that during this quarter, “99% of the time [advertisers] need to be focused on performance[-driven campaigns], but that doesn’t mean there aren’t pockets for innovation.” 

Despite the icy ad market that persisted in the first quarter, publishers remain cautious optimistic that by summer, once-frozen advertising budgets will be accessible again.

“We’re still going up, but it’s more effort to do so,” said a second publisher during the Digiday Publishing Summit Town Hall. “Overall it’s going to be a rough three or four quarters. It’s so variable. Things seem OK, and then there’s the bank collapse. It’s so many of these macroeconomic things that just keep knocking you off. It doesn’t feel existential, but it certainly feels hard. And it certainly feels that we’re tight.”

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