Dotdash Meredith Sees Higher Digital Revenue, Traffic in Q3

By: Christiana Sciaudone & Jacob Cohen Donnelly

Dotdash Meredith’s digital revenue increased 16% to $246 million in the third quarter, the third consecutive period of double-digit growth, and helping to push revenue higher by 5% to nearly $440 million.

• Advertising revenue rose 26%, driven by higher premium advertising revenue from the beauty, technology, pharmaceuticals and retail categories, and higher programmatic advertising revenue rates.
• Licensing and other revenue rose 17% thanks to a partnership with OpenAI, initiated in May, and improved performance from syndication partners like Apple News+.
• Performance marketing revenue dropped 7% year-over-year driven by revenue declines from services, concentrated in finance including insurance and brokerage.
• Print revenue declined 6% to $199 million.
• Adjusted EBITDA fell 24% to almost $15 million due to revenue declines, partially offset by lower operating expenses.

“For the first time in a while, traffic growth was particularly strong in our entertainment, food properties, and we continue to see momentum there,” Joey Levin, chief executive officer at IAC, Dotdash’s parent company, said on an earnings call today.

Programmatic sales were “superb,” he said, with rates up 30% in the quarter, while performance marketing is improving in the fourth quarter.

“We expect growth in the fourth quarter across performance marketing broadly and then licensing continues to be solid, driven by both our OpenAI partnership and Apple News,” Levin said.

October was softer in advertising and traffic with digital revenue up 7% in the month, the company said.

“We knew there’d be some challenges with the election, but consumer distraction and advertiser caution exceeded our expectations,” Levin said. Dotdash Meredith does not sell digital inventory on its titles to political advertisers. “The good news for DDM was the election was rapidly decided, and things are shaping up to come in during November and December, with advertisers steadily returning.”

Executives predict 10% digital revenue growth in 2025 and beyond.

D/Cipher, an intent advertising tool, is driving advertisers to spend more at higher prices, with about half of digital advertising revenue coming from contractual commitments between DDM and premium advertisers.

“In Q3, revenue from the cohort of advertisers whose buys include D/Cipher targeting grew 5x faster and the average deal size was 54% larger than the cohort of potential advertisers that did not use D/Cipher,” the company said in a letter to shareholders. “We are working to extend D/Cipher’s targeting capability to both the rest of DDM’s advertising offerings and third-party sites across the entire open web.”

Dotdash has completed the integration of D/Cipher with OpenAI, which tracks intent at scale. “We believe this capability will generate additional revenue growth for us in 2025,” executives said.

“We have the ability, whether through partnership, or we can just buy some of that inventory, to sell that inventory to advertisers, to increase the size of their buy with us, and to deliver larger scale packages. And that’s something that we think we can deliver in 2025 when we expect to be a driver of growth unbound by the size of DDMS existing inventory,” Levin said on the call.

AMO’s Take

If we write regularly about traffic to publishers’ websites dying, Dotdash Meredith has endeavored to prove us wrong. And by all accounts, it has.

To some extent, this is due to Google’s bias toward larger publishers, of which Dotdash Meredith is certainly once the biggest. It’s also a function of it not seeing much drop in traffic due to Google’s AI Overviews. Management said in its shareholder letter, “AI answers appeared in roughly 20% of DDM’s relevant searches in the quarter and the impact on overall traffic remained minimal.”

Additionally, AppleNews has become a more important distribution channel, which drives traffic to its brands as well as licensing revenue. While it’s unclear how much traffic is coming from this source, Semafor wrote a piece in the spring talking about how many publishers were seeing success here. And so, if Google’s traffic begins to pull back, it may not be as dire for Dotdash Meredith as for other publishers that have been myopically focused on the search engine.

Another thing that’s worth noting is Levin’s point regarding D/Cipher and the open web. The Dotdash Meredith team uses reading signals to determine intent. And those signals might not even be as clearly linked as you might imagine. For example, assume that an advertiser wants to read retirement savers. DDM found three topics were very relevant to this cohort:

• What’s the best retirement savings account for me?
• Should I invest in mutual funds?
• How much does Alzheimer care cost?

The first two are obvious targets for retirement savers. But the third one, which in DDM’s example, lives on one of its healthcare sites, might normally sit outside of a retirement savers target audience. And yet, it makes sense when you consider that in your retirement, you may need to care for someone with Alzheimer’s.

Well, what if you could take that same intent and spread it out across the open web? That becomes very interesting and, potentially, very profitable for Dotdash Meredith. There are a couple of ways it could do this.

The first is simply using 3rd-party cookies to target users that fit within a specific audience cohort (retirement savers). When that person shows up on another site, Dotdash Meredith could purchase the ad impression and deliver a D/Cipher-targeted ad. These sorts of audience extension campaigns can give the brand more reach and generate strong margin. 

The second is more advanced, but Dotdash Meredith could, in theory, roll out a D/Cipher ad network where it partners with other publishers in a more direct way. In this case, DDM would drop its own pixel of some sort on these other publishers’ sites. It’d then determine which articles fit within its audience cohorts and deliver D/Cipher ads accordingly. This is certainly more complicated, but could also be more lucrative. 

As it stands, this is pure speculation. Nevertheless, being able to extend its reach gives it a lot more inventory to work with and could help buttress any drop in traffic it may experience if Google starts getting more aggressive with its AI product.