November 15, 2022

Ad Markets Struggled in Q3

When the economy gets rough, the first budget to go is marketing. It’s the most manageable variable expense for a CFO to zero in on. And so, it’s no wonder we’re all seeing tougher Q4s than we might have anticipated when we started planning for the year.

But how are the biggest public companies performing right now?

Before that… A note about our sponsor, Omeda.

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Now let’s dig in…

Across the board, it’s evident that the ad markets are struggling. But that pain is being felt more at some companies than others.

Dotdash Meredith

According to its Q3 2022 earnings, IAC reported that Dotdash Meredith’s digital advertising revenue was down 13% year-over-year due to a variety of reasons:

  • Lower advertising rates due to macro headwinds impacting Retail, Home Goods, Beauty and Entertainment advertisers
  • Meredith integration impact including site migrations and sales force consolidation
  • Softening consumer demand impacting affiliate commerce revenue and performance marketing revenue (primarily related to financial services products)

All of that makes sense and is valid. However, that last bullet is interesting because we can see financial services-related marketing spending drop by looking at earnings statements.

For example, MarketWise is a company that generates considerable revenue selling financial education products. I have no idea if they advertise through Dotdash’s network. But if we look at their Q3 marketing spend, it’s down 37% year-over-year from $82.5m to $51.6m. As MarketWise said in its investor presentation:

MarketWise continues to be impacted by these events as prospective and existing subscribers are still assessing the environment and not yet re-engaging at more historically normal rates. Engagement, as measured by landing page visits, was down 15% sequentially between 2Q22 and 3Q22, influenced by the economy, summer travel and a reduction in our marketing spend. This decrease trended in line with Schwab DAT’s during 3Q22.

People are not spending as much in learning to grow their money; instead, they’re operating from a position of fear of losing their money. And so, with inflation up and the markets down, it’s a perfect storm across the board for Dotdash Meredith’s publications.

The integration portion is also interesting. Dotdash’s sites are better able to monetize than Meredith’s sites. IAC CFO, Christopher Halpin, said on the earnings call that:

And Dotdash Meredith management is – feels very good that where we are in early November, with 90 plus percent of the sites and all of the big sites migrated. Those challenges are behind us. But those were definitely drags on q3 performance. Additionally, we just had some sort of break and fixes on ad serving on e-commerce integrations. And those were drags, as you’ll see in the Q, on performance marketing in the quarter.

Getting through that should help Dotdash Meredith quite a bit.


It’s a little complicated with BuzzFeed. According to its press release:

Including Complex Networks in the 2022 results, BuzzFeed increased Q3 revenues to $103.7 million, growing 15% compared to the third quarter of 2021

Those numbers, broken down, look like this:

  • Advertising revenue: $50.4m, which BuzzFeed says is “flat year-over-year.”
  • Content revenue: $38.4m, which BuzzFeed says grew 45% year-over-year
  • Commerce and other revenues: $14.9m, which grew 12% year-over-year

At the same time, BuzzFeed reported that time spent declined 32% year-over-year to “151 million hours across our owned and operated properties as well as third-party platforms.”

Something isn’t exactly adding up for me. Fortunately, BuzzFeed shared its Q3 2021 earnings last year before it officially went public. According to this, BuzzFeed, excluding Complex, generated:

  • $50.2m in advertising revenue
  • $26.5m in content revenue
  • $13.4m in commerce revenue

On top of that, Complex generated $31.2m in revenue. So if we add all of that up, BuzzFeed and Complex combined generated $121.3 million in Q3 2021 revenue. Compared to this year, that’s a double-digit percent loss in annual revenue. So it looks to me that BuzzFeed is comparing total network revenue this year to just BuzzFeed last year.

Do with that as you will.

The New York Times

The Gray Lady had mixed results when it came to advertising. According to its earnings announcement:

Third-quarter 2022 digital advertising revenue increased 4.9 percent and print advertising revenue decreased 8.5 percent. Digital advertising revenue was $70.3 million, or 63.6 percent of total Company advertising revenues, compared with $67.0 million, or 60.4 percent, in the third quarter of 2021. Digital advertising revenue increased primarily as a result of higher direct-sold advertising at The New York Times Group and the addition of advertising revenue from The Athletic, which more than offset lower revenue from fewer programmatic advertising impressions and pressure from the macroeconomic

It’s the same narrative. The macroeconomic environment is putting a lot of pressure on the business, but because of more directly sold revenue, it can continue growing, albeit slowly. Again, according to the earnings call:

We saw the impact of deteriorating macroeconomic conditions most clearly in our tech and media categories. Still, there were several areas of relative strength in a tough market, like direct-sold display advertising. We believe that strength underscores the value of our first-party data and premium ad products, our unique audio offerings, and the appeal of The Times brand and varied product set to a wide range of marketers.

Do I need to be more annoyingly obvious with the call out to first-party data? The fact that it can see a drop in programmatic impressions but more than offset that by directly selling its audience is a good sign. As demand picks up next year—I hope—NYT will be in a good position.

What’s particularly interesting about its earnings announcement is that it expects Q4 advertising revenue to be down by approximately 10% compared to Q4 2021. If we recall, Q4 digital advertising revenue was $111.1 million; therefore, it looks likely that The Times might barely hit $100m in the quarter.

We’ll have to wait and see.

Dow Jones

And to round it out, NewsCorp’s Dow Jones continues to grow. According to its FY Q1 2023 release:

Advertising revenues increased $4 million, or 4%, primarily due to 11% growth in digital advertising revenues, driven by higher average yields, partially offset by a 6% decline in print advertising revenues. Digital advertising accounted for 65% of total advertising revenues in the quarter, compared to 61% in the prior year.

The NewsCorp team wasn’t very forthcoming on where the challenges might lie concerning advertising, and when David Karnovsky from JPMorgan asked, the team glossed over it.

That said, growth is slowing. For example, digital ad revenue grew 38% in FY Q1 2022. And so, growing 11% is much slower than in previous years. That said, the team must be pleased with where it is currently operating. And like I wrote a few weeks ago, Dow Jones is only one part of a much bigger pie.

Ultimately, advertising is a tricky business. We don’t have control over what marketing and finance teams will do. And therefore, we have to tell a compelling story to ensure we can capture advertising dollars. But, of course, some of these companies have done a better job of that than others. So we’ll continue tracking to see how they perform every quarter.

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