August 22, 2023

Atlas Obscura Ads Are Crushing; But What’s the Story With Experiences?

It’s not every day that I get to write about not one, but two media companies that have transformed themselves over the past few years. Both Atlas Obscura and The Telegraph have put themselves in much stronger positions in which they found themselves a few years ago.

On another note, I am waiting for two more confirmations for the AMO Summit and then the agenda is locked. It’s been a wild few months planning this event and I am really pumped to see so many of you on game day.

If you want to attend the AMO Summit here in NYC on October 26th, buy your ticket now. It’s going to be a great meeting of the minds across both consumer and business media. 

Publishers are obviously thinking a lot about the impact AI is going to have on search and how it’ll transform the way content is discovered and consumed.

On September 12th, Brian Morrissey of The Rebooting and I are joining BlueConic’s Patrick Crane to discuss the impact of AI-powered search on publishers. We’ll talk about:

  • How AI-driven search will change the way publishers create and monetize their content
  • The intersection between AI-driven search and existing cookie deprecation preparedness efforts
  • What publishers can do to future-proof their businesses

Sign up for the webinar here.

Atlas Obscura Bucks The Pandemic

One of the earliest stories I ever wrote mentioned Atlas Obscura raising $20 million in September 2019. At the time, I said: 

In New York, for example, I can pay $55 to “Tour the House of Wax with the Curator” or pay $25 for “Behind the Scenes at the City Reliquary.” But they also plan wonderful looking trips like “Sailing Sardinia’s Hidden Coastlines,” an 8-day, 7-night excursion that costs $3,580 per person.

They write about wonderful experiences and then offer travel opportunities to their audience. In the past, they tried to rely on advertising, but this is a much better business for them. I’ll be curious to see how they deploy the additional capital and what the addition of Airbnb’s audience can do to the business.

And in September 2019, I thought this was true. If it knew so much about its audience, why shouldn’t it be able to grow a healthy business on building great excursions? Of course, none of us could have predicted that in March 2020, the entire world would shut down due to Covid-19. 

Travel was hit particularly hard. And so, Atlas Obscura had to make a hard pivot. Whereas originally, the experiences business was the goal—hence why Airbnb led that $20 million round—now it needed revenue and it needed it fast. Three years later, the pivot worked. 

According to an Adweek story on Atlas Obscura:

In 2019, its $5 million in revenue came almost equally from a smattering of smaller brand partnerships and its experiences business, the latter of which the company saw as its primary offering.

In 2020, it generated roughly $6 million in total revenue, followed by $11 million in 2021 and $17 million in 2022. This year, it is on pace to bring in $24 million in total earnings, roughly $15 million of which will come from brand partnerships.

There are a few things to unpack from all of this. 

First and foremost, it’s easy for pundits like me to say “the ad markets are bad” as if the ad markets are monolithic. But the reality is, within the ad markets, there are thousands of niches where the needs of advertisers differ. What thrived in 2020 and 2021 is now course correcting. On the flip side, travel, which was largely left on the side in those years, has seen a massive resurgence. 

And so, is it any wonder that ad revenue is growing by leaps and bounds at a travel-oriented publication? But what’s particularly interesting is that the type of revenue is true brand campaigns versus performance-driven spend. The destination marketing organizations (DMOs) and tourism boards are trying to make their local geographies look enticing to travelers. These groups are less interested in which airline you pick and more in you spending money once you’ve arrived. 

Many of us may be struggling with a harder ad market, but as it stands right now, travel is having its moment in the sun. I cannot predict if/when that’ll change, but I suspect much of it is tied to the state of the economy. 

Second, it’s confusing why the experiences business hasn’t grown in lock step with the brand partnerships business. In 2019, Atlas Obscura generated about $2.5 million in experiences revenue. In 2023, it’s expecting to generate about $4 million. That’s a 60% increase from 2019 to 2023. At the same time, brand partnerships revenue is up from $2.5 million 2019 to an expected $15 million this year—that’s 500% growth.

There are a couple of possible theories to explain this. The obvious one is that the priority has been growing the ad business in a quest to get to profitability. The reality is, it raised $20 million four years ago and so it needs to be in control of its destiny. More cash coming in than going out is the best way to control one’s destiny.

The other less obvious theory is that it doesn’t know its audience as well on a one-to-one basis. If I look at the company’s advertise page, nearly every data point comes from Quantcast. Relying almost exclusively on third-parties for data doesn’t set it up for success.

The goal with content to commerce is to build a marketing funnel where you know what your audience cares about and can then promote specific offerings to those people. In the case of Atlas Obscura, I suspect it’s less about declarative data and far more about the behavioral.

Let me explain with an example…

I was browsing the various trips on the site and landed on this one that takes place in Uzbekistan. I’ve always found the country’s history fascinating, especially with Samarkand being an ancient city on the Silk Road and the capital of the Timurid Empire (okay, I’m done showing my history nerd side).

Theoretically, if I were going to book a $5,700 vacation (before airfare), I would have first read content on the site about Uzbekistan. What’s the food like? What are the places to see? What’s there to do? All of this is information that Atlas Obscura should want to know about me and me specifically.

When one of these trips comes up, it could look in its database for people who have demonstrated interest in Uzbekistan. Rather than casually promoting the offer to the entire database, it could zero in on just people who have read content on Uzbekistan and promote the trip.

It would then be able to proactively plan trips around where the audience is spending the bulk of their time engaging. If Atlas Obscura sees a ton of people digging into content about Japan, it should prioritize creating a trip in Japan. If no one is consuming content about England, perhaps planning a trip there doesn’t make sense.

If this theory is wrong and Atlas Obscura has been capturing this data, then there’s an argument to be made that this type of business is just much harder to grow. Either people have more of a surface-layer relationship with the brand or people disconnect their research for travel from where they purchase trips.

Whatever the case, one thing is abundantly clear… Atlas Obscura was in a very tough position when the pandemic hit. The team had to pivot. And three years later, it’s obvious that things have paid off. The brand is now profitable.

There’s more to A Media Operator than just this Tuesday newsletter. Sign up to become an AMO Pro member and start receiving additional benefits, including:

  • An invitation to the AMO Slack
  • A second newsletter every Friday digging into tactics and strategies to grow your media company
  • Access to the transcripts of all AMO podcast episodes
  • A growing list of commentary on public media company quarterly reports
  • Early bird access to events

Become an AMO Pro member today.

The Telegraph hits 1 million

Flashes & Flames has a deep dive about The Telegraph, digging into the company’s valuation and its growth over the previous few years.

First came news of the company’s continuing financial recovery with last year’s 4% revenue increase to £254mn, a 17% rise in EBITDA to £47mn, and a new record of 734k digital and print subscribers in 2022. Second, came CEO Nick Hugh’s assurance that he would achieve his target of 1mn subscriptions (first predicted back in 2018) before the end of this year. Third, came the declaration that the Telegraph had indeed reached its 1mn target, courtesy of the 200k+ subs brought by the newly-acquired Chelsea Magazine Company.

There are a lot of things in that paragraph all happening at the same time. As the author explains, this would make The Telegraph only the third brand in the UK to hit 1 million subscribers. And while it was done through M&A versus organic growth, it’s still remarkable growth for the brand.

But what I think is more impressive is how The Telegraph has pivoted to generate the majority of its revenue in subscriptions. In 2020, 42% came from subscriptions. By the end of 2022, that had grown to 51%. That’s a big shift for a business of this scale.

This shift has also allowed the business to recoup the majority of its lost revenue from 2019. In that year, it did £265.8 million in revenue. In 2020, that had dropped to £235.2 million. In 2022, it was £254.2. What’s even more impactful is that EBITDA has increased from £25.6 million to £46.8 million. It’s nearly doubled its EBITDA despite revenue being down over £10 million. That’s the sign of a healthy business.

It is reported that The Telegraph is for sale for £600 million. But is that a fair valuation? Flashes & Flames seems to think so:

Based on our calculations, it may seem reasonable to value the Telegraph’s digital business at £500mn (20x EBITDA, 5x revenue) and print, cautiously, at £120mn (4x EBITDA).

The team’s right to break down print and digital separately. I think the broader question is how long the growth can last. 12.8x 2022 blended EBITDA is not a bad valuation, but a lot will hinge on its ability to continue growing the digital revenue and EBITDA beyond the shrinking print business. If The Telegraph can sell that story, it might get the valuation.

But it also depends on who the buyer is. Interest rates are high right now, so if the intention is to use a lot of debt, it could get very complicated. Many of the big media deals of the past few years—Informa buying Industry Dive, Axel Springer buying Politico—all took place before interest rates skyrocketed. This matters in M&A.

Nevertheless, it’s worth praising the team for this massive turnaround. The Telegraph is a profitable media company that has made the transformation to digital-first. Not many media companies can say that.

Thanks for reading today’s AMO. If you have thoughts, hit reply or become an AMO Pro member for an invitation to the private Slack.

If you buy your ticket to the AMO Summit being held here in NYC on October 26th, you get one year of AMO Pro included. Buy your ticket today before prices increase in September.

Have a great week and see you on Tuesday!