February 7, 2023

B2B Media Showing More Resilience Than Consumer

With what everyone writes about the state of the ad markets, you’d think that the world was coming to an end. And for some publishers, it might seem that way. But for the AMO audience, it’s not so cut and dry.

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Now let’s jump in…


I sent a survey to the AMO audience last week to better understand how everyone felt about the ad economy. Ninety-four people responded. What I found is that B2B media is feeling more confident about this year than consumer media. Additionally, January was far better for B2B media companies than their consumer contemporaries.

According to the survey, 64% of B2B media companies hit or exceeded their January revenue goals compared to only 51% of consumer media. If we look at where these companies are pacing full-year, 67% of B2B media companies are confident that they will end the year flat or greater than 2022 revenue; Consumer media is 59% as confident.

Of the B2B media companies, one interesting comment stuck out to me:

Main challenges are VC-backed clients, client consolidation (one client bought another client), and layoffs (some close contacts within clients were let go so have to make new friends).

This is important because it goes back to my piece last week about recalibration. The VC-backed companies had a lot of money to spend, but now that funding is not so clear for them, they’ve been forced to pull back. My expectation is that this will continue this year. Whether the full economy goes into a recession remains to be seen, but it would be impossible not to call out the tech world specifically.

And so, for publishers that were overly dependent on these inflated B2B SaaS advertising dollars, it will be painful for a while.

A consumer company, which was flat in January and expects to be flat compared to last year, said this:

They [advertisers] are spending and asking for more discounts and free things. They are short staffed so they want more turn key products that require them to work less.

There has been a very sharp correction toward simpler products. I’ve heard of multiple advertisers moving toward straightforward programmatic advertising. Is it because it works the best? No. Instead, they opt for it because it’s easy and scales. Why do a heavy, custom content campaign when you can, instead, do a simpler programmatic campaign and turn it on/off if things are working?

Simplification is the right approach for publishers to take right now. Yes, we may want to offer exciting things. But marketers need to be flexible. Budgets that exist today could get cut tomorrow. If you’re banking on big, flashy campaigns to get you deals, you will be in for a rude awakening.

Along with asking for more discounts and free things, others are being tight with how they spend. According to two respondents:

More “test” and short-term campaigns and further investment based on performance and if budget is available even from long standing clients.

Reluctance to book yearlong campaigns, clients are looking to do things in installments.

These are both points related to fear. A year ago, publishers were booking full-year deals. Back in July, I wrote about how important it was to start selling 2023 months ahead of the year. Now? Advertisers aren’t budging. Annual deals turned to quarterly turned to monthly. And it makes a lot of sense why. Advertisers need to ensure that what they’re investing actually works. The last thing you want is to fail on a campaign and have to explain to your boss why you wasted budget.

It helps to understand the psychology at play here. If we can make ad buyers look good—competitive rates, solid performance, etc.—they are more likely to return to us. And so, buyers are being careful right now.

That should be okay for us, though. If we do perform and they continue to return, you’ll see them get more comfortable with longer-term spending, especially as the economy turns. And if you are running out of inventory—a good problem to have—you can try and push them to lock up their inventory ahead of time.

Another interesting comment that stood out:

More advertisers seem to be realizing consumer spending isn’t crashing.

This is similar to the discussion above about VC-backed companies. What originally looked like a general recession appears to be localized to the tech community. But for the rest of the economy, there’s not a recession in sight. Inflation is coming down. Job numbers look great. People are spending. For all intents and purposes, the economy is humming along.

And so, as advertisers get past their fear and start thinking about the future, they realize that they will have no choice but to advertise if they want to reach their target market.

This brings me to the final point that a few respondents mentioned: “All eyes are on Q2.” Not only does the survey suggest this with how many respondents are confident with full-year pacing, but I’ve heard from multiple sales teams that they are seeing a lot of activity for Q2. So long as this is actual interest versus exploratory RFPs—and so long as the rest of the year doesn’t collapse—we could see a much stronger second half of the year.

For that, we’ll have to wait and see. That said, there is more confidence within the AMO community than I had originally anticipated. It’s certainly an interesting time to be working in media.


Before we continue…

Over the past couple of years, I’ve interviewed a variety of media operators from big and small companies about building their businesses for the AMO podcast. I spoke with Neil Vogel at Dotdash Meredith, Tim Hartman at GovExec, Snigdha Sur at The Juggernaut, and many others.

The podcast is open to all subscribers.

Premium Members also get the transcripts of all past and future podcast episodes as part of their subscription. Sign up here and then head over to the podcast page to read through them all.

Now let’s get back to what we were talking about.


Penske takes call option on Vox

It seems that Penske Media has its eyes on its next major acquisition, though it’s not making a formal move just yet. According to The New York Times:

Vox Media, owner of publications including New York Magazine and tech site The Verge, is raising $100 million from Penske Media, the owner of a swath of entertainment and trade publications including Rolling Stone and Variety, according to several people with knowledge of the deal.

As a result of the investment, Penske Media will own about 20 percent of Vox Media, making it the largest shareholder of the company, according to one of the people with knowledge of the terms.

In my opinion, this is a simple call option to acquire the rest of the company. In some respects, this is like a down payment to see how Vox handles the economy over the coming months and years. If things go well, Penske can come in and buy the entire company. And as a large minority investor, it will be in a strong position to make a deal happen.

This is a similar strategy to what Cox did with Axios. According to Sara Fischer at Axios in November 2021:

Axios on Monday told staffers in an internal note that the company raised a series D funding round from Cox Enterprises, Inc., valuing the company at $430 million. Axios will bring in roughly $85 million in revenue in 2021.

Fast forward to August 2022, Axios announced that it was selling the entirety of the company to Cox, valuing the company for $525 million.

If Penske is following the same playbook, I would expect it to make a move at some point in the next 12-18 months. A good barometer for how Vox is doing would be whether Penske tries to buy the rest of the company. If it decides to remain a minority investor, it might be looking to cut its losses.

As with all of these things, we’ll have to wait and see. But a strategic investor coming in to make this play is far different than a VC. In my book, this reads like a call option.

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