The New York Times is speeding up the overhaul of its ads business after being hit by a slump in advertiser spend across print and digital – despite record subscriber figures.
The company reported quarterly ad sales of $106m – a dip of 15% from the $125m it made in Q1 2019. Digital advertising declined 8% year-on-year while print revenues dropped by 21%.
High volumes in reader traffic saw programmatic offer only some cushioning to the decline in direct sales. The Times noted particular drops in demand from the luxury, media, entertainment and financial categories.
The biggest hit to the quarter came in the latter weeks, when the coronavirus saw swathes of advertisers cutting, pausing or pulling spend. Based on the trends of the last month, chief executive Mark Thompson warned investors that advertising in the second quarter is likely to fall by 50-55% compared to a year ago, “with limited visibility beyond that”.
The rapid slowdown has prompted Meredith Kopit Levien, chief operating officer of the company, to “hasten” the multiyear strategy put in place to transform the company’s ads business.
The international media co will now focus on winning the media spend of a larger concentration of advertisers in a smaller number of earmarked categories such as tech, telecom and financial services. Kopit Levien explained the Times had seen better success negotiating “larger, multi-platform" deals with these clients in the past.
“I think it's fair to say [that] in both print and digital we’ve got more pressure in our legacy categories, and I think we can assume that that will continue through the crisis,” she said.
The Times will continue to invest in products that tap into the first-party data and consumer insights gleaned from its subscription model, while its audio business will also be nourished. Podcast revenues grew by 30% in the quarter, primarily due to the success of The Daily, which Kopit Levien said had become an “even larger and more sought-after platform for our advertisers”.
“We do expect some softening of demand for both data-driven display and audio during the recession, but less so than in our legacy products,” she added.
Despite the plummet in advertising revenues, topline readership and subscriber numbers painted a more positive picture for investors. The company posted 587,000 new digital subscriptions from February to April, making Q1 the best quarter in its subscriber history.
It now counts more than 5 million paid-for digital-only subscriptions and more than 6 million total subscriptions across digital and print.
“The Times’s business model, with its growing focus on digital subscription growth and diminishing reliance on advertising, is very well positioned to ride out this storm and thrive in a post-pandemic world,” said Thompson.
“We believe that the company will emerge from this global crisis with a distinctive and valuable advertising revenue stream to complement a digital news subscription business, which is now by far the largest and most successful in the world. The revenue from those subscriptions – and our strong balance sheet – give us real confidence, not just that we can remain financially sound through the pandemic, but also that we can safely invest in our digital growth strategy and continue to hire new talent to help execute it.”