Reach hits 10 million registered users and sees digital ad dividends
Reach Plc has announced its full-year results for 2021. The newspaper company behind The Daily Mirror, The Daily Express and The Manchester Evening News has ridden the long tail of print advertising and circulation decline over the past few years, using the time to pivot to digital. So while the core of its business (print accounts for roughly 75% of overall revenue) is declining, it is repositioning itself by investing in data solutions and digital advertising.
Reach’s digital advertising growth is ‘more than offsetting’ print decline
It announced an operating profit of £146.1m, up £12.3m, while print declined by £22.3m – 4.7% on a like-for-like basis. The results note that decline; nevertheless it is a stronger performance than Reach had originally anticipated. That is in no small part due to its integration between the print and digital sides of the business, with engagement on websites and social channels shoring up interest in the print brands. Despite that, Reach also notes that it expects print to continue to shrink in line with the rest of the industry.
In terms of advertising revenue specifically, much of the market is still impacted by the lingering impacts of Covid-19, with travel and local advertising in particular bearing the brunt. The results state: “Advertising revenue was down 4.9% on a like-for-like basis (2020: -28.9%), a much-improved performance. Nationally-sourced advertising continues to outperform locally-sourced activity. At a national level, while certain sectors such as leisure and travel remained subdued throughout much of the year, others, such as food, retail and entertainment, have remained buoyant.”
Meanwhile, digital revenue has continued to grow as a proportion of Reach’s overall revenue. In 2019 digital revenue accounted for only 15% of the total, while last year saw that rise to 24%. It is a reminder of how disruptive the pandemic has been for the industry that we have to look longer-term for comparisons; 2020 in particular saw enormous jumps in e-commerce revenue that make short-term comparisons misleading.
Reach’s 2020 benefited from significant one-off digital traffic, driven in part by Covid-19 related stories, “which did not contribute significantly to revenue.” On a two-year basis page views were up 29%.
The release states that growth was “supported by strong strategic delivery, in particular relating to our new data-led advertising product portfolio, PLUS+, demand for which has helped grow our digital yield.”
That focus on new data products puts Reach in a stronger position when it comes to the changes in digital advertising coming down the pipe. The release itself makes no mention of Apple’s iOS changes, but does refer to an industry-wide focus upon first-party data that is delivering better yields overall.
Reach’s chief executive Jim Mullen said: “Key to the performance has been our suite of data-led PLUS+ products, which has contributed significantly to digital revenue growth this year, despite having only launched in Q2 of 2021. These products enable us to categorize data sets by geography, reader behavior and preferences, and produce targeted data sets for client campaigns. PLUS+ driven campaigns are driving improved results for advertisers, while attracting significantly higher digital revenue yield.
“These campaigns also utilize our AI tool Mantis to refine the data sets for emotion and context, in addition to content subject matter ensuring greater accuracy. These products have far exceeded our expectations with over 200 campaigns run during 2021.”
He also stated that the business had achieved its target of 10 million registered users several months ahead of schedule. The drive to increase the number of logged-in and registered users has been a central tenet of most newspaper groups’ strategies for the past five years, as mooted changes to third-party data use allowed publishers to make the most of their own first-party data.
Despite hitting its targets over registered users, Reach took a 25% hit to its overall share price on the back of the results. That is an overblown reaction to the warning in the results of a squeeze in operating profits due to inflation - though it does reflect the wider uncertainty around local and regional news companies.