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?

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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:

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:

Getting through that should help Dotdash Meredith quite a bit.

BuzzFeed

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

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:

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:

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:

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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