IAC-owned Dotdash Meredith (DDM) saw double-digital growth in its digital business last quarter.
Q2 digital revenue was up 12% year-over-year to $238 million, and digital ad revenue was up 16% YOY, as per IAC’s earnings call on Wednesday.
Ad revenue was helped along by 9% growth in unique visitors to the top sites in DDM’s portfolio, including People, Investopedia, Allrecipes and Food & Wine.
Programmatic ad rates were up roughly 36% in Q2, compared to an estimated 15% to 20% increase in rates across the wider programmatic market.
“DDM’s digital advertising revenue growth is outpacing competition in digital publishing and beginning to rival the growth of the platform companies,” IAC CEO Joey Levin wrote (and boasted) in his letter to investors. “We are growing both in volume and price, which we believe differentiates us in this environment.”
D/Ciphering market trends
Adoption of D/Cipher – the contextual targeting solution DDM launched last year as an alternative to third-party cookie-based targeting – was the biggest factor driving Q2’s increase in pricing across programmatic and direct-sold premium campaigns.
It’s now “part of more than half of our premium campaigns and has helped turn previously challenged categories like home and food back to growth,” wrote Levin, who also claims D/Cipher campaigns are “twice as performant as cookies.”
Meanwhile, Levin added, DDM’s recent data licensing deal with OpenAI will bring more scale and better optimization to D/Cipher. DDM’s licensing and other revenue increased 19% in Q2, helped in part by the partnership with OpenAI.
The cookie conundrum
But D/Cipher was originally pitched as a third-party cookie alternative, which could feel less relevant now that Google has abandoned its plans to turn off third-party cookies by default for all Chrome users.
However, DDM isn’t changing its strategy in response to Google’s cookie pivot.
Cookies are widely deprecated across platforms, including on Safari, which is associated with some of the most in-demand audiences for advertisers, Levin said. And DDM expects Google’s decision to give users control over opting out of cookies will yield more or less the same result as if Google had killed the cookie itself, he added.
“We expect cookies’ status as the de-facto currency of the digital ad-buying world will continue to diminish,” Levin said. “As advertisers shift their bidding strategies to reach a growing cookieless audience rather than a declining audience with cookies, DDM is well positioned to win.”
Search wars
Levin also had plenty to say about the changing dynamics around search traffic, including the release of generative AI-enabled summaries in search results by Google and others.
Although DDM has a data licensing deal in place with OpenAI – which includes sharing links to DDM content when it’s used in ChatGPT responses to queries – it has no such deal with Google … yet.
However, Levin’s letter to investors claimed the impact on DDM’s traffic since Google rolled out AI Overviews for search in May has been “negligible.”
“AI-generated answers are being served on roughly 15% of searches across our categories, with the highest frequency in health, technology and finance,” he said. “Click-through rate differentials between pages with and without AI Overviews are minor so far, but it is still early.”
Levin added that “referrals from Google search queries produce less than half of our traffic” – a somewhat surprising statement considering the effort DDM undertakes to manipulate Google’s search results in its favor through “keyword swarming.”
When it comes to competing with AI search for user engagement, DDM is banking on its reputation as a reliable source for consumers looking for answers to a wide range of queries, Levin said, from recipes to investment advice to home improvement tips.
To that end, DDM took a few thinly veiled shots at Google’s reliance on Reddit for training its generative AI – and the mind-boggling episode in May when Google’s AI recommended glue as a viable pizza ingredient based on a joke Reddit thread.
“There aren’t a lot of scaled sources of truth out there, and we think we have one of the most valuable ones,” Christopher Halpin, IAC’s EVP, CFO and COO said to an investor asking about AI deals, before deadpanning, “Don’t put glue in your pizza.”
