Dotdash Meredith (DDM) is expanding its performance-focused contextual targeting solution, D/Cipher, to third-party inventory.
D/Cipher+ – plus sign product nomenclature is officially inescapable – was announced during the publisher’s Q4 2024 earnings call on Wednesday.
DDM reported $522 million in overall Q4 revenue, a 10% year-over-year improvement. Ad revenue was up 3% YOY, in part due to 3% growth in core sessions and higher programmatic ad rates.
But D/Cipher has also been one of the driving forces behind DDM’s return to revenue growth, IAC Chairman Barry Diller and CFO and COO Chris Halpin told investors.
Now, DDM is looking beyond its own sites for inventory to capture more performance marketing budgets.
A direct turnaround
Following IAC-owned Dotdash’s $2.8 billion acquisition of Meredith in 2021, the combined company saw six consecutive quarters of revenue decline, as the integration of the two portfolios proved to be “a tough slog,” Diller said.
DDM launched D/Cipher in May 2023 and returned to growth by Q4 that year. Last year, DDM experienced four consecutive quarters of double-digit growth.
To be clear, digital growth is also coming from other avenues, such as licensing deals with OpenAI and Apple News.
But D/Cipher has been a major catalyst for DDM’s ad business. Prior to the product’s launch, DDM blamed its ad revenue woes on drop-offs in premium, direct-sold deals.
D/Cipher – which is a premium, direct-sold product – turned that part of the business around, Halpin said.
As of last quarter, D/Cipher deals accounted for half of DDM’s direct-sold digital revenue, he added. These deals are also 50% larger on average than those that don’t use the platform.
D/Cipher is a performance-focused product, as well, and performance marketing revenue was up 22% in Q4. Affiliate marketing revenue, another contributor in the performance column, was up 39% YOY.
Add another plus
Naturally, the company wants to build on D/Cipher’s success. However, “DDM is often limited by inventory and our own premium pricing,” Halpin said.
Hence the need to bring in third-party inventory. DDM has been testing D/Cipher+ with select advertisers throughout Q1 and will expand access throughout the year.
D/Cipher+ will prioritize “lookalike, premium inventory in our core categories – food, health, home, others – where we see consumer intent at scale,” Halpin said.
DDM will also ensure that any third-party inventory sold through D/Cipher can meet the platform’s guarantee to outperform cookies and audience-based targeting, he said.
This third-party inventory is undervalued when it’s sold on programmatic platforms that don’t do a good job of packaging the inventory into intent-driven audiences for performance buyers, Halpin added.
Plus, adding third-party inventory can give buyers more pricing flexibility in D/Cipher deals.
“We have core advertisers who are being priced out of DDM inventory because the performance and [cost per impression] are so high,” Halpin said, “They’re looking for some lower-priced volume to be included in their buys.”
Update 2/12/25: A previous version of this story misattributed Chris Halpin’s quotes to outgoing IAC CEO Joey Levin.
