Here’s some good news about a digital publisher (no, seriously).
IAC-owned Dotdash Meredith saw healthy margins, an increase in traffic and better ad pricing in Q4, which led to a 9% YOY increase in digital ad revenue to $284 million.
“It’s a heck of a lot easier” to write shareholder letters and lead earnings calls, IAC CEO Joey Levin told investors during the company’s earnings call on Wednesday, “when the news is good.”
Good news is a change of pace for Dotdash Meredith, which, like most other digital publishers, spent the past year and a half being buffeted by headwinds, including a weak digital ad market, soft programmatic demand, blah direct demand and anemic traffic.
So, what changed?
Programmatic FTW
IAC’s vision for Dotdash Meredith – to be a flywheel for generating advertising and commerce revenue – is finally starting to pan out.
After a slow October, business improved during the rest of the quarter, thanks to better performance across direct sales, affiliate marketing on core sites and programmatic.
Affiliate marketing revenue grew the fastest, up 31% YOY, while direct sales (which IAC refers to as “premium sales”) also did better than expected, according to CFO Christopher Halpin.
More than 80% of Dotdash Meredith’s traffic and digital revenue come from its core sites, such as Food & Wine, Travel & Leisure and Southern Living, that deliver a form of what one might think of as commerce-related service journalism.
“The product we’re creating is something our users really want from us,” Levin said. “They want to hear from Food & Wine about the best air fryer.”
Meanwhile, around 30% of direct campaigns are already running through D/Cipher, an ad targeting product launched by Dotdash last year that relies on first-party intent data rather than third-party cookies.
But programmatic – which Halpin described as what’s “left over” from premium ad sales – was also a breakout star in Q4.
“Programmatic was excellent,” said Levin, noting that Dotdash Meredith’s CPMs grew faster than ad rates across the broader market. “And that’s [from] a combination of technology and performance.”
What’s cooking after cookies?
Still, stability can be a fragile thing dependent on factors outside of a business’s direct control – and big changes are on the horizon.
One investor asked Levin about what effect third-party cookie deprecation will have on Dotdash Meredith’s hard-won improved CPMs.
Levin pointed to the growth of D/Cipher, noting that 150 brands are already seeing success from buying cookieless inventory through the platform.
To encourage more sign-ups, Dotdash Meredith plans to partner with demand-side platforms so advertisers can more easily access the tool through their existing buy-side integrations.
In October, for example, Dotdash Meredith became the first digital publisher to integrate with Amazon Publisher Cloud, which is a clean room solution that allows publishers to analyze their first-party data with Amazon Ads data and plan programmatic campaigns. These campaigns can then be activated through the Amazon DSP.
Dotdash Meredith is working on completing a similar integration with Google.
“One of the things that will drive D/Cipher adoption is plugging into the pipes and the purchase path of DSPs,” Levin said. “If we can build into those pipes – which I think is totally doable – then we’ve got big opportunities for growth from here.”
