These are strange times for a publisher that’s all in on contextual advertising, given the third-party cookie’s latest stay of execution.
Still, Dotdash Meredith (DDM), which launched its D/Cipher contextual targeting platform in 2023 and expanded it to non-DDM sites in February – isn’t sweating Google keeping third-party cookies on Chrome, CEO Neil Vogel told investors during DDM parent company IAC’s Q1 earnings call Tuesday morning.
Cookies persisting despite Google’s deadlines was – pardon the pun – “baked in” to DDM’s projections already, Vogel said. And if anything, having cookie-based campaigns as a point of comparison helps DDM make the case that D/Cipher performs better, he added. “But I don’t think, in the long term, it makes any difference for us.”
That being said, the cookie’s new lease on life, and the implications for cookie alternatives, is just one of the challenges DDM is facing. The publisher cited traffic downturns due to Google’s increasingly AI-powered search results, as well as soft advertising demand due to tariff-induced uncertainty. And the result was flat ad revenue growth for Q1.
DDM reported just 1% year-over-year growth in digital advertising revenue for the quarter. It posted $393.1 million in overall revenue, also up 1% YOY.
An AI Overview on search
DDM saw a 3% YOY decline in core user sessions, which caused a dip in programmatic ad revenue.
Part of that downturn in user engagement was related to weakening referral traffic from search platforms. For example, DDM is starting to see Google Search’s AI Overviews eat into its traffic.
AI Overviews appear on roughly a third of search results related to DDM’s content, Vogel said. “[And] you see a little performance decline on those pages.”
Publishers can’t substantiate the degree to which AI Overviews impact traffic, he said, since Google made other major changes to its search experience, such as ramping up visibility for Reddit results and throttling publisher affiliate marketing sites.
Regardless, DDM is on a mission to be less reliant on Google traffic, Vogel said. When IAC combined Dotdash and Meredith in 2021, about 60% of both portfolios’ traffic came from Google, he said. Now, Google accounts for about a third of traffic.
And Google’s ongoing crackdown on affiliate sites doesn’t seem to have harmed DDM too much. DDM’s performance marketing revenue grew 11% YOY for Q1, driven by a 26% increase in affiliate commerce revenue.
While Google’s embrace of generative AI has apparently not been a positive for DDM, the publisher touted its partnership with ChatGPT maker OpenAI.
Licensing revenue was up 30% YOY for Q1 as a result of DDM’s OpenAI deal, as well as licensing deals with syndication partners like Apple News+.
Plus, the OpenAI partnership has been fruitful in helping DDM develop modeling technology for D/Cipher’s contextual targeting, Vogel said. “We do not have productive relationships with other people in their space, but with OpenAI, they’ve been great.”
The tariff threat
Speaking of D/Cipher, Vogel pointed out that DDM isn’t solely about contextual. It’s continuing to offer advertisers cookie-based targeting to meet lingering demand.
“We have a lot of clients that want to buy parts of their programs, even all their programs, based on cookies, for whatever reason,” Vogel said.
But Google’s cookie machinations are just one headwind facing DDM’s ad business. The greater macroeconomic threat appears to be the Trump tariffs, which are already depressing programmatic ad pricing, said Christopher Halpin, CFO and COO at IAC.
“Programmatic prices have been up strongly for a while, but with the recent concerns about tariffs and such, it’s essentially gone to flat pricing year over year,” Halpin said. He added that “programmatic prices are no longer a tailwind, given some of the market disruption we’ve seen.”
DDM and IAC try to sell as much ad inventory as possible directly, given direct deals carry higher CPMs, Halpin said. And strong demand for direct deals in Q1 offset some of the downturns on the programmatic side caused by traffic disruptions.
But tariff-induced uncertainty could further damage programmatic revenues going forward, Halpin warned.
For example, two major programmatic buyers that are based in China – fast-fashion ecommerce platforms Temu and Shein – have scaled back US advertising in the wake of the 145% tariffs the Trump administration slapped on China and the closing of America’s de minimis exemption, which offered these companies a tariff loophole.
Vogel stressed that neither Temu nor Shein did much direct advertising with DDM, because they didn’t bid on inventory at DDM’s direct deal prices.
However, Halpin pointed out that Temu and Shein were important buyers on the programmatic side, especially on mobile apps. That could spell trouble for the monetization prospects of DDM’s new PEOPLE app, which launched in April.
And, Vogel added, “when a big chunk of demand comes out of the market, prices are going to go down” overall. So, even though Temu and Shein weren’t major direct advertisers, he said, the pullback in programmatic spending from them and similar brands this year “definitely could be a factor.”
