The New York Times is removing open marketplace programmatic ads from its mobile app starting in January 2020, because their slow loading times detract from the user experience. The decision will result in a single-digit millions loss of revenue.
“We believe that this will be more than made up by gains in engagement and a higher propensity by app users both to subscribe and retain,” CEO Mark Thompson said during the company’s Q3 earnings call Wednesday.
Because the Times is a subscription-first company, it’s setting a higher bar for ad experiences.
“Where there is a trade-off to be made between engaged user experience and immediate advertising revenue, we will increasingly favor the subscription side,” Thompson said.
The Times is making decisions that support its subscription business, which is booming, over its advertising business, which is declining.
This quarter, the Times approached 5 million total subscribers and 4 million digital subscribers. Revenue from digital-only subscriptions increased 15% year over year to $116 million. It added 273,000 net subscribers year over year.
Meanwhile, digital advertising decreased 5% year over year to $55 million in Q3, primarily due to fewer direct-sold deals. Overall, advertising declined 2% to $113 million. Revenue across all of the Times’ businesses rose 5% to $429 million in Q3.
This business dynamic makes the Times less dependent on advertising revenue, which accounts for just 26% of its current business. Subscriptions make up 62% of the Times’ revenue. Becoming a subscription-driven company means it can absorb losses from the advertising business, and will even accelerate those losses if it thinks a cleaner ad experience will help attract and retain subscribers.
The Times plans to grow to 10 million subscribers by 2025, with 20% of those subscribers from outside the United States.
But the newspaper isn’t completely abandoning advertising. The Times sees value in its subscriber data that could lead to more targeted ads – on its terms.
“We also believe that we have a big opportunity around first-party data,” Thompson said. “Our new digital access model means that we’re going to know far more about millions of our most engaged users and will be able to tailor advertising messages to them more effectively in ways that rely on this first-party data.”
