The coronavirus pandemic is bringing record numbers of people to The New York Times – but advertisers are fleeing due to the economic upheaval caused by the crisis.
The worst will come next quarter, when the Times predicts its advertising business will take a 50-55% nosedive. Beyond that, there’s limited visibility.
Throughout March, more than half of American adults visited The New York Times. Page views totaled 2.5 billion, “more than double what we normally see,” said Chief Operating Officer Meredith Kopit Levien.
Despite removing its paywall for coronavirus coverage, 587,000 people signed up during the quarter – the Times’ largest-ever uptick in new subscribers. The number of new subs dwarfed Q1 2017, Levien said, which was “the peak of the Trump Bump.” Two-thirds more people signed up for a Times subscription in Q1 2020 compared to that period.
Total digital-only subscriptions topped 5 million. Overall subscription revenue rose 5% to $285 million.
On top of that, this audience is a highly desirable bunch. The Times’ new subscribers are younger and more geographically and racially diverse than in the past, a sign that its content is connecting with a broader readership.
According to Levien, the peak in anonymous traffic coming to view free coronavirus coverage has already passed. Now, the Times is starting to see return rates improve week over week for people who register to view content. These known users are creating a marketing funnel for the Times to encourage even more people to convert to a subscription.
Advertising’s big drop
It’s not all good news, though.
Advertising dropped 15% to $106 million during the quarter, with March particularly affected due to the coronavirus.
Q2 advertising revenue will be even worse. “We are expecting a pronounced downturn in advertising for at least the next quarter,” Levien said.
The Times advised that advertising will drop between 50-55% the next quarter, with digital advertising set to decline 40-45%. The “other revenue,” a category that includes affiliate revenue and licensing revenue from Facebook and TV, will dip 10% year over year.
During Q1, print advertising fell more than digital advertising.
Although advertising demand is weaker across the board, the Times expects demand won’t decline as much for ad products that use its first-party data, as well as for audio advertising.
By the same token, the economic pressure being caused by the coronavirus pandemic will likely accelerate the rate of change away from “old” media, such as print, and toward the Times’ more innovative ad products, including data-driven display that uses the publisher’s registered user base to help serve advertisers in a privacy-safe way.
Taken together, the increase in subscriptions and decline in advertising means that advertising accounted for just 24% of the Times’ overall revenue. Subscriptions brought in 64% of the Times’ revenue, with “other” revenue growing to $52 million for the quarter, or 12% of the overall total.
This mix shift bodes well for the Times, said CEO Mark Thompson.
Its strong subscriber base and “diminishing reliance on advertising,” means that the Times is “very well positioned to ride out this storm and thrive in a post-pandemic world,” Thompson said.
