“The Sell Sider” is a column written by the sell side of the digital media community.
Starting with the acquisition of online-native car publication The Drive in 2018, investment firm North Equity LLC has amassed a portfolio of established media brands.
North Equity snapped up Popular Science, Field & Stream and Saveur with a few new media upstarts mixed in, including Task & Purpose, Donut Media and MEL Magazine. [Editor’s note: On 7/22, Recurrent laid off MEL Magazine’s editorial team and ceased operations associated with the publication. See the end of this interview for Recurrent’s statement on the matter.]
In 2021, North Equity launched Recurrent Ventures as its media division. That same year it added Matt Young, a former programmatic lead for BrightRoll, Yahoo and Verizon, as its CRO. Recurrent, which raised $400 million in funding to date, has roughly 300 employees.
Young spoke with AdExchanger about Recurrent’s acquisition strategy, its ambitions in CTV and gaming and why the company is prioritizing its private marketplace (PMP) business to reduce its reliance on open web programmatic.
AdExchanger: What are Recurrent’s main revenue drivers?
MATT YOUNG: Our three biggest revenue streams are direct ad sales, programmatic – both open web and programmatic guaranteed – and affiliate commerce.
In Q2, less than 50% of our revenue was from programmatic and direct-sold ads. We want that to be lower – in the range of 30% to 40%.
We have growing subscription, merch and platform video businesses that are all approaching double-digit revenue share. Subscribers get curated, longer-form content and a lighter ad experience, so no programmatic ads.
What’s your programmatic ad strategy?
While open web programmatic is great, we want to drastically increase the share of programmatic direct.
Our PMP business is small but growing. We had basically zero programmatic direct revenue last year. That’s grown dramatically this year, partly due to tech implementations, and also due to Jonathan Penn, our head of programmatic sales and agency development.
Q1 saw about 8,000% growth from a pretty small baseline. Q2 over Q1 this year, programmatic direct grew about 130%.
Why are you looking to offset your reliance on open web programmatic?
We haven’t seen any impacts to our ad revenue that would suggest a recession. Everything is continuing to go up. But looking at the macro trends in the general economy, everybody is a little nervous. We see how the bigger platforms have been affected and what they’re forecasting, and we want to be ready if something does happen.
Recurrent has been very busy acquiring media brands. Are you also interested in acquiring ad tech vendors or bringing technology partners in-house?
We potentially would look at tech assets, but our focus is media brands. We want to acquire brands that fit within our core verticals and that have highly engaged, intent-based audiences.
We traditionally have not kept print components of the brands we’ve acquired. The model has usually been to either sell, license or deprecate print. That’s just how our playbook works.
On the programmatic side, when we acquire a new company, we flip it to our tech stack and implement our playbook. Generally, we’ve seen almost a doubling in revenue year over year after we acquire a brand. For example, Futurism, which we acquired last summer, has seen a 139% increase in programmatic revenue after year one. Some of our more mature assets, like bobvila.com and The Drive, have grown more than 250% since we acquired them.
How have your other acquisitions helped with growth?
Donut Media was good on two fronts: It bolstered our auto vertical, but because of its YouTube presence, it also brought in video expertise for the whole organization.
The acquisition of the Bonnier assets in 2020 started our science, tech and outdoor verticals. Popular Science is 150 years old and Outdoor Life and Field & Stream are both over 100 years old, so it added brand authority. It also jumpstarted our direct ad sales business, which we didn’t have until most of Bonnier’s direct sales team joined.
What’s your ecommerce strategy?
Affiliate commerce is very important. We hired the former head of ecommerce at Insider, Breton Fischetti, last summer. The affiliate business is largely driven through Google Search, plus having partnerships with major retailers.
How are you future-proofing your business against third-party cookie deprecation?
We’re early days into our data strategy. We’re working with several ID partners that we’ll announce later this year. We want to have a more robust first-party data strategy for programmatic and direct ad sales.
Are you testing contextual targeting solutions?
We have contextual implemented, but we’re testing partners to help us increase demand. We’re seeing some interest, but once cookies are actually deprecated, contextual should see a spike.
What’s your social media strategy?
It’s an element of our custom content campaigns, but it’s a largely untapped area.
Social does drive traffic, but it’s best for traffic to come to us directly or organically through search. That’s how we get the vast majority of our traffic, and we can control the experience more, so the RPMs are significantly higher.
Do you have any new revenue streams in mind?
We’re bullish on consumer product licensing. We have a partnership with consumer products platform Aterian. We also have a relationship with Celestron, which makes telescopes that carry the Popular Science name.
We haven’t explored gaming deeply, but we have one deal inked with a big video game launching later in the year – which I can’t talk about yet – and we’re looking at doing more.
And expect news this year about us getting Donut and some of our other video channels onto OTT. We have the infrastructure in place. Now we’re working on partnerships.
Will you have your own streaming channel or be part of a content aggregation or streaming service?
To be determined.
Any other priorities?
We are very focused on sustainability. We have a head of sustainability who reviews our corporate and editorial practices.
We also recently made a hire on the affiliate commerce side to make sure we have buy-once-buy-forever-type picks, and we’re seeing an uptick in our affiliate revenue from having sustainable picks. We think it’s good for the world but good for business, too, and we believe in it.
We’re also looking at vendors who are thinking about sustainability, but that’s secondary to ensuring our own house is in order.
This interview has been edited and condensed.
Correction: Recurrent has a partnership with consumer products platform Aterian, not with furniture brand Interion, as stated in an earlier version of this story.
Update 7/22/22 at 4:15pm ET: Recurrent Ventures has laid off MEL Magazine’s editorial team and will cease operations associated with the publication. Recurrent offered the following statement on the decision and its pivot away from the lifestyle vertical:
“Today, Recurrent announced the reorganization of several teams, predominantly in direct sales and strategic partnerships as well as in various areas of operations. We have also made the difficult decision to pivot our editorial and acquisition focuses away from the lifestyle vertical which includes our key lifestyle brand, MEL.
We’ve spent more than a year implementing and strategizing a variety of different monetization channels that haven’t gained traction. At this stage, we’ve invested more into the business than we committed to because we wanted [the MEL Magazine acquisition] to succeed. Our overall M&A strategy has evolved to be focused on building a leadership position in our core verticals.
These are difficult decisions, but ones we believe are necessary to ensure Recurrent is properly structured for the long term.”