Native Ads Were 'Inside' 10% of Digital at The New York Times Last Year

Publisher Now Pursuing More Creative Work

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A native ad for Google on The New York Times website.
A native ad for Google on The New York Times website.

The New York Times' native-advertising product Paid Posts comprised "inside of 10%" of the company's digital-ad revenue last year, according to Meredith Kopit Levien, executive VP-advertising at the Times.

Digital-ad revenue in 2014 climbed 11.8% to $182.2 million.

That would mean the Times sold up to $18 million worth of native ads in 2014 -- or "inside" that number, anwyay. A Times spokeswoman declined to elaborate.

Ms. Kopit Levien disclosed the 10% figure during a presentation to investors Tuesday on the company's fourth-quarter and full-year 2014 earnings. "We have a lot of demand," she said of Paid Posts, which the Times introduced a year ago.

Roughly 40 brands bought Paid Posts last year, she said, with about 50 campaigns running on The New York Times' website and within its mobile apps.

"We think there's immense further potential in Paid Posts," New York Times Company CEO Mark Thompson added during the presentation.

The Times, which reduced its newsroom staff by 100 people through layoffs and buyouts in December, is hiring at T Brand Studio, the department that helps produce native ads for clients.

Times executives said they expect "creative work" to be a meaningful revenue contributor.

Native advertising is a sometimes controversial practice in which ads mimic the editorial content surrounding them. It's driving revenue growth at media companies, but profit margins are usually slimmer than display advertising. That's because native ads are typically bespoke products that require heavy lifting on the part of publishers.

The Times didn't break out profits from native-advertising. But it said the company's operating profit last year was $92 million, down from $156 million in 2013. Severance, retirement costs and strategic investments ate into profit, they noted.

Revenue last year was $1.5 billion at the Times, a 0.7% increase from 2013.

Print down, digital up
Paid Posts fueled a 19.3% increase in digital ad sales at the Times during the fourth quarter, the company said. Digital-ad sales were $63.2 million in the fourth quarter and comprised 30.5% of the company's total ad revenue.

But the gains weren't enough to stem declines in print advertising, which fell 9.2% during the last three months of 2014. Print advertising is expected to continue declining in 2015 amid long-term headwinds in the print media industry, according to Mr. Thompson. Despite that trend, the Times is introducing a new print section aimed at men's style this year.

Total advertising revenue in the fourth quarter fell 2.1% to $207 million.

Circulation offset the overall advertising declines, rising 1.4% to $210.5 million in the fourth quarter on the strength of digital subscriptions. The Times had 910,000 subscribers to its digital-only product at the end of the fourth quarter. Mr. Thompson said he is confident that the Times will pass the million subscriber threshold in 2015.

Overall revenue in the fourth quarter increased 0.2% to $444.7 million.

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