Native Advertising Gooses New York Times' Digital-Ad Sales
Native advertising fueled a 16.5% increase in digital-ad revenue at The New York Times during the third quarter, the company said Thursday.
Digital ad sales reached $38.2 million in the third quarter -- which is the period from July through September -- comprising more than a quarter of total ad sales.
"The biggest drivers are the launch of, and positive growth of, our Paid Post business," Meredith Kopit Levien, the Times' exec VP-advertising, said during a call with investors on Thursday explaining the quarterly results.
Paid Posts are the Times' native-advertising product, which are ads that look like editorial articles but are labeled as ads and not created by the newsroom. The Times will finish 2014 with more than 30 Paid Post clients, the company said.
Ad sales on mobile, where the Times attracts more than 50% of its digital audience, is now roughly 10% of overall digital-ad revenue, according to Ms. Kopit Levien. "We're starting to feel more optimistic about mobile advertising," she said. "Branded-content product was meant for a mobile world."
Mobile advertising is a tricky proposition for publishers. Although they're seeing large gains in mobile traffic, advertisers generally pay less for an ad that appears on a smartphone compared with ads on desktop sites.
The Times is also building its automated ad-selling technology and expects sales from these channels -- broadly referred to as programmatic advertising -- to be a bigger part of its business, it said.
Despite the digital gains, total advertising revenue declined 0.1% to $137.9 million, driven by a 5.3% drop in print-ad sales, the company said. That marks the second-straight quarter of falling ad revenue for the Times, which broke a three-year streak of sagging ad sales in the first quarter of this year, only to return to a decline in the second quarter.
This week, the Times announced a reorganization of its business side, splitting the department overseen by company veteran Denise Warren, who is executive VP-digital products, into a marketing division and a digital-products division. Mr. Warren is leaving the Times as it plans to name executives to oversee each unit, both of whom will report to President-CEO Mark Thompson.
During Thursday's earnings call, Mr. Thompson said the person overseeing the marketing division -- responsible for print and digital subscription marketing, brand marketing, customer care and all consumer revenue streams -- will be the Times' first-ever chief marketing officer.
Slight increase in total revenue
Total revenue at the Times increased 0.8% to $364.7 million during the third quarter, with circulation revenue inching up 1.3% to $206.7 million.
Digital subscriptions led the increase, as did a rise in home-delivery prices, the company said. Revenue from the Times' digital-only subscription products was $42.8 million in the third quarter, up 13.3% compared with the previous year.
Paid subscribers to its digital-only subscription products was 875,000 at the end of the third quarter. That's a 20% increase compared with the same time last year, the company said.
Even with the gains, the Times has reconsidered its digital-only subscription products, shuttering a mobile app, NYT Opinion, and moving another app, NYT Now, off the web and to mobile only. The company plans to focus more resources on bolstering its more expensive subscription product, Times Premier, it said Thursday.
"Our audience-development efforts also remain a top priority, with the goal of extending our already broad reach and deepening the engagement of our readers," Mr. Thompson said.
The Times reported an operating loss of $9 million in the third quarter, compared with an operating profit of nearly $13 million the prior year. The losses are due mostly to severance costs related to job reductions, according to the Times, which is eliminating about 100 newsroom positions as well as some on the business-side. Severance costs amounted to $21.4 million.
The company reported an overall loss to shareholders of $12.5 million for the quarter. That's an improvement from the same period last year, when losses totaled $24.2 million.