Essential First-Quarter Stats for Agencies and Media Companies - 21 minutes read

Essential First-Quarter Stats for Agencies and Media Companies – Adweek

Editor’s note: Adweek worked with Matthew Scott Goldstein, a consultant with a deep knowledge of the media industry, to craft his quarterly newsletter into an Adweek article. Through his findings on various industry earnings calls, we’re bringing you insights about how your favorite brands, agencies, media companies, publishers and tech companies are performing on a quarterly basis. His goal was to go past what the trades were focusing on, which mostly revolved around revenue, and tap into the nitty-gritty data shared on these calls.

This iteration focuses specifically on agencies and media companies in the 2019 first quarter. Publicis: First Quarter 2019 net revenue was up 1.7%. North America net revenue in the first quarter of 2019 was broadly flat. Ranked first in New Business Wins in 2018, and the largest ones are starting to ramp up in the second quarter. This Epsilon acquisition will accelerate the implementation of the strategy to become clients’ preferred partner in their transformations. Epsilon, which brings a data trove of around 160 million individual clients, generated revenue of $1.9 billion last year, almost entirely in the United States. Epsilon currently gets 97% of its revenue from the U.S., while Publicis derives 54% of sales from North America. Publicis along with Epsilon will offer the most compelling suites of services, fully aligned with client needs. Together, they will be perfectly positioned to accelerate on growth and gain market share in an enlarged $1.5 trillion addressable market. Epsilon has 9,000 employees, with 3,700 data scientists and 2,000 delivery experts based in India brought together by what is clearly an outstanding management team. Identity data from more than 250 million consumers in the U.S. Omnicom: Worldwide revenue fell by 4.4%, to just under $3.5 billion. Has 5,000 clients in more than 100 countries. The results continue to demonstrate the consistency and diversity of Omnicom’s operations, the ability to deliver consumer-centric strategic business solutions to clients and best-in-industry creative talent. The U.S. was up 2% in the quarter, driven by strong performance in advertising and media, healthcare and precision marketing group, offset by the decline in events business, further consolidated data and analytics and technology services and investments at Annalect. There will be more regulation around privacy in U.S. That’s nearly inevitable with the comments made by a number of people in the industry; legislation is going to happen in the U.S. Omnicom did a deep audit of all of the assets, looking at all of the different data providers and partners and came up with policies and procedures. Interpublic: Total revenue of $2.36 billion in the first quarter of 2019 increased 8.9% compared to the same period in 2018. The impact of net acquisitions was positive 9.4%, and the resulting organic net revenue increase (which excludes results from Acxiom) was 6.4%. This was composed of an organic net increase of 5.7% in the U.S. and 7.7% internationally, attributable to a combination of net client wins and net higher spending from existing clients. Results were driven by strong top- and bottom-line performance in media, as well as growth from global creative networks, public relations and digital offerings. With Acxiom, the company has also significantly strengthened position as it relates to helping clients succeed in a world where data-driven marketing solutions are core to brands’ success. At quarter end, total headcount was approximately 54,000, an increase of 7.8% from a year ago, with more than half of the increase due to the addition of Acxiom and the balance due to the many growing areas of the portfolio. While there is still macro uncertainty, the company continues to believe that economic fundamentals are sound, especially in the U.S. Operate in a media landscape that evolves at a rapid pace. Media channels continue to fragment, and clients face an increasingly complex consumer environment, in which data which fuels the digital economy is central to most contemporary media offerings and marketing capabilities. To address today’s marketplace, acquired Acxiom, adding a foundational world-class data asset. WPP: Reported revenue up 0.9% year-over-year. First quarter trading update reflects the impact of certain significant client losses in 2018, particularly in the United States. Although WPP faced a challenging year, especially in the first half, the business is encouraged by how well people, agencies and clients are responding to new strategic direction. Expectations for the full year are unchanged. It will take time to address the company’s legacy issues, but committed to taking all the actions necessary to position WPP for future success. Continued progress in implementing three-year turnaround plan. Key 2019 priority is to address USA growth, and WPP remains committed to taking all actions necessary to position WPP for future success. North America like-for-like revenue less pass-through costs -8.5%, weakest performing region, although in line with budgets, because of continued pressure and impact of automotive, pharmaceutical, FMCG assignments lost in 2018. New strategy resonating well with clients. Solid new business performance and client stability. Strengthening team and leadership. Technology: partnership with Adobe, Microsoft and SAP on the Open Data Initiative. Continuing progress on disposal of Kantar and restructuring on track Comcast: Revenue increased 18% to $26.9 billion on a reported basis and decreased 3.3% on a pro forma basis primarily because of the comparison to the successful broadcast of the Super Bowl and Winter Olympics in last year’s first quarter. Residential broadband customer base increased 5% year-over-year to over 25 million. NBCUniversal revenue decreased 12% to $8.3 billion, primarily reflecting the difficult comparison to profitable broadcast of the Super Bowl and Winter Olympics, partially offset by a strong quarter at Filmed Entertainment. The Super Bowl and Winter Olympics generated $1.6 billion of incremental revenue for the TV businesses in last year’s first quarter. Cable network revenue decreased 9.2% to $2.9 billion. Excluding $378 million of revenue associated with the Winter Olympics last year, revenue increased 3.2% driven by distribution and advertising revenue growth. Distribution revenue increased 6.8%, reflecting the ongoing benefits of previous renewal agreements and a modest decline in subscribers. Advertising revenue increased 2%, benefiting from overall higher pricing, robust demand at MSNBC and healthy NHL results, partially offset by ratings declines. Together NBC and cable networks have leading viewership share and consumers love Universal’s films, library in many content franchises. Advertisers are eager for targeted digital advertising opportunities, and the kinds of top-quality shows they produce and the ad sales capabilities and organization are the best in the industry. AMC Networks: In the first quarter, total company revenue increased 6% year-over-year to $784 million. Advertising increased nicely at each of WE TV, BBC America, IFC and Sundance, with BBC America, IFC and Sundance each reporting double-digit growth. Strong advertising performance for the quarter was in large part due to better-than-expected ratings for The Walking Dead at AMC, as well as pricing and ratings increases at other networks. For the upfront, AMC was in a very attractive position, given the inherent strength of the content and the brands. Highly immersive, high-end, mostly scripted content. And there are fewer and fewer places where one can advertise within this type of content. It’s stating the obvious to say that can’t be done on Netflix, on Amazon Prime, on HBO, etc. Making AMC Networks stand out as one of the few and best ad-supported premium TV environments. Focus is on how to best monetize the delayed viewing that occurs for this premium content, an area that represents a large untapped pool of revenue for us. Planning tool Aurora is now being used by more than a dozen blue-chip advertisers across several categories, including auto, retail, pharmaceutical and others to optimize their media buys. And ad-targeting tool called Mediator helps advertisers more directly target consumers across the five networks. Discovery: In the first quarter, Discovery had a 4% U.S. advertising growth year-over-year. Discovery’s strategy is different than any other media company; while everyone else is focused on big and expensive movies and scripted series, a very crowded space, Discovery has a different approach: important, entertaining and useful content in categories that are loved, trusted and safe. Content has the broadest multigenerational consumer appeal and high-proceed value among advertisers and distributors. Powering people’s passions and genres that are central to their lives, and niche channels, quality brands and talent that people around the world trust, respect and believe in. Upfront feels pretty good; scatter is strong. Not a lot of TV inventory out there; a lot of companies have a lot of make-goods. Gannett: Consolidated revenues of $663 million compared to $723 million in the first quarter of 2018. The revenue decline reflects the challenging secular trends in both print advertising and circulation, partially offset by strong paid digital-only subscriber revenue growth. On a same-store basis, total revenues declined 9% in the first quarter. Total digital revenues of $246 million represented 37% of total revenue, up from 35% a year ago. On the local side, continuing to see a shift toward performance-based marketing, and some downward pressure on CPMs. Additionally, as expected, saw modest impact on page views and therefore programmatic revenues from decision to lower meters to more aggressively grow paid digital-only subscribers. At national levels, continuing to see very strong results with revenues up 11% year-over-year, further illustrating why Gannett continues to serve as a trusted comprehensive marketing partner to both national and local businesses. These strong results were driven by solid growth in both direct-sold and programmatic channels, and strongest categories were financial services, automotive and telecommunications. As expected, digital classifieds continued to negatively affect digital advertising and marketing services results with trends similar to the fourth quarter. Paid digital-only subscriber volume growth remains robust in the quarter, up 39% year-over-year to approximately 538,000. Aggressively targeting new digital subscribers. Also saw improved growth in digital-only revenues with solid retention as new subscribers move up their introductory rate to higher monthly rates. CBS: Revenue for the first quarter was up 11% to an all-time high of $4.2 billion, driven by the success of Super Bowl LIII. Underlying business also was largely from higher affiliate and subscription fees. Advertising led the way with an 18% increase. At CBS, advertising remains strong and consistent with underlying network advertising up 1% for the quarter even without the Super Bowl. This year, CBS is on track to invest more than $8 billion in programming. direct-to-consumer subs were up 71% year-over-year. Two main services, CBS All Access and Showtime, will be anchors for the Apple platform from the outset. Already had great success offering DTC services on Amazon, Roku, Hulu and others. Target of 25 million U.S. DTC subs in 2022. CBS is the No. 1 broadcast network, but not everyone knows that CBS operates a top-10 internet property right alongside it with over 178 million unique users in March. Have one of the largest direct-to-sales divisions on the internet, selling the most in-demand inventory online, premium addressable video, while leading the way in the transition to both programmatic and advanced advertising. For local, in terms of advertising for categories, auto, entertainment and healthcare all posted solid increases. CBS said last quarter that it already hit 8 million subscribers combined across CBS All Access and the Showtime DTC platform. The New York Times: Very strong quarter in digital advertising. Revenue grew 19% year-over-year, with growth coming increasingly from directly sold inventory, in particular related to the large-scale commercial partnerships, as well as from marketing services. Expect the strong growth to continue in Q2 aided in part by comparatively easy comps with the previous year. Digital advertising strategy is unique in the market and it’s working. Print advertising by contrast fell by 12% year-over-year, a return to familiar and somewhat deeper declines after the more moderate trends in the second half of 2018. Total advertising revenue was flat. The increase in digital advertising revenue was largely driven by growth in direct-sold advertising on digital platforms, including revenue sold against podcasts. The print advertising result was mainly due to declines in the studio entertainment, luxury and financial services categories, partially offset by growth in packaged goods, technology and education. The biggest driver is probably audio, so advertising revenue on podcasts, which continues to be a big and fast-growing business. The Daily is the main driver there, and it’s up to 2 million listeners a day, coming out every weekday. In the fist quarter, added 223,000 net new digital subscriptions of which 144,000 were to core news product. That took the company’s total number of subscriptions to 4.5 million. For the first time, digital-only subscription revenue was more than a quarter of total company revenue Viacom: Domestic ad revenue improved to -2% year-over-year. Domestic ad sales improved, driven by continued strength in Advanced Marketing Solutions, or AMS, which grew revenue 76% year-over-year. Continue to expect AMS business, now including Pluto TV, to nearly double their revenue in fiscal 2019, representing nearly 20% of domestic ad sales and bringing more new advanced ad inventory online across the growing portfolio. In AMS’s first full year of operation, it delivered over $300 million of revenue. By the end of April, Pluto TV had approximately 16 million monthly actives, a 31% increase in three months. Have tens of millions of additional Pluto TV-enabled devices coming online over the next few months, so there is strong growth ahead. Pluto TV has instantly added billions of ad impressions per month to the Viacom portfolio, and these are high-value impressions. The audience skew is young and is diverse, and the impressions are overwhelmingly delivered on a TV glass in long-form premium content, which means it is a high-quality advertising environment. In general, digital CPMs are higher than linear CPMs. IAC/Dotdash: Dotdash revenue increased 13% to $34 million. Operating income decreased slightly to $3 million. Eighteen percent higher traffic resulting in strong advertising revenue growth, primarily from Verywell, as well as growth in affiliate commerce commissions. The best content, the fastest site, the fewest ads and search engine algorithms that prioritize quality experiences for users began to respond. Dotdash doesn’t publish news, entertainment, gossip or any of the “sexier” parts of digital media that are defined by big headlines and short shelf lives. Dotdash publishes only reliable evergreen content on intent-driven topics: health, home, beauty, fitness, food, technology and finance. Built the fastest sites in categories because milliseconds matter when delivering content, as proven by user preference and engagement. An army of editors, contributors and technological infrastructure to ensure that all of the content is the most accurate, current and reliable in its category—freshness and accuracy are measurable. Spent almost $100 million on content since the rebranding. Built ad sales teams and technology that allows reduction of advertising to the bare minimum while maximizing performance (for which advertisers pay more). Eighteen of the top 25 advertisers have spent for five straight quarters, and average spend per account, average deal size and effective price per media impression have all increased every year since the relaunch. Ad technology sits on top of an audience with dramatically higher purchase intent than news or entertainment. Increasingly migrating to deals where revenue comes from a piece of a consumer’s purchases rather than charging advertisers by impression, and now the fastest growing revenue stream. The result is a reinforcing system, driving more visitors to the sites, more advertisers interested in those visitors, better revenue from those ads and more dollars to invest in content—and the flywheel continues. Meredith: For the national media group, total revenues are down in the mid-single digits on a comparable basis. For the local media group, total revenues were up 11%, with nonpolitical advertising up in the mid-single digits. Particularly excited about the recent launch of Apple News+, a subscription service that offers digital access to more than 300 publications, including more than 30 Meredith magazines. As one of the most successful consumer-based companies in the world, Apple’s launch of Apple News+ is a strong testament to the power of premium paid content from trusted brands. While not at liberty to discuss specific terms of this agreement, the economic benefits to Meredith flow from four areas: First, there are guaranteed minimum payments; second, they earn royalties based on the time consumers spend with brands on the platform; third, anticipate cost savings, including lower subscription acquisition expenses and lower magazine production expenses overtime; and finally, they benefit from innovative advertising opportunities on the Apple News+ platform. There’s a number of trends that Meredith is seeing in the marketplace from a shift to performance, to video continuing to be in high demand across platforms, more transparency, demand for higher-quality first-party audiences and a continued desire for big ideas. At the NewFront presentation to the advertising and marketing industry last week, Meredith announced a new slate of video programming, including an expanded lineup for PeopleTV, ad-supported streaming service available on all major OTT platforms that will include tripled red carpet event live coverage, the premiere of a new royal show, and the launch of a daily reality TV news show called Reality Check. J2: For the first quarter of 2019, J2 saw a 6.9% increase in revenue from the first quarter of 2018 to $299.9 million. Established a business structure across the company. The business units of J2 are lead by general managers, who have full P&L responsibility for their units and oversee all aspects of their businesses from product to engineering, to sales and marketing. Today there are 14 business units of the company, six of which are in the cloud services segment and eight are in the digital media segment. Vertical media audiences are valuable beyond traditional advertising. This has been a long-held thesis that now has even more components. Historically, the execution of this thesis has been in layering performance-marketing revenues on to the media assets. Prime example of that is affiliate commerce, where sites generate traffic for online retailers and where J2 receives a percentage of an ensuing transaction. Display-ad business does not rely on third-party data; it’s all placement based. In other words, placing advertising next to contextually relevant content, and when we use data to fine-tune targeting, it’s first-party data. Advertising grew mid-teens organically, everyday health grew up grew mid-teens organically in the first quarter.


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