Ukraine’s impact on brand safety led to a marked slowdown in digital advertiser demand, Reach’s half-year results have reported, amid a warning from CEO Jim Mullen of a “sector-wide slowdown” in adspend.
The Daily Mirror and Daily Express publisher’s digital revenue increased by 5.4% to £72.5m in the first half of this year, but only grew by 0.3% in the second quarter (compared to 10.4% in Q1).
Yield from open market programmatic advertising affected around 50% of Reach’s ad volume, and in Q2 was down 40% year-on-year.
In a statement, Mullen said: “Following the start of the war in Ukraine at the end of February, we have seen a broad doubling in the amount of content considered ‘brand unsafe’ by many advertisers. While this ad space continues to be sold, it has been at a lower than expected rate, contributing to a lower average yield per page.
“During Q2 we have also started to see a sector-wide slowdown in advertiser spend, reflected in a 40% lower yield on advertising sold programmatically through the open market. We expect our higher yielding data-driven products to continue to perform better than the overall market during H2, though expect overall digital growth will remain subdued within the context of broader macro trends.”
These “higher yielding” data-driven products include tools such as PLUS+ and Neptune.
Group revenue ‘marginally down’
Print revenue decreased by 3.9% and circulation and advertising revenues were down 5.1% and 9.9% respectively, while printing and “other revenue” was up 19%.
Reach reported group revenue was marginally down by 1.6% in H1 2022 but it expected stronger circulation revenue to “counter impact of lower digital yields” in the second half of this year.
Adjusted operating profit was £47.2m in H1 2022 and was impacted by “unprecedented increase” in newsprint, timing of cost actions and cover prices, and adjusted operating cash flow was £39.2m, down from £82.6m in H1 2021.
Editor’s note: Reach amended the presentation of revenues in 2019, aligning revenue streams with the strategy. Print revenue comprises circulation, advertising (including digital classified which is predominantly upsold from print), printing (including third party printing contracts) and other (contract publishing, syndication, reader offers and events); this corresponds to the part of its strategy focused on maximising cash flow from print.
UK audiences and page views up
Reach reported increases in its traffic and audiences, with page views and UK audience up 8% and 2% respectively compared to H1 2021.
A quarter of the total UK audience is now registered with Reach as registered users hit 11 million registered in these results, more than doubled from five million in 2020.
Reach also found page views per user had increased by 2%, registered page views by 103%, and loyal users, those who visited Reach’s websites on at least eight days in every 16, or every other day, also increased 17%.
