UK news publisher Reach reported today that it’s seen a strong bounce back in digital ad sales towards the end of Q2 and during Q3, as the company has begun recovering from the financial impact of the pandemic.
Reach, which runs national titles including the Daily Mirror, the Daily Star and the Daily Express, said that so far in Q3, digital revenues have been up 12.9 percent year-on-year. This marks a sharp turnaround from a one percent drop in digital revenues during the first half of the year. Reach said this was driven by a recovery of digital ad revenues, as well as increased audience engagement.
The uptick in digital ad revenues hasn’t been enough to prevent an overall decline in revenues for the publisher. Total revenues in Q3 were down 15 percent year-on-year.
But this is an improvement on the previous quarter, where revenues were down 27.5 percent. And Reach says it is performing materially ahead of market expectations. The results were well received by shareholders too, as Reach’s share price is up by 20 percent since the results were announced.
Reach’s CEO Jim Mullen credited the results in part to a company-wide transformation programme which begun back in June, which streamlined editorial and commercial operations across Reach’s titles. The change is expected to generate at least £35 million in savings annually.
“As the wider economic impacts of lockdown led to reduced advertising levels and double-digit declines in print sales we acted swiftly to protect the business – reducing costs and conserving cash,” said Mullen. “Once the market had stabilised, we were able to announce a major transformation process – developed and delivered within several months entirely overseen by the Reach management team.”
The overall recovery in digital ad revenues is a good omen for other publishers, showing that advertisers are ramping up ad spend again having cut or paused campaigns during the height of lockdown.
Mullen also said ad revenues have been helped by the company’s drive to register more of its readers – an initiative which will help the business cope with the decline of third-party cookies. Since February, Reach has increased the proportion of registered users from two percent to eight percent, representing 3.5 million individuals.
But while the trading update was overall positive, Mullen acknowledged that the pandemic could still add further complications, especially if a second lockdown comes into effect in the UK. “We continue to be aware of the possibility of further macro-economic impacts due to COVID-19 and consequently the steps that may need to be taken to protect our business,” he said.