Advertising: A Look at the COVID Impact

Meredith reported 1Q20 (its 3QF20) earnings yesterday (link to full note). Key takeaways for MDP and the broader industry: 

• Results were in-line during the first two months of the quarter, the advertising outlook deteriorated dramatically in March and April. 
• Secularly challenged print revenue at the publishing business averaged a 12% decline over the past three quarters. This accelerated to an 18% decline in 1Q20 with 2Q pacing down 30%.
• Publishing’s digital revenue averaged 7% growth over the previous three quarters before declining 4% in 1Q20. 2Q is pacing down 40%.
• Non-political ad growth at the TV stations averaged 2% over the past three quarters but declined 11% in 1Q20. 2Q results are expected to be down 40%.  

The results also highlight the more challenging environment for traditional media companies relative to digital natives. To see this, compare the 40% decline in digital ad revenues at Meredith’s publishing business to Google.   On its 1Q20 call, Google management said that:

• Search declined at a mid-teen rate in March 
• YouTube declined at a high-single digit rate.  
• More mature Google Network revenue saw a low double-digit decline. 

While Google’s trends are not great on an absolute basis, the aggregate low double digit decline compares very favorably to the 40% decline at Meredith’s digital business. 

Originally published on 05/15/20.