New York Times digital subscriptions rise despite ad-revenue slip

new york times

(Getty Images/Mario Tama)

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The New York Times posted its Q1 2016 earnings on Tuesday. The company's total revenues for the quarter were $379.5 million, down 1.2% from the $384.2 million reported in Q1 2015.

And digital-ad revenues, in particular, decreased by 1% compared to Q1 2015. Despite this slight dip in revenues, The Times boasted strong circulation revenues driven in part by a large uptick in digital-only news subscriptions: 67,000 new customers joined The Times' digital-only subscription, the largest net addition in subscribers since 2012.

The Times' digital-subscription strategy seems to be working. Revenues from The Times' digital-only subscriptions increased 14.2% year-over-year, reaching $54.2 million for the quarter. The publisher now counts approximately 1.35 million subscribers and expects to reach 1.5 million digital-only subscriptions by the year's end.

Paid subscriptions are a highly coveted revenue stream for publishers. They represent a reliable and steady source of revenue that is less exposed to the volatile nature of the ad industry. Further, subscriptions are one way that digital publishers can circumvent the growing threat of ad blockers, which can suffocate ad revenues.

Digital-ad revenue was stagnant, contrary to industry trends. This is somewhat surprising given that advertisers are pouring more funds into digital. Digital-ad revenue across the industry climbed from $49.5 billion in 2014 to $59.6 billion in 2015, according to the Interactive Advertising Bureau's latest internet-advertising revenue report.

The Times' failure to post digital-ad revenue growth makes it all the more important that it continue to develop its subscription business. Nevertheless, The Times is working on developing newer ad formats, including branded content offerings through its in-house creative team, T Brand Studio.

The unit has been one of fastest-growing units of the company's advertising business, according to the The Times' 2015 Annual Report. Spending for branded content advertising is expected to increase by 20% year-on-year (YoY), reaching $25 billion in 2019, according to Boston Consulting Group estimates.

As noted earlier, dollars are increasingly flowing from traditional ads to digital, as strong growth in mobile, video, and social spending continue to change the face of the US media market.

Over the next five years, marketers will especially embrace mobile. It will drive up spending on video, search, display, and social, and propel the migration of ad dollars away from traditional media, including newspapers and magazines.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report that forecasts spending trends for the major digital-ad formats — including search, display, and video — and mobile vs. desktop. It also examines trajectories for social ad spending and programmatic ad buying, which cut across digital formats. Finally, the report looks at how spending on traditional media formats will grow or contract over the next five years, as digital, and particularly mobile, rises.

Digital Media Ad Spend Report Cover

(BI Intelligence)

Here are some of the key takeaways from the report:

• Mobile will be the fastest-growing advertising channel and buoy spending on each of the digital formats. US mobile-ad revenue will rise by a 26.5% CAGR through 2020.

• Digital video ad spending is rising faster than search and display. US digital video ad revenue will rise by a CAGR of 21.9% through 2020.

• Mobile-search will overtake desktop-search ad revenue by 2019. Mobile-search ad spending will rise by a 25.2% CAGR, while desktop-search ad revenue will decline during the same period.

• Mobile display ads, including banners, rich media, and sponsorships, will overtake desktop display-related spending even earlier, in 2017.

• Social-media ads, which cut across display and video, are seeing fast adoption. US social-media ad revenue, which includes video and display ads, will grow by a CAGR of 14.9% through 2020.

• The rapid embrace of programmatic ad-buying tools is fueling a dramatic uptick in the share of digital-ad spending coming through programmatic channels. Programmatic transactions will be a majority of total US digital-ad spending this year.

• Unlike digital, traditional ad revenue will remain flat overall through 2020. Total traditional ad revenue will rise by a CAGR of just 0.4% between 2015 and 2020.

In full, the report:

• Forecasts ad revenue for emerging digital-ad channels and formats like mobile, video, social, and programmatic over the next five years.

• Explores why ad revenue is flowing from desktop to mobile.

• Examines the stagnation of traditional advertising channels like TV, magazines, and newspapers.

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an All-Access Membership with BI Intelligence and gain immediate access to this report and over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP

2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours, but however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of digital-media advertising.

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