The UK’s largest commercial publisher, Reach, has reported growth in its digital revenues for the first time since 2022.
Overall revenue in the first half of 2024 was down 5.2% year-on-year to £265m with print revenue down 6.1% to £204m and digital down by 1.3% to £60m.
However the publisher of the Mirror, Express, Daily Star, Manchester Evening News, Liverpool Echo and many other regional titles said “momentum” had improved in digital as revenues were down by 8.5% in Q1 but then up 6.7% in Q2.
Adjusted operating profit was up 23.1% to £44.5m in the first half of the year, with an improved margin of 16.8% versus 12.9% in the same period last year, put down to “early and effective action on costs”.
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At the end of 2023 Reach announced a restructure plan that involved 450 job cuts while almost 300 redundancies are thought to have been made earlier in the year. Largely as a result of this, in the first half of 2024 total adjusted operating costs were down by 9.3% compared to the first half of 2023, reaching £221.8m.
Digital was hit hard in the past year amid falling referral traffic at Facebook and Google hitting Reach and many across the industry.
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Page views were down 25% over the first half of 2024 as a result of the ongoing impact from these trends, the company said on Wednesday, but it added: “Trends are improving and open market prices for mass scale programmatic advertising have stabilised.”
It said the drop in volume had been mitigated by “actions to diversify digital revenues and trade digital assets more effectively” which have increased yield, or the amount earned for every 1,000 page views, by 32% year-on-year.
“Mass-scale programmatic yield has also improved with a stabilisation in open market prices. It is too early to call this a recovery, but the early indicators are positive,” Reach said in its half-year results.
Content around the Euros, UK general election and Taylor Swift’s Eras tour coming to the UK all in Q2 also bolstered the results.
Data-driven revenues continue growth in Reach half-year results 2024
Data-driven revenues, which are part of the Customer Value Strategy and defined as being based around Reach’s own audience data, affiliates, partnerships and e-commerce, were up 9% to £27.2m. They now make up 45% of all digital revenues (up from 41% in the first half of 2023 and 43% in the full year).
Reach said these revenues grew 13% year-on-year across Q2 "due to the strong growth in direct advertising revenues and non-advertising revenues, including partnerships, ecommerce and affiliates".
In the first half of the year Reach restructured the creation of its audio and video content across its national and regional brands into one team called Studio. The results said this had seen "good progress" so far and had secured its first exclusive sponsorship deal for a new production in June for Euros vodcast Euro Thrash.
Reach added that it is working on monetising video content on platforms like Youtube and Tiktok.
It said: "In order to meet growing audience demand for video, we will continue to focus on developing not only our video content, but our routes to monetising this output. This work is still in its early days, but audience engagement with our video content is growing with overall views up 20% year-on-year and Tiktok views more than doubling. YouTube is a focus area for us, with revenues growing 14% year-on-year.
"For the time being, these represent a small part of our overall mix, but continue to be an important focus area for us to expand our reach by producing content for multiple platforms."
Reach also revealed that the increased use of AI in its newsrooms has led to an estimated doubling of the speed an average story can be uploaded into its content management system. It also said there had been other "clear efficiency wins in reducing time spent on repetitive tasks".
In print, Reach said circulation revenues had proven "reliable" and the fall in print readership had been mitigated by "cover price increases, strong promotional activity and standalone products tying into popular events". Meanwhile print advertising saw "continued demand" particularly from food retailers.
Reach chief executive Jim Mullen said: “We are pleased to have delivered further operational progress this year, with our commercial and editorial teams making the most of the strong news agenda.
"Our Customer Value Strategy continues to deliver long-term success, with an increasing share of data-driven digital revenue as well as digital growth returning in Q2. Alongside our expertise in managing our print product, we have traded our digital assets hard and delivered an operating margin improvement.
"We continue to build a stronger, more resilient business and are on track with our plans for the year.”
At the start of 2024 Reach committed to reducing total operating costs by 5-6% and it is currently trending "slightly ahead" of this target. However it said the relative level of savings will contract across the second half of the year and profitability is expected to be more equally weighted across the year.
Its focus for the rest of the year, the results said, is on "profitability and cash management.
"We will continue to carefully manage our print business, grow our digital revenues prioritising our data-driven strategy and control costs."
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