Last summer, the bogeyman of a looming recession choked the ad market. The aggressive campaign to temper historic inflation and widespread uncertainty compelled companies to slice their advertising budgets, sacrificing spending there to brace for tough times ahead.
But the recession that executives saw coming never bothered to arrive. Now, ad dollars are flowing again.
Executives at Paramount (PARA) in their latest earnings report touted the company's strong position in advertising and a rebound for digital ads. "Paramount has seen sequential improvement in year-over-year advertising in Q2. And in the upfront we just wrapped, Paramount saw positive low to mid-single growth on volume," said CEO Robert Bakish. He added that Paramount’s direct digital revenue is up by double digits compared to the same period last year.
Leaders at the New York Times (NYT) and Fox Corp (FOXA) also posted promising figures for ad revenue in another sign that spending is recovering faster than expected.
The rebound in ad sales suggests that media companies are on a trajectory that lags behind the tech platforms that have already roared back to life on Wall Street. Shares of Meta (META) and Alphabet (GOOGL), the parent companies of ad giants Facebook and Google, have surged 142% and 45%, respectively, this year. Both companies posted muscular earnings this quarter, buoyed by a resurgence in ad dollars.
New York Times CEO Meredith Kopit Levien said earlier this week that advertising performed better than expected for the quarter. Digital ads climbed 6.5%, which the company attributed to strength in its "core offering, a combination of proprietary premium ad canvases and first-party data," Levien said.
She also highlighted the tremendous ad growth of the Athletic, the sports website the company bought last year. The Athletic’s ad revenue more than doubled year over year for the second quarter in a row, she said, driving new advertisers. But the sizzling revenue source has also fueled controversy. Last month the Times disbanded its sports department and shifted coverage of teams and games to Athletic staff.
While advertising revenue for Fox’s fiscal fourth quarter fell by 4%, its full-year picture was more optimistic, rising 12%. "These results demonstrate that Fox's differentiated strategy continues to deliver engaged audiences at scale for our advertising and distribution partners across our sports and news verticals, while also driving exceptional growth across our digital businesses," said CEO Lachlan Murdoch, during a call with analysts this week.
But not all signs were positive. News Corp (NWSA), which owns the Wall Street Journal, reported a 10% decline in digital advertising revenue for the fiscal fourth quarter. But the company noted it hopes to see "improvement in advertising declines" at Dow Jones, the Journal's publisher, in the year ahead. News Corp’s reliance on digital ads, in contrast to print, continues to grow. Digital advertising revenue ticked up from 58% to 60% of total revenue during the most recent quarter, pulling the company, like many of its news media peers, further away from its legacy business model and into the often fickle hold of the online marketplace.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
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