• by May 25, 2022

Snap triggered a selloff in media stocks this week with a surprising disclosure that advertising sales would be slower than the social media company had forecast. Management cited a deterioration in economic conditions, rising inflation, Apple’s changes to its privacy policy and effects of the war in Ukraine among reasons for the uncertain ad-spending climate.

The implications for publishers vary by their business models and revenue mix, including subscriptions and ad sales. The New York Times, for example, is at one end of this spectrum, with subscription revenue that made up 69% of its total during the first quarter of the year. Reader revenue grew 13% from the prior year to about $372 million, which included a 26% gain in digital subscriptions.

Because its subscription revenue comes from millions of readers, the newspaper publisher has a diverse source of income that provides a buffer against economic cycles. Losing a few thousand readers isn’t as devastating as steep cuts in media spending by advertisers. The Times' readership also consists of higher-income consumers who are more likely to have the financial resources to ride out a recession.

For publishers more dependent on advertising revenue, the outlook for growth will depend on their digital exposure. By all accounts, digital ad spending is still growing strong, and despite its warning, Snap foresees gains this year. The company said it expects to miss the low end of its target for 20% to 25% yearly revenue growth. Outside of the tech sector, double-digit revenue growth isn’t too shabby.

Social media companies have complained about Apple’s efforts to give its customers more control over their personal data. The diminishment of those data signals hampers their targeting of iPhone users. Publishers also feel the effects of these changes, but it also gives them an opportunity to tout their contextual and brand-safe ad environments.

Service publishers that cater to niche audiences of enthusiasts are well positioned to deliver high-intent consumers to advertisers. As content and commerce continue to intermingle, there are opportunities for affiliate revenue growth.

Meanwhile, publishers that host events are seeing a comeback in attendance. These events have more opportunities to grow as professionals balance their concerns about the pandemic with fears of missing out on a chance to mingle with clients and close deals.

Not to diminish the significant risks to the economy -- including high inflation, supply-chain delays and the continued threat of the coronavirus -- there are reasons for publishers to be optimistic about growth.