Reach plc sees lower advertiser demand
Reach noted that over the past two months the market has experienced reduced advertiser demand and lower average yields, with the war in Ukraine significantly reducing the level of ‘brand safe’ content for news publishers.
While this has led to lower growth than expected, Reach said it is improving the quality of its digital sales, with strong growth in its higher yielding revenues, such as PLUS+, becoming a bigger part of the mix.
PLUS+ data has also recently been added to the online marketplaces of three of the largest advertising agencies and Reach said it is continuing to enrich customer profiles and use technology, like its AI contextual tool Mantis, to encourage more customer time on site.
Investing amid inflation
The publisher of said it is continuing to invest in its Customer Value Strategy, with the reshaping of its cost base supporting investment in data and technology.
However, it noted that, since the middle of March, it has seen further inflation in operating costs, particularly within print, where the impact of newsprint (paper cost) increases will now exceed its previous expectations.
“We have taken additional measures to help offset this including, the acceleration of efficiency plans, changes within print production and actions around print cover prices” Reach plc wrote in its trading statement.
The company said still anticipates broadly flat group revenue for the year, though with a higher mix of circulation revenues and lower digital contribution than previously expected as a result of more challenging trading conditions.
The impact of further recent newsprint inflation is fully reflected in its cost expectations for the current financial year, with actions now underway to help mitigate the impact on operating profit, it said.
Jim Mullen, Reach plc’s Chief Executive Officer, said: “We’re developing a more sustainable and profitable long-term future for the business, with delivery of the strategy progressing well, despite a more challenging economic backdrop.
“The effective collection and use of data are supporting the growth of our higher yielding digital products, which are becoming an increasing part of our revenue mix.
“We’ve taken swift action to address the impact of inflation on our cost base and the business remains strongly cash generative, supporting the investment in data and technology that is key to future growth.”
Reach plc’s shares were trading 19.8% lower at £1.27 at 10am on Thursday.