Gannett Scales to 200M MAUs in Q3 2024; Says Engagement Is More Important

By: Christiana Sciaudone

Gannett, the owner of USA Today and more publications, reached a record 200 million average monthly unique visitors in the third quarter—but even they admitted that scale’s not enough in this day and age. 

“The more scale we have, the bigger our opportunity is, but what becomes even more important is actually engagement because that drives enhanced monetization beyond just the scale of our audience,” Chief Executive Officer Mike Reed said on an earnings call today. “Each page view represents an opportunity to deliver a tailored monetization, whether through programmatic ads, premium ads from our local teams, our digital-only subscription offers, our recently launched wine club, or our partner e-commerce experience through our affiliate agreement.”  

Total digital revenue rose 5.2% to $277 million, representing 45% of all sales and an all-time high.

• Digital-only subscription revenue of $50.1 million grew 25%
• Digital-only average revenue per user of $8.16 increased nearly 20%
• Record 203 million average monthly unique visitors, an increase of 7.4%
• Digital Marketing Solutions (DMS) segment core platform revenue of $119.2 million dropped 1.4% driven 

The New York-based publisher lowered its forecast for 2024 total digital revenue growth to 6% to 7% from a previous forecast in August of 10%. Shares were down nearly 17% in mid-day trading. 

Gannett has sold about $20 million in non-core assets this year, including a commercial printing business and a site that was very dependent on Google algorithms and got hit by changes made by the tech giant that have led to a drop in traffic across the internet. The company used the proceeds to pay off debt. 

Gannett is focused on engaging its audience as search becomes less dependable and readers are awash in options to read national news from CNN and Fox to the Washington Post and the Washington Times. 

“We are committed to a diversified monetization strategy that is intended to maximize the revenue opportunity across our entire audience and to tailor that opportunity based on individual customer habits,” Reed said. “This heightened focus on monetizing the full spectrum of our audience through personalized experiences has driven significant wins across our digital business in Q3.”  

The digital marketing solutions business total core platform revenue in the quarter totaled $119 million, down 1.4% as spending accounts continue dropping amid uncertainty over housing and home improvement, though preliminary figures show an improvement for October.

Gannett has generated 14 consecutive months of at least 1 billion page views, according to Chief Content Officer Kristin Roberts, who joined the company in early 2023. Gannett has “intentionally returned to our roots as a fact-forward, down-the-center survey of our nation. There is a significantly underserved audience seeking a viewpoint that reflects the middle majority.” 

She also touched upon a decision made over a year ago to only recommend candidates in local and state elections has resonated, a decision that looks prescient in light of the last-minute non-endorsements at the Washington Post and Los Angeles Times. 

Gannett aims to become “the nation’s dominant sports content organization,” citing a 45% increase in page views for the Paris Olympics versus the Tokyo Games, which were held when much of the U.S. was likely asleep. The publisher is counting on new partnerships like the newly announced deal with sports betting platform BetMGM to drive further cash flow. 

Reed also alluded to future AI deals after one signed with Microsoft. 

“One of the things about the Microsoft deal is that it was a very narrow slice of content that we were able to understand what the use of the content was and what kind of value for that,” Reed said. “We expect to do broader deals where we’re fairly compensated for much more of our content. But you know, the partnership with Microsoft, while it’s modest from a revenue perspective, it’s a good example of the type of partnerships we’re looking to strike.”

AMO’s Take

Gannett is currently in transition, seeing its print business shrinking faster than its digital business can catch up.

Between Q1 2022 and Q3 2024, total revenue has decreased by nearly $136 million or 18% while digital revenue—a portion of total revenue—has only increased by $26 million or over 10%. As Christiana reported above, the team is managing this transition, selling off non-core assets like its printing operations, but it does mean that on the whole, Gannett will likely continue trending down from a total revenue perspective.

However, that’s not an inherently bad thing because it is doing a better job monetizing its digital audience. Over the last 12 months, it has been able to grow its digital average revenue per user (ARPU) by nearly 20%. This is necessary if Gannett is going to be able to accelerate its digital revenue growth over the next year. 

Management projected that its digital revenues are “expected to accelerate with growth exceeding 10% year-over-year and are expected to make up 50% of total revenues in 2025 and exceed 55% of total revenues in 2026.” Increasing ARPU is certainly one way to do that; getting more people to subscribe is another. 

On the surface, this growth is very anemic. When shared in connection with the growing ARPU, there is a possible story of price graduation with subscribers. For example, USA Today is running a program where a reader can get a full year for $1. This would, naturally, depress the ARPU quite considerably. And yet, with it continuing to rise, one theory could be people renewing at a higher price point. 

We should also pay attention to Mike Reed’s point regarding more tailored monetization. Delivering the correct offer to a reader at the right time should help it continue pushing its ARPU even further. Theoretically, it should also help boost growth in the total subscription numbers.