The Arena Group Bets on a Commerce-Led Strategy for Growth
By: Christiana Sciaudone
Media companies left and right are leaning into subscriptions and paywalls as traffic from Google search and social media falls off a cliff. The Arena Group is not.
Still smarting from the Sports Illustrated debacle that shaved 25% off its stock price year to date, Arena and its still-new chief executive are now betting that continued traffic driven by content from real people—not artificial intelligence—will set its brands like Parade, Men’s Journal and TheStreet apart. That and commerce revenue.
Sara Silverstein’s plan to turn around the struggling media company is the opposite of what most media is aiming for today as Google search and social media platforms have cut back the amount of traffic that they send to publishers. Silverstein took over Arena in April after two and a half years at the helm of TheStreet. That’s also about two and a half months after Arena lost the license to publish Sports Illustrated—and the roughly $100 million in annual revenue that came with it—after missing a payment to the sports brand’s licensor.
Silverstein said: “We’re not delusional, but we’re trying to figure out what our strategic differentiator is, and for us, it’s real content, real audience, and then trying to tie our commerce business into our ad business and trying to tie all that data together so that we can offer better commerce solutions for our retail partners.”
Arena announced its first ever profitable quarter for the most recent period, posting net income of $4 million. That was more the result of getting expenses down—including by letting go of their entire direct sales team—to $8.9 million from $18 million a year earlier, than a jump in revenue, which fell to $33.6 million from $37 million—that excludes Sports Illustrated revenue in both periods.
On the revenue front, the company is leaning into commerce revenue to help turn things around and it’s working, for now, at least. While sales slumped overall in the most recent quarter, commerce revenue jumped to $6.3 million from $1.1 million a year earlier.
Silverstein is betting on her growing cadre of commerce writers to keep that trend going. Arena has hired and will continue to hire to boost the commerce department, which writes about items for sale like dressers and crossbody satchels and the best gifts for men under $50, a list that recently appeared in its Parade entertainment and lifestyle property. It’s not doing reviews, however, so much as alerting consumers to sales and deals. The company takes a cut of the sales made related to its posts.
“We’ve grown the team by a few times in the last three months,” Silverstein said. “We have to make sure that it’s serving the audience, because otherwise Google will punish us.”
The commerce business has been a boon to many of the largest publishers. It goes beyond simply diversifying revenue. In an interview with the International News Media Association, Patrick Gray, executive director of commerce at Condé Nast, noted that their offering is truly service journalism. It’s also a way to interact with brands and bring them into people’s homes. It doesn’t hurt that it’s low-cost revenue with high margins.
Arena is depending entirely on commerce for its future. It has also started working on its newsletter strategy. Arena has little first-party data on those guests, something it aims to fix, even as its sites get about 100 million unique visitors a month and between 300 million and 400 million page views. Total page views in 2023 were 3.5 billion and Arena projects reaching 3.7 billion for 2024.
What Arena will not do is buy traffic or play the third-party affiliate game, Silverstein said.
“I don’t think the tricks are gonna work” on Google anymore, Silverstein said. “I don’t want any AI solutions for content. I think Google’s going to be better at that than us, and they’re also gonna be better at protecting it.”
It’s likely Silverstein is adamantly opposed to “AI solutions for content” because Arena has been burned by it before. When it still had Sports Illustrated in its stable, the brand gained its share of infamy for allegedly using AI to create stories under fake bylines. Arena shares took a beating on the news. Hence the repeated emphasis on “real content.”
“We have real content, we have a real audience,” Silverstein noted. “How do we leverage that?”
Arena’s retail partners so far seem to be happy with what the company is doing. Retailers like Wal-Mart have increased the commission rates they are paying Arena as they see the value of having a true editorial recommendation for their products drive sales.
“We’re just trying to figure out what’s really working and do more of that,” Silverstein said.
