Follo softened that statement somewhat when addressing the 4% total digital ad revenue drop to $46 million in Q1. "Advertising continues to be affected by ongoing and secular trends and an increasingly complex digital marketplace that is undergoing a shift toward ad exchanges, real-time bidding and other programmatic buying channels," Follo said during the call.
He added, "While such audience-targeted approaches affected pricing for premium advertising environments such as NYTimes.com, we believe that the Times Media Group can return to digital advertising growth by making significant inroads in video advertising, substantially increasing our inventory and focusing on unique, custom ad units, and by better monetizing our tablet inventory."
One of the complications that NYTCo faces, along with its newspaper brethren, is the issue of paywalls. The company is lowering the price of admission for certain content, though details on new pricing structures weren't offered. At the moment, when users consume 10 posts in a given month on NYTimes.com, they are hit with the paywall. At the high end, monthly all-digital access is $36.
Earlier in the week, NYTCo did say that video viewing on the site would be completely free as the company plans to increase production in that area. Still, it's not clear if NYTCo would rely on basic pre-rolls, additional custom ad units or some programmatic approach – perhaps a combination of all three?
On the plus side, executives did say that Q2 was showing signs of a possible turnaround, particularly in mobile advertising, which took a hit in Q1. "Overall, mobile was challenged during the quarter due to the timing of some campaigns but has turned around significantly since then, and we expect robust growth for the second quarter," Follo said, though he did not provide specifics.
While NYTCo refines its ad programs, Follo made it clear that the centerpiece of the digital revenue strategy would remain squarely concentrated on building its subscriber base, both domestic and international. Paid digital subscriptions to NYTCo totaled 708,000 at the end of Q1 for a gain of 45% over the same period the year before. However impressive, those gains will eventually slow. And while Thompson only offered an introduction to that digital strategy, it is hard to gauge how much patience investors and analysts will show toward to the still-new CEO.