The media and advertising worlds were abuzz when IAC subsidiary Dot Dash acquired Meredith Corporation in May for $2.7B. But what's gotten less attention than the size of the deal was the critical role that affiliate and performance-based advertising programs played in this fascinating acquisition and the insight that that information gives investors, corporate development teams and managers.
Strange Bedfellows. But Not Breadfellows!
At first glance, Dotdash and Meredith may have seemed a strange match - a vertical digital content publishing leader acquiring 119-year-old magazine publisher Meredith, a company best known for highly successful print titles sold next to Zagnuts and Beef Jerky at checkout counters. But if you look below the surface, it's quickly apparent that a big part of why the deal makes sense comes from the growing role of affiliate in brand advertising budgets and burgeoning advertiser interest in performance deals with content publishers. It's like anything else. If you wanna understand, follow the bread - err, cash.
Performance deals are the key to monetizing content in a United States media environment in which Google, Facebook (sorry, "Meta"), and Amazon control 65.1% of digital media spend. For content publishers to thrive, they need a way to sell the power of high-quality content and intent-based audiences. This deal, along with Buzzfeed’s public offering gives the market insight into the value of performance media. Until now, that had largely been speculative.
Different Histories. Same King: Intent-Based Content
Dotdash and Meredith Corp may have had different histories, but both were pioneers in delivering high-quality content designed to help consumers make decisions. For Dotdash, that has been a central tenet from its beginnings. So too for Meredith, which for decades has been pitching the commercial influence of evergreen content focused on a rich understanding of its readers and their interests. In fact, the Des Moines-based magazine publisher was one of the first non-native media companies to offer scientific measurement of sales impact. As it pursued its digital transformation, it was also an early mover in the development of branded content teams.
Further, Meredith titles are exactly the sort of potential content-driven performance marketing partners that advertisers drool over. As senior marketers search for ways to diversify their ad buys from the big three tech giants, being able to buy accountable ads, advertorials, promo codes, and more from Meredith's national media group titles like Better Homes and Gardens, Real Simple, People Magazine, Southern Living, Magnolia Journal, Entertainment Weekly, All Recipes InStyle, etc. is just what the CMO ordered! Further, Meredith's 17 local TV stations are a great source of timeless, high-quality video content for the combined Dotdash Meredith company.
IAC's Dotdash media brands were no slouches either. Its roots are in the 1990s and 2000s giant About.com, which Barry Diller's IAC acquired in 2012. At that time, the About.com user experience had sadly become "about" 926 blinking banners on every page and content “about” a topic like MP3 Players that included the words MP3 players three times in every sentence about MP3 players for SEO. MP3 players.
When IAC acquired About.com, it refocused on the customer, and results started to improve again. But the brand was retired in 2017 and the company rebranded to Dotdash, as part of a major shift to a vertical content strategy. Today, typing the URL redirects to the Dotdash Meredith corporate homepage, where you can read about its dozens of vertical content properties.
Dotdash CEO Neil Vogel created the highly successful growth strategy for the business, combining organic property development with major acquisitions including Brides, acquired in 2019. The company also managed the migration to mobile screens better than many, today driving the vast majority of traffic from mobile, according to Similar Web data.
The combined Dotdash Meredith company is focused on delivering high-quality editorial, even as they have gradually increased paid performance content. Wait, scratch that last sentence; both "sides" of new company Dotdash Meredith maintain that good branded performance content ADDS to the reader experience.
As the FTC and others scrutinize the frankly stinky pay-for-ranking corners of the affiliate business, legit media companies must focus on editorial integrity. After all, that's what makes them legit. Independence is the keystone asset for the likes of Conde Nast, Hearst, WIrecutter parent The New York Times, and Dot Dash Meredith. But how can brand content really add value?
If you're skeptical that media companies are really putting their audiences first as they expand performance marketing, talk to the partner team at your affiliate network or platform. Odds are that they'll give you a sizable list of advertisers that haven't been accepted for programs because the brand leaders don't "get" what content-based marketing is, or because their products did not pass independent selection and review processes. Striking the right balance can be done, and is being done at a wide variety of media companies. Consider this Better Homes feature: 5 Holiday Trends from Walmart That Work for Every Room in Your Home.
The old Dotdash business derived the majority of its revenue from performance media, whereas traditional CPM advertising led for the Meredith family of properties. Expect that balance to shift in Meredith's digital future; it has to if these media assets are to grow. Even before the acquisition, Meredith recognized the importance of direct commerce, as their 2020 acquisition of Swear By attested.
And Then We Come to the Ones and Zeros
Because this is digital, we also need to talk about data. Both Dot Dash and Meredith have massive troves of customer data and insight advertisers have always needed but now need even more with "cookiegeddon".
In addition to the scale of Dot Dash Meredith total reach (100M+ MUVs,) reader understanding is something that's enjoying a wonderful revival after years of so-called audience-based programmatic targeting. Here's a sprinkle of recent headlines from various Dotdash Meredith titles to give you a sense of how timeless lifestyle edit can contribute top- and bottom-funnel value:
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Before I’m accused of writing a puff piece for the company, let's be clear that Dot Dash Meredith by no means holds a monopoly on these concepts. Conde Nast, Ziff Davis, and Hearst, for example, are employing similar business strategies - shifting the focus of brand relationships toward performance-based collaborations. And absolutely no one can deny the power of brand association with their properties, which include Vogue, Esquire, PC Mag, Cosmo, and Epicurious. These and other tier-one publishers are working hard to prove that performance-based deals can help power the growth and success of great content brands.
So the point here isn't really about Dot Dash Meredith. It's that affiliate and other performance-based media strongly contributed to the appeal of the Meredith purchase. So many forces are converging to power growth in affiliate and other performance partnerships.
As an industry, we must all focus on how content-centric affiliate is fundamentally altering the industry, and how, more than ever, success in this business is about a lot more than coupon site tenancies, offer code banners, and sponsored links.
That doesn’t mean we should stop dancing with the coupon and cashback properties that brung us to the CPA prom. But it does mean that we need to evolve our mix as affiliate investment grows. And it also means that, ultimately, programs must deliver multiple forms of consumer value if we are to thrive.
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