Digital advertising continued to be Townsquare Media's fastest growing segment in 2023, increasing 1% year-over-year to $232.5 million. Despite what CEO Bill Wilson called recent “setbacks” at the subscription-based Townsquare Interactive Digital Marketing Services business, total digital revenue in 2023 is expected to remain on par with pre-pandemic 2019. This is an increase of 47% compared to the previous year.
More than half of Townsquare's 2023 revenue will come from digital, making it less affected by the industry-wide decline in national radio ad sales. The revenue derived from the national radio market is less than 10% of his total revenue. “This, combined with the fact that we have strong and often long-term relationships with our local advertising clients, has contributed to the performance of our broadcast advertising division,” Wilson said on a conference call with analysts Friday. “This has contributed to us outperforming the industry.”
Still, Townsquare's 2023 broadcast ad sales were down 5.4% year over year (down 3.6% excluding political ads), primarily due to an 18% decline in national ad sales. Mr Wilson said national broadcasters “continue to put downward pressure on broadcasting” and will decline by 7% in the first quarter of 2024, while local broadcasters continue to outperform national broadcasters. Overall, he added, broadcast revenue in the first quarter was down by “just a few percentage points at this point.” Although Townsquare's broadcast rates remain “significantly below” pre-pandemic levels, the company has gained market share since 2019, and that continued into 2023.
Its digital advertising arm, Townsquare Ignite, will be the company's growth engine in 2023, with revenue up 7.1% year-over-year to $150.3 million, and profit up 7.5% for a profit margin of 31%. However, digital ad sales fell 1.5% to $36.4 million in the fourth quarter. The cause was a double-digit decline in the national digital business. “We see a similar trend in Q1 2024, with domestic digital declining by double digits, offset by strong programmatic growth,” Wilson said.
While some broadcasters rely on third-party providers, Townsquare's digital advertising products are completely in-house. Wilson said this will give the company “100% control over its customer relationships, starting with customer pitches, campaign design, media buying and optimization, and ongoing reporting and insights.” I can do it.'' This gives the company a first-party audience of 75 million monthly unique visitors to its 400 local news and entertainment websites and mobile apps, and 10 national music and entertainment websites. data can be collected and analyzed. This dataset is mined for insights into consumer behavior, audience interest, and purchase intent, helping clients improve their ROI.
Town Square Interactive shows signs of improvement
In a previous earnings call, Wilson said 2023 is a “year of reset” for Townsquare Interactive, the company's subscription-based digital marketing services division. “Rising interest rates, inflation and wage pressures have increased churn rates and slowed sales velocity,” he told analysts on Friday. The company started 2024 with 6,500 fewer subscribers than a year ago. This is because employees were ordered to return to the office after working from home for an extended period of time, leading to an increase in employee turnover. Despite full-year sales down 9.1% to $82.2 million and fourth-quarter sales down 14.5% to $19.1 million, Wilson said his commitment to the division continues, with the division improving from last year. The company said it opened a new facility in Phoenix to complement its Charlotte headquarters.
He said there were “many early signs of improvement” in the department, which had been a shining star for many years. Customer churn peaked in the second quarter of 2023, but remains above historic levels. The spike in employee turnover has “passed” and revenue from new sales is increasing. Changes made to the division's customer service model have improved cost efficiencies and “allowed us to scale even more efficiently going forward,” Wilson said.
But revenue and profit growth in 2024 is still slowing due to the loss of thousands of customers last year. Although there was less subscriber decline in Q1 2024 compared to Q4 2023, Townsquare Interactive's first quarter revenue is expected to decline by 15-16%. “In the long term, we are confident that we have a long and sustainable runway ahead of us,” Wilson said, adding that the sector had 24,000 subscribers at the end of 2023, with 58% of them. pointed out that it is outside the local radio base. With an addressable market of nearly 9 million customers, he said, “we've just scratched the surface,” and the division is “positioned for long-term, profitable growth and success.” We are making preparations,” he added. Wilson told analysts that TSI could return to pure subscriber advertising as early as the second quarter or as late as the third quarter, with a return to month-over-month profit growth in the third or fourth quarter. Stated.
Continuous revenue growth
Total revenue decreased 4.6% in the fourth quarter That was $114.8 million, up from $120.3 million a year ago. Giving a glimpse of business trends in 2024, Wilson said that the first quarter was stronger than the fourth quarter, the pace of the second quarter was stronger than the first quarter, and that both the broadcast business and the digital advertising business He said there has been continuous improvement.
“Our performance over the past several years has proven the effectiveness of our digital-first local media strategy, demonstrated our focus on local markets outside of the top 50 U.S. cities, and strengthened our business model. “I think we have renewed confidence in our future direction,” Wilson said.
