For eight consecutive quarters, the digital media industry has experienced abnormally low growth. While that sluggish performance continued for Q2 2024 digital media revenues, it wasn’t all bad. For the first time in two years, volatility has begun spiking to the upside and may be hinting that a positive shift is underway. Read more to find out why the return of volatility may be good, even though Q2 2024 digital media revenue growth remained low.
While the median for Q2 2024 digital media revenue growth remained at a modest 5%—marking the eighth consecutive quarter of low growth—volatility jumped to 28%. Representing a significant jump when compared to the 18-21% range we have observed in recent quarters. This increase in volatility could indicate potential changes ahead for digital media companies, as the industry has struggled through its longest sustained period of low growth on record.
Tired of mainstream media focusing only on “Big AdTech”, our team began examining public revenue data for the broader digital media industry. We review the revenues of more than 30 public digital media companies and compare their performance next to “Big AdTech”. With a median growth rate of 5%, we have now entered the second full year of historically poor performance and are releasing the 2024 Q2 Digital Media Revenue Report to share our findings.
Companies Analyzed
We evaluated data from publicly traded companies, in the USA, with financial reports denominated in USD. Those companies must also earn a majority of their revenues from digital media operations and have been underwritten by OAREX’s credit team. Furthermore, we excluded some “Big AdTech” companies to ensure the data was not outweighed by industry giants (i.e. Google, Meta, and Snap).
Key Findings In The Report
- Longest Period of Low Growth Continues: Q2 2024 marks the eighth consecutive quarter of modest revenue gains, with median growth at 5%. Although 58% of companies reported positive revenue growth, this continues a trend of growth below 6% for two full years—the longest period of sustained low revenue growth on record.
- Google remained below the industry average, again: Google’s ad display business (Google Network) continues to underperform, with a 5% year-over-year (YoY) decline in Q2 2024. This marks Google’s eighth consecutive negative growth quarter. In contrast, Snap reported a 16% YoY increase, while Meta led the pack with a 22% surge in revenue.
- Bigger Companies Still Lead: Larger companies in the digital media space continued to outperform smaller ones. Excluding Google, Meta, and Snap, larger firms posted higher YoY growth, suggesting that size remains a strong factor in performance.
- Volatility is Back: After two years of low and stable revenue volatility, Q2 2024 saw a jump in dispersion to 28%, up from the suppressed 18-21% range observed in recent quarters. This return to higher volatility could signal increased movement in the market, with potential growth shifts ahead.
- Best Performance: Hubspot, The Trade Desk, Taboola, AppLovin, QuinStreet, and MediaAlpha, all achieving YoY growth of over 20%.
- Worst Performance: Perion, System1, and Fluent saw steep declines, with revenue dropping by more than 20%.
Our Takeaway
With volatility picking back up in Q2 2024, the digital media sector may be on the cusp of a break out. For two years, the industry has experienced historically low growth and volatility, but the sudden increase in dispersion of revenue performance could be an early sign of a positive change. To put this in context, the average dispersion over the four year period prior to Q3 2022 was 34%. During that time, we saw significantly better performance in terms of revenue growth. As volatility continues accelerating, we could see rapid growth across various companies within the index. However, on the flip side, we could see an acceleration to the downside.
OAREX remains cautiously optimistic. The next few quarters will be critical in determining whether this volatility leads to a broader recovery or whether digital media companies will need to continue navigating an unpredictable landscape. Given the prolonged period of low growth, we are hopeful that comps will improve and growth ticks to the upside. When we take into account that it is an election year and Q4 is primed for scale, this positive outlook is strengthened in the short term. For businesses also focused on exploiting those opportunities and maximizing scale, OAREX can help. Don’t leave ROAS on the table, schedule a call today to find out how OAREX can help you earn more revenue in 2024.
Want to see more? Download a copy of our free report here or schedule a call to speak with our team.
