New York Times will end in-app programmatic ads

Brief:

The New York Times in January will remove open exchange programmatic ads from its mobile app to prevent slower download times that interfere with the user experience (UX). The company estimated that the change will cut revenue by a figure in the "single-digit millions," AdExchanger reported, citing the newspaper's Q3 earnings call.
The company's advertising fell 6.7% to $113.5 million during the quarter from a year earlier, with a 5.4% decline in digital ad sales to $54.7 million. Advertising made up about 26% of its total revenue of $428 million during the period, per its quarterly report.
Subscription revenue rose 3.8% to $267.3 million as the company approached 5 million total subscribers and 4.1 million digital subscribers. Digital-only subscription revenue gained 15% to $116 million from a year earlier. The newspaper added 273,000 digital subscribers in Q3, including 209,000 for its news site and the remainder for its cooking and crossword puzzle content.

Insight:

While the New York Times is removing open exchange programmatic ads from its mobile app, the newspaper still has direct sales channels for programmatic ads. That gives advertisers a way to reach its audience without bidding for placements through an open exchange. The company's revenue from open exchanges started to shrink two years ago as it ramped up its programmatic direct business, Digiday reported.

The newspaper's plan to remove programmatic advertising from its mobile app demonstrates how the newspaper is prioritizing the reader experience over the needs of sponsors. As advertisers follow audiences to social media and paid search, they are pulling back from print and digital publishers. That makes reader revenue more important for companies like The New York Times, which now sees 62% of its sales from subscriptions. Keeping those readers happy with a positive mobile experience is a higher priority for the newspaper than selling space to the highest bidder on programmatic platforms.

U.S. advertisers are forecast to boost their spending on programmatic display advertising by 35% to $81 billion by 2021 from $60 billion this year, per researcher eMarketer. Programmatic advertising's share of spending on digital display ads will grow to 88% in two years from about 85% this year, the researcher forecast. Only 17% of total programmatic spending will go through open exchanges by 2021 because of concerns about audience verification and brand safety, boosting growth for private marketplaces (PMPs) and programmatic direct ad spending, per eMarketer. Until open exchanges can deliver better ad verification and an improved mobile UX for media outlets like the Times, the newspaper is unlikely to re-open its ad inventory to them.