Compounding this downturn, the industry-wide slowdown in digital promoting spend final yr additional sophisticated the state of affairs.
In his 2022 shareholders letter, O’Shaughnessy addressed the state of affairs.
“Leaf Group, our assortment of media and commerce manufacturers acquired in 2021, has struggled. These struggles accelerated as 2022 progressed,” he wrote. “In brief, Leaf has underperformed our expectations and we overpaid. I screwed this one up.
“To make issues worse, we’re not out of the woods but,” he continued. “Traits round promoting weren’t favorable as we exited 2022 and Society6 continued to see depressed demand and inflationary pressures. Because of this, Leaf Group incurred substantial losses in 2022 which we count on to proceed into 2023.”
Monetary challenges persist for publishers
Leaf Group is on no account alone in its industrial straits, because the media {industry} has broadly resorted to layoffs, closures and cost-savings to deal with a depressed local weather for digital promoting.
The fortunes of its artwork marketplaces adopted a trajectory much like different industries, such because the know-how sector, that noticed demand spike throughout lockdown solely to normalize afterward.
Whereas its diversified enterprise mannequin shielded Leaf Group from some danger, on this case, it additionally uncovered the corporate to 2 parallel downturns: the lower in lockdown spending and the drop in promoting demand.
Graham Holdings Group now finds itself ready much like that of Vox Media and Recurrent Ventures, which each acquired publishers through the pandemic solely to reevaluate their worth in a recessionary market.
In contrast to Vox Media and Recurrent Ventures, which this week spun off NowThis and Saveur, respectively, Graham Holdings Firm stays dedicated to Leaf Group and goals to shepherd it by means of this downturn, in keeping with Mayfield.
“The crew at Leaf Group will proceed to work with Graham Holdings’ management to develop the enterprise and drive outcomes,” Mayfield stated.
