Guardian prepares for job cuts as drought in online advertising hits publishers

The Guardian’s staff is bracing for job cuts, after their bosses informed them that the publisher will make a £39million loss annually due to a slump on the digital advertising market.

The Guardian’s troubles, which were revealed to its staff in a meeting hosted last week by executives, coincide with the struggles of several rivals who are also facing what an analyst called a “perfect hurricane”.

Reach, the newspaper giant, and other news publishers have cut hundreds of positions in the past year. Meanwhile, broadcaster Channel 4 announced recently plans to eliminate 200 jobs, citing advertising market problems.

According to a source, Scott Trust, which owns both the Guardian and the sister title The Observer, has told staff that the current financial situation is “beyond sustainable or acceptable”. Staff heard that the publisher has lost £36million in the last nine-months of 2023, and they are projecting a £39million loss by the end next month of the financial year. Staff heard that editor-in-chief Katharine Viner told her troops to “worry but not panic”.

The Guardian, in recent years as digital advertising has become less reliable, has tried to increase its “digital readers revenues” which includes voluntary contributions and app subscribtions. The website of the news group is free but subscription revenue comes from other products such as a crossword application. Last week, staff were informed that the news group plans to launch an app for recipes, Feast. This will be a paid-for service.

A Guardian spokesperson said that staff members were updated as part of the quarterly update. Executives discussed the issues that are affecting the industry in general as a result the slowdown of digital advertising.

The spokesperson stated: “Although this also affects our business, we discussed the fact that the Guardian has an established and unique reader revenue system, as well as plans to create new revenue streams. We have no immediate plans to reduce headcount, but we are committed to managing the organization as efficiently as we can.

Reach, the publisher of Mirror, Express, and Star newspapers as well as regional titles in dozens, was also forced to experiment with subscribing models due to the digital ad crash that has particularly hit free-to read publications.

In the next few weeks, it is believed that Reach’s flagship publication, the Mirror, will launch a “premium tier” of its news app. The “premium version” of the Manchester Evening News app, owned by Reach, will likely be a copy of that. It costs £19.99 per year and includes puzzles, less advertising, and the option to listen to the articles. Reach has also tried charging readers for the Express app and other regional apps.

Reach used to be a big proponent of free content, hoping to attract large audiences and monetize with advertising revenue. In recent years, this business model has been largely abandoned by the news industry.

Douglas McCabe is the chief executive officer of Enders Analysis. The research service covers the media, entertainment, and telecoms industries. He said that a major part of the issue was the fact that US giants like Google, Meta, and Amazon have absorbed a lot of digital advertising revenues.

He said that advertising was flowing into search engines, but also to retail. “All that is bad news for a newspaper or magazine business because it takes away advertising budget.” He also said that search engines, such as Facebook, and social media sites were bringing less traffic to news websites. McCabe said that this has a direct impact on the amount generated by advertising. It’s like a perfect storm, with all the problems happening simultaneously.

McCabe stated that the TV industry is suffering from the wider advertising slowdown which has affected the UK economy over the past few years. He said: “The market for news publishers has become accustomed to these challenges.” “The TV market is beginning to feel that pain.”

MailOnline, a DMGT product, has also launched a new subscription service under which certain stories are now behind a paywall.

In recent years, British news outlets expanded their operations to the United States in order to take advantage of a more lucrative market for digital advertising. Even there, publishers are facing difficulties. It was reported last week that 2023 digital advertising revenues fell by 8.5% to $187,000,000.

A spokesperson responded to the Scott Trust’s concerns regarding the sustainability of The Guardian by saying: “Our financial stability was earned over the past few years.” The Scott Trust’s role is to invest in the long-term growth of Guardian, with the goal of ensuring the publication of high-quality, trusted journalism in perpetuity.