Thursday, September 29, 2022

Axios used ad money from Facebook and other tech companies to help sell for $500 million

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Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

Axios is a contrarian success story: a five-year-old media startup, backed by venture capital, that was journalistically and financially successful. That’s why it worked sell themselves for over $500 million to Cox Enterprises.

But there’s something else unusual about Axios, at least compared to most media companies: it owes a significant portion of its success to Meta and other tech giants.

That’s because Meta, Alphabet, and other Big Tech companies looking to restore or polish their reputations have poured advertising money into Axios and other digital publishers targeting Washington, DC. That group includes Politico and Punchbowl News, a startup that focuses on Congress. Publications that would like to be in that group include Puck, the subscription news startup, and Semafor, the publication that Ben Smith and Justin Smith are launching this fall.

Tech companies are not the only players in the so-called corporate social responsibility advertising market that has been around for years. If you’ve ever watched a Sunday news program like Meet the press, you have certainly seen examples. They’re often for companies that you’ll never interact with in person—think Cargill or ADM or Lockheed Martin—but are eager to communicate with Congress. And they were a staple of an earlier generation of DC print publications, such as Congressional Quarterly.

But the ads, designed to influence people who could regulate the company that pays for the ads, have become especially important for the new breed of digital-first publishing emerging in DC over the past decade, starting with Politico in 2007.

Publishers in the market say spending has risen significantly in recent years, largely under pressure from tech companies trying to tackle new controls. And they say that Facebook owner Meta is the biggest player in the game.

“Facebook is a huge net asset for us,” Axios CEO Jim VandeHeis told me in 2020, when he explained why his company’s advertising business was growing faster than planned. (VandeHei, like many publishers I spoke to, declined to officially speak for this story, as did executives at tech companies I spoke to.)

How much money Meta and the rest of the big tech companies are putting into DC publications — as well as publications not just focused on Washington, including the New York Times, the Wall Street Journal, Atlantic, and even cafemadrid Media, which owns of this site – is a matter of guesswork. But publishers I’ve spoken to think the market for corporate social responsibility advertising in DC pubs could be about $350 million — maybe ten times as much as it was in the 1990s — and tech companies are taking maybe a third of that for theirs. account.

By the standards of tech giants — that is, some of the largest companies in the world — that’s next to nothing. For context, in the second quarter of 2022, Meta, which struggled on multiple fronts, generated $6.7 billion in profits. That’s more than $70 million a day.

But for publishers, even a slice of tech money is incredibly high-margin and makes sense. Rivals tell me that, for example, Axios charges $300,000 for a week-long ad campaign with multiple placements. Last year, Axios generated a profit of $4 million on revenue of $87.5 million and hopes to generate more than $100 million by 2022, the company has told investors.

The money also matters to small marketing agencies that have created a boutique industry that places ads on behalf of corporate clients. Plague Sermon Interactive, for example, handles Meta’s DC-based purchases, although neither company would officially confirm that. Meta is also not listed as one of Bully Pulpit’s clients on the homepage, which does mention the Chan Zuckerberg Initiative, the philanthropy funded by Meta CEO Mark Zuckerberg and his wife, Priscilla Chan.

If tracking total dollars tech folks spend in Washington remains obscure — unlike lobby expensesthey don’t have to file that information anywhere — the rationale for the spending is pretty obvious: In the wake of the 2016 election, Big Tech has come under scrutiny and criticized by Democrats and Republicans, who are lining up to power the sector to regulate.

“They’re doing so much more in Washington because Washington is doing so much more to them,” said Matt Kaminski, editor-in-chief of Politico. Other active big-tech messengers, publishers tell us, include Alphabet, Google’s parent company, which is currently facing multiple lawsuits from regulators, and Amazon, which may also be sued by the federal government over the end of the Biden administration. .

Less obviously active is Microsoft, which got a crash course in the dangers of Washington in the 1990s when it battled a long-running antitrust lawsuit. Since then, the company has paid much more attention to policymakers, which may help explain why it has spared much of the anti-big-tech chunks in recent years.

It’s reasonable to wonder if all that money has any effect on the coverage the DC pubs are aiming at for big tech. Because when they push a shared message, it’s hard to miss, as journalist Judd Legum has pointed out.

But publishers I spoke to insist that they don’t have to worry about technology money distorting their messaging. For starters, many of them barely cover technology. And they say corporate image advertisers want to advertise with them because they reach a select group of policymakers and influential people — not because they want to distort the way they report. They also note that the New York Times, which has been remarkably critical of big tech in its post-election coverage of 2016, often runs image campaigns from within Big Tech.

Also up for debate is whether technology’s dominance in DC advertising will continue for years to come or whether it will be replaced by other prominent sectors. Some publishers believe the pendulum will eventually swing in the other direction, and healthcare companies and Wall Street will see technology at the top of the ad mountain.

Others argue that the sheer size and influence of technology means it will always be a target for regulation, meaning it will always be willing to pay to change the way important people see it. But whoever wants to spend money will always find a bunch of publishers willing to take their money.

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