“When I look back at 15 years of growth, it is a tough pill to swallow and disappointing,” says Alexander “Solly” Solomou. The chief executive of the digital publisher behind popular brands including LadBible is bemoaning the City’s reaction to a sharp drop-off in traffic after algorithm changes made by the owner of Facebook and Instagram.
The change by Meta to more heavily promote creator content has sent a chill wind through digital publishers – from Solomou’s LBG Media to the owners of Marie Claire and the Daily Mail – which had relied on its platforms to promote clickable content and now face a scramble to reinvent business models that had flourished from relationships with Big Tech.
The reality of Meta’s decision was sobering for Solomou, who saw LBG’s shares plunge as much as 40% in a single day recently after he was forced to issue a second profit warning in as many months.
The algorithm change resulted in a precipitous 41% fall in LBG Media’s so-called indirect revenues – advertising from its stable of websites, which include SportBible and Betches, and social media revenue share agreements.
Solomou, who co-founded LadBible with Arian Kalantari in 2012, launched the irreverent and at times offensive first version on Facebook out of a “little office resembling a prison cell” above a printing shop in Leeds.
Targeting the lads’ mags demographic who were ditching buying copies of Zoo, Nuts and FHM for social media, its content included Cleavage Thursday and Bumday Monday, and videos of Rambo-themed stag parties or a man changing a nappy in a gas mask.
After weathering accusations of sexism and misogyny in its early years, LadBible, which has always had a sizeable female following, refocused the tone of its content as the business mushroomed into a plethora of brands across social media attracting a global audience of 500 million.
“The bulk of what we do is entertainment, about 70%, but the rest is more serious,” says Solomou.
After listing on the stock market in 2021, the company hit a peak valuation of more than £400m, but is now valued at just £68m, with its shares below the float price.
“This is definitely the biggest shift I’ve seen in any market,” says the 35-year-old, who holds a 42% stake in LBG, having sold £50m worth of stock at the float. “We have seen a backward step … There is inevitably going to need to be change in our business model to address it, and we are very cognisant of that.”
Digital publishers are also suffering from the introduction of Google’s AI Overviews, which provide information summaries when searches are made, negating the need for users to click on links to the source of content on publishers’ websites.
Shares in Future, the publisher of brands from Marie Claire and Country Life to Techradar and Tom’s Guide, lost a third of their market value after it said in March that the decline in traffic from Google was “more pronounced than anticipated”.
Once a stock market darling, reaching a £4.7bn valuation in 2021 as it successfully made the transition from a print-based publisher to a digital advertising and e-commerce business, Future’s shares have plunged more than 90% in the last five years leaving it with a market capitalisation of £260m.
Alastair Reid, head of media and internet research at Investec, summed up the company’s travails in a recent note to investors saying Future has faced a “maelstrom of headwinds in recent times” including the impact of AI and a change in chief executive.
In December, Future’s chief executive, Kevin Li Ying, announced a “Google Zero” strategy shift, playing on the notion of a future where referrals from the internet company dry up.
The idea is to develop more direct relationships to retain users and includes the launch of Future+, a membership scheme launched across seven brands to date that has attracted 200,000 members who are “more engaged and provide more rich data in our data lake”.
While actual zero traffic referral may once have seemed implausible, the tech company accounts for more than 90% of the search market and has been central to online journalism since its inception. The situation has been described as an “existential crisis” for publishers.
According to the Reuters Institute, publishers expect traffic to news sites from search engines to decline by more than 40% over the next three years, after a 43% fall from Facebook and a 46% decline from X over the last three years.
In a submission to the UK competition regulator’s consultation on Google’s search services, the owner of the Daily Mail revealed that AI Overviews have fuelled a drop in click-through traffic to some content genres on its sites by as much as 89%.
Publishers have long argued that Google and Facebook have too much power in controlling the terms of deals relating to search and discovery of content, which the tech companies have denied.
However, earlier this month the Competition and Markets Authority (CMA) said that online publishers can block their content from being used in AI Overviews without jeopardising their wider search deals, which it said would put them in a “stronger position to negotiate deals with Google”.
The scale of the impact of decisions taken by big tech companies was thrust into the spotlight earlier this year when Facebook banned The Daily Mash, the UK-based satirical news platform, for breaching content rules.
The Facebook page, which had more than 1 million followers, was banned after three articles were identified as breaking rules for satirical takes on topics such as drugs.
“We have appealed but nothing came of it, we are still banned”, said Tom Whiteley, editor-in-chief of The Daily Mash. “It is a pretty powerless feeling to have everything you have built snatched away from you. The stories at issue have been on our site a long time: one since 2022, the other two were last year, but one of those was ‘evergreen’ and had been published multiple times in previous years. None had been flagged previously, it all seems arbitrary.”
Meta declined to comment.
While very high-profile US alumni of a similar launch era to LadBible have mostly gone or become lower profile – such as BuzzFeed, HuffPost, Vice and Vox – the Manchester-originated peer has thus far weathered the digital turmoil.
Earlier this year, Solomou and his family moved to New York as the business looks to capitalise on its growing reach in the world’s largest ad market.
And Solomou has already been working hard at diversifying the business, building what the company calls “direct revenues” from working directly with brands and broadening its ownership of intellectual property such as its hugely popular YouTube series called Snack Wars.
The series has featured celebrities including Hailey Bieber, the cast of The Devil Wears Prada, Snoop Dogg, David Tennant and actor Jennifer Garner taking on challenges such as eating classic British snacks.
While Facebook is tweaking its algorithm to try to keep pace with the creator boom – with audiences increasingly turning to TikTok and Instagram over the ageing social media original – companies such as LGB Media are pivoting to survive.
LBG Media’s reliance on “indirect revenues” has fallen dramatically, from 55% to 28% of total revenues in a year, albeit partly due to the fall in income due to the decline in traffic.
Revenue from direct visits to its sites now account for 72% of its business, and has doubled in size over the last year. The company still expects to make underlying profits of between £15m and £20m this year.
“This is very much a transition year. We have a recovery plan,” Solomou says. “We reach 500 million people, two-thirds of all millennial and gen Z young adults in the UK and US. We have the scale. In the world of AI, we are exposed to that in terms of risk and opportunity like any business out there.
“Even in a challenging year for us, we are profitable. The business has evolved over time, and in terms of what we are building, it is a long-term play. We are going to be here for many, many years.”
