Satirical website The Daily Mash was hit by social media platforms changing their algorithms as they attempted to tackle misinformation around Covid-19 and the US presidential election last year.
Digitalbox, which also owns student news website The Tab and online brand Entertainment Daily, said the problem contributed to a “difficult” third quarter.
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But it said it managed to recover in the final quarter of the year, reaching 12m monthly users across the group in December with more than 250m ad impressions.
The company called Facebook’s misinformation algorithms “increasingly sensitive” and said they had repeatedly failed to correctly identify and understand satirical content from The Daily Mash, reducing the reach of its articles.
However, it said there are “consistently high levels of engagement” when users do see the Daily Mash content and the issue is being increasingly offset by the “high proportion” of visitors that come direct. The website ultimately grew its visits by 14% year-on-year.
The publisher is in continued dialogue with Facebook about the issue.
The Daily Mash, which launched in 2007 and was bought by Bath-based Digitalbox in 2019, has more than 1m Facebook followers and routinely publishes at least ten links to its stories on the platform per day.
Chairman Marcus Rich, formerly chief executive of magazine publisher TI Media before it was bought by Future, said the business had been “confronted with not just the sudden and dramatic economic downturn in Q2 2020 caused by Covid-19, but also the disruption created by the social media giants in their efforts to combat misinformation in the run-up to the US elections and their ongoing difficulties tackling the same issues with Covid-19”.
“Thanks to swift decision-making by an alert management team the business took immediate action in ‘right-sizing’ the cost base in order to soften the blow of the sudden and inevitable reduction in revenues,” he said in the company’s full-year results, published on Monday.
Rich added that all three of Digitalbox’s brands are now “seeing the disruption in the ecosystems of the social media giants beginning to dissipate” while the company is successfully diversifying its traffic sources.
Digitalbox bought The Tab in October and said it had already been made profitable for the first time since being integrated onto the group’s mobile-first operating platform Graphene.
The Tab grew its Q4 traffic by 42% year-on-year.
“Our efficient and expert content creation married to our cutting-edge technology creates value with The Tab being a strong proof point for our buy and build plan,” Rich said.
Digitalbox reported revenue of £2.19m in 2020, down 2.4% from £2.24m the year before, which came entirely from advertising.
It reported a loss before tax of £143,000, an improvement on the £460,000 of the year before, and said it has £1.9m in cash reserves.
It also benefited from cornerstone investor Downing Strategic Micro-Cap Investment Trust plc coming on board.
The company is aiming for organic growth, putting investment into each of its three brands this year, plus further acquisitions. It said it is “actively evaluating potential targets on an ongoing basis”.
Chief executive James Carter said: “The disruption brought to the market by the pandemic created opportunities, and as time progresses we envisage seeing more businesses increasingly challenged and being made available to interested parties.
“Overlaying our model on two acquisitions so far has proved successful and we remain focused on repeating this to grow the business.”
Overall full-year visitors for Entertainment Daily and The Daily Mash, and for The Tab between October and December since its buyout, were up 76% to 67m compared to 38m in 2019, according to Google Analytics figures provided by the company.
Entertainment Daily, which has a core demographic of 25-55-year-old UK women, averaged 3.3m monthly unique users in 2019, rising to 4.5m in 2020 and the group’s user base has grown 76% year-on-year.
Carter said: “The year saw a massively disrupted economic environment created by the Covid-19 pandemic alongside some significant turbulence within social media platforms as their algorithms struggled to manage issues around misinformation, but I am pleased to report we have been able to move the business forwards, ending the year operating three significant brands and in a much stronger position than we started it.”
He added: “We enter 2021 with cash at the bank, an expanded portfolio of assets, a stronger investor base, a brighter advertising market and a reinvigorated board.”