Not many digital first producers and publishers have managed to monetise social content at scale. But one of the few to have done so is LADbible Group (LBG). This week, LBG Media released its annual report for 2022. For the latest edition of The Drop, we take a look under the bonnet of one of the sector’s star performers.
Stock market performance: LBG started trading on the UK stock market in December 2021. Initially valued at £360m (175p per share), the company is currently worth £206m and trades at a fraction under 100p. While this isn’t great news for people who bought at the time of the IPO, there has been a strong recovery versus the share price six months ago. This 2022 bounce is partly an indicator of the improved state of the stock market; but it is also a reflection of the company’s resilience in 2022 – as it launched new channels and grew its audience across leading digital platforms.
2022 revenues: In terms of headline performance, Lad Bible Group success saw 2002 revenues grow by 15% to £62.8m year on year. Profit and earnings were both down year on year but LBG reduced staff headcount in Q4 2022 to try and address this fact. The company says it will feel the benefit in “current and future years”. LBG Media chairman Dave Wilson said “progress in 2022 has been achieved despite a challenging macro-economic environment and the Group continued to deliver on the strategy set out at the time of our IPO. The £30m we raised at IPO is still to be deployed, giving us significant firepower for both M&A and organic growth opportunities.”
Revenue breakdown: LBG CEO Solly Solomou breaks revenues down into two main areas – direct revenue and indirect revenue. Direct revenue, (44% of the total) is generated from the provision of content marketing services to marketing agencies and other entities such as government bodies. This grew by £4.1m to £27.8m and involved work for brands such as Muller Rice, John Lewis, Specsavers, Boxpark, Google and Budweiser. Q4 2002 was a record quarter for direct revenue, when the firm worked with a number of clients who spent increasingly large sums during the period. Indirect revenue (54% of the total) is generated via third parties, such as social media platforms (Facebook, Snapchat, YouTube etc) through social videos or via programmatic advertising exchanges/online markets. This grew by £3.9m to £33.6m.
The final 2% of revenue is from content licensing and affiliate revenue. This is where, for example, content is sold either on a clip by clip or package basis. Typical customers are TV channels and other media publishers. The low figure shows there is still minimal crossover between digital first and traditional media – so perhaps it’s an opportunity.
Operating costs: As outlined above, earnings and profits were down despite increased revenues. LBG said significant expenses during the year were payroll costs, tech infrastructure and media costs. The latter was £7.4m – up 68% year on year. This bucket saw “an increase in content acquisition costs to support view growth, coupled with an increase in marketing spend post covid-19.”
Audience growth: Lad Bible Group success for prime revenue streams are all about audience scale. Currently, the company claims a global reach of 1 billion and chalked up 98bn views across 2022. In the 2022 report, it said it is “the world’s most viewed publisher on Facebook” and that its websites “are visited by 43% of all adults in the UK”. It also generates 2 million hours of watch time per month on YouTube. CEO Solly Solomou said: “We have continued to engage our global audience, which increased by 102m year on year to over 366m followers as at 31 December 2022. Our audience continued to be highly engaged, with 1.4bn interactions over the year.”
TikTok growth: The elephant in the room for businesses like Lad Bible Group is how to engage with young audiences now that they have migrated to TikTok. In its 2022 report, the company said it has “established itself as a leading player on TikTok” with 29m followers. Solomou said: “We are also investing in younger audiences, particularly those on TikTok, Snapchat and Instagram, which we are already monetising directly when we work with brands. We are well placed to benefit from indirect revenues when such opportunities arise on these particular platforms. We have added TikTok specialists to specific brands, such as SPORTbible, so that we are best placed to capitalise on monetisation opportunities, as well as making ourselves as attractive as possible to a broader range of commercial partners.” TikTok, said LBG, “presents significant revenue opportunities for LBG Media when the platform monetises”.
Geographic split: LBG’s biggest markets are the US, India, UK, France, Australia and Germany. The US and India alone accounted for 62.5% of the total audience in 2022. On geographic expansion, Wilson said: “We have started to establish a team in the US to tap into the significant direct revenue opportunities that are available to us in this market.” Solomou added: “Core international markets consisting of Australia and Ireland have delivered a very strong performance in 2022. The performance in Australia was particularly strong, and included the renewal of the Group’s contract with Amazon Prime in that market.” While the US is seen as a strong opportunity, India only rates a passing mention – presumably because ad revenues are lower.
Brand extensions: In addition to its flagship LADbible brand, the company has launch GAMINGbible, SPORTbible and FOODbible spin-offs. There are also local versions of LADbible in Australia and Ireland. Other brands in the stable include a range of UNILAD channels, Tyla and Furry Tails. The latter was created following the 2022 acquisition of the social pages of Go Animals and focuses on the relationship between humans and animals. LBG said it is seeing “excellent growth since acquisition”.
Innovations in 2022: LBG heralded the 2022 launch of LADnation, a research youth panel of more than 55,000 Gen Z and Millennials, which offers brands real-time insight into the social generation’s consumer habits and motivations. The data insight capabilities generated by LADnation form an integral part of the company’s work with its insights ensuring campaigns are effective and measurable. It has helped LBG secure business with clients and is now an integral part of the offer.
Investment into the Group’s own website proposition has also been a big area of focus and the Group “is benefiting from an increasing amount of traffic coming from Google.”
LBG said it is expanding its capabilities to produce innovative content and drive engagement. “During 2022, we launched LADcreator Network, which unites and amplifies more than 50,000 of the world’s best creators, allowing brands to tap into key target communities with hand selected creators. We want LADcreator Network to be the place to come to for the next big thing, in an exponentially growing market.”
Social purpose: Despite its name, and the fact that 61% of the audience is male, LBG has been working hard to give a voice to the digital world’s diverse audience base. Highlights in 2022 included affirmative action around body positivity and abortions. One episode of The Gap focused on two trans women from different generations. Agree to Disagree and Minutes With have also tackled prosocial issues. Minutes With reached its 100th episode in 2022 and has championed unheard voices including a Taliban hostage and a young woman with Tourette’s syndrome. At the end of 2022, LBG created an episode of Minutes With featuring Laura Nuttall, a terminally ill woman. “LBG Media are champions of women’s sport, and will be putting a huge focus on to this in 2023, so we surprised Laura with a visit from Lioness Chloe Kelly.”
Investment case: LBG bases its strategy around thee headings – geographies, M&A and capabilities. It has identified the US as a key growth market and anticipates more M&A like Furry Tails. “Furry Tails is monetising well with the brand’s followers reaching 7.8m this year,” said LBG in the annual report. In 2022 the Group also acquired the Facebook pages of Irish Banter which has since been rebranded to LADbible Ireland (Facebook). “To support our growth ambitions, in January 2023, we created a new position to be solely responsible for M&A and have since welcomed our first M&A Director into this role. Post year-end, in March 2023, we completed the acquisition of the social media pages and content from Lessons Learned in Life Inc.”
LBG also points to the growth potential in the sector: “We operate in a fast-growing market and have a huge opportunity in our global target addressable market. The global digital advertising market was valued at $541bn by 2022, and is forecast to reach $680bn by 2025. We are focused on some of the fastest growing segments of this market, including social video, web programmatic and content marketing. Our asset light business model is highly scalable and strongly cash generative.”
Conclusion: LBG has made solid progress in 2022 – especially in terms of its relationship with brands and the growth of its own online destination. Looking ahead its key challenges are as follows: Firstly, gaining further traction in the US market and exploring growth opportunities outside existing territories. Secondly, finding a way to even out the gender balance in its audience, making sure the LAD brand doesn’t act as a hindrance to growth. Thirdly, positioning itself to take advantage of the revenue growth that is likely to come via TikTok (assuming it isn’t banned, in which case LBG will need to pivot quickly). Fourthly, keeping a lid on operational costs associated with audience growth. Finally, building a slate of IP that can help it grow the content licensing side of its business – which is currently around the £1.25m mark.
Footnote: As an interesting aside, LBG makes no provision in its business model for brand extensions (clothing, drinks, hotels etc). Possibly it will come to these areas at a later point, or maybe they are better suited to individual influencers. The LADcreator Network may eventually transform into an opportunity for LBG to generate agency-style revenues from talent brand extensions. It’s a similar story with subscription revenues. Eventually, LBG might have enough volume of premium content to launch an ad free offering to hardcore fans, but this isn’t on the cards as yet.
