Catena Media navigates Google changes, forecasts revenue decline
Organic Search Policy Update Impacts Affiliate Marketing Partnerships.
Catena Media, a company specializing in affiliate marketing for the iGaming industry, issued a Q2 earnings update last week. The update follows preliminary financial results for May and an evaluation of the impact of recent changes in Google's organic search policies.
A key factor influencing Catena Media's financial performance is a Google update targeting site reputation abuse. Implemented in May 2024, this update negatively affects the search rankings of sports betting and casino content published by many major news media websites. This has consequently reduced the effectiveness of some of Catena Media's strategic media partnerships, which rely on these websites for traffic generation.
As a result of the Google policy change, Catena Media anticipates a decline in revenue and direct costs associated with certain media partnerships. However, the company also reports an offsetting effect – higher traffic and improved organic search rankings for its own operated brands. This suggests that search engine algorithms are increasingly favoring high-quality, relevant content.
Based on these developments, Catena Media forecasts a revenue range of EUR 12.5 million to EUR 13.5 million for the second quarter of 2024. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) are expected to fall within the range of EUR 0.5 million to EUR 1.5 million.
Despite the Q2 2024 decline, Catena Media reiterates its forecast of a return to revenue growth in the latter half of 2024. However, due to the ongoing impact of the Google policy change and the company's organizational transformation, a new full-year adjusted EBITDA forecast is not available at this time.
Catena Media is taking steps to improve profitability by exiting low-margin media partnerships with high minimum guarantees. These partnerships, expiring in Q2 and Q3 of 2024, account for over EUR 1.4 million per quarter in direct costs. Additionally, the non-renewal of these agreements is expected to reduce internal and outsourced content costs by EUR 0.7 million to EUR 1.0 million annually.
The company emphasizes its commitment to a new product-focused operating model. This strategy prioritizes the development of organic content and explores profitable partnership opportunities that benefit both parties. Catena Media believes this approach will lead to sustainable growth with high-margin operations in the second half of 2024 and beyond.