USA Today Co. says shifts in search, tied to AI summaries, cut into its digital ad revenue in the third quarter

USA Today Co., the US newspaper publisher formerly known as Gannett, reported its third-quarter results on November 5. Revenue fell 7.4% from a year earlier to $519.2 million, or 5.8% on a same-store basis. The company posted a net loss of $4.6 million, compared with $39.2 million a year earlier. Adjusted EBITDA fell to $36.6 million from $57.2 million.

Search changes and advertising

In the earnings release, chief executive Mike Reed said the company had felt "the impacts of the changes in consumer search" in the quarter, along with some inflationary pressure. Poynter links those changes to readers getting AI-generated summaries on Google and other platforms instead of clicking through to articles. On the earnings call, Reed said the damage was concentrated in indirect advertising, meaning programmatic ads and sponsored recommendations. He described this as a business of about $100 million a year, less than 5% of revenue, and said it fell 32% year over year in the third quarter.

Reed also said search referral traffic was lower than a year earlier but had not fallen further between the second and third quarters. Average monthly unique visitors rose to 161 million from 158 million in the previous quarter. Digital revenue totalled $249.3 million, or 48% of the total, and digital advertising brought in $75.0 million. The company now expects digital to pass half of revenue during 2027. Poynter notes that the earlier target was this year.

Betting on AI as well

USA Today Co. is also pursuing AI revenue. Chief financial officer Trisha Gosser said digital other revenue, which includes AI partnerships, rose 24.8% to $21.3 million. Reed said he expects to announce at least one and possibly two more AI licensing deals before the end of the year, while acknowledging that signings across the industry have slowed. Executives also pointed to a partnership with Palantir on reader and customer data. Poynter reports that unions at dozens of the group's papers have criticised that deal. Other plans include using AI to offer more content as video and selling branded content designed to be found on AI platforms.

Costs and Google

At the end of the quarter the company put in place a cost-reduction program worth $100 million a year, which Poynter says included layoffs. In its separate lawsuit against Google, the company says a court has largely denied Google's motion for summary judgment, and a trial is set for April 5, 2027. USA Today Co. puts its damages through 2024 at $901 million, before any trebling.