XLMedia set for strategic changes

XLMedia set for strategic changes

Affiliate marketing specialist XLMedia is to accelerate certain planned strategic initiatives amid concerns that the recent decision by Google to change its search algorithm could impact revenue.

Published 4th February 2020

Last month, XLMedia revealed the move led to a “significant decrease in traffic” on certain websites, which it said in turn is likely to impact its revenue.

Some 107 sites have been impacted since the initial announcement, with 84 of being tier 3 or 4 sites and the other 23 tier 1 and 2 premium sites. Most of the sites are related to online casino gambling.

XLMedia continues work with Google on the matter with a view to restoring the rankings, but has opted to accelerate certain proposed strategic changes and refocus its activities on the sustainable growth of its publishing assets.

This will involve a focus on core and profitable tier 1 and tier 2 premium sites and a significant reduction in its tier 3 and tier 4 sites and non-core business activities.

XLMedia has started to remove certain sites that are either old legacy sites or that it believes are not sufficiently compliant with Google guidelines. Certain tier 3 or tier 4 legacy sites may have had a collective negative impact on the ranking of a broader pool of its sites, XLMedia said.

Such sites will now be removed or de-indexed, but XLMedia said until this process is complete, it will not be possible to be certain the issue will be resolved.

In addition, XLMedia has ceased certain activities that following the closure of the majority of the media activity in March 2019 no longer regarded as core to the future of the business.

XLMedia said demoted tier 1 and 2 sites will see an immediate impact of lost revenues of between $1m (£771,805/€904,498) and $2m for the period. The removal and de-indexing of tier 3 and 4 sites, as well as the reduction in non-core activities, is expected to have an impact of between $3m and $5m for the 2020 financial year.

However, XLMedia said that some of these actions were included in its proposed strategic changes and some of the associate costs budgeted for during the period, which it said will in turn reduce the full impact on earnings.

"There is no question that we currently face operational headwinds, but fundamentally, I firmly believe in the underlying quality and sustainability of our business,” XLMedia’s group chief executive Stuart Simms said.

“However, I believe it is now time to accelerate a number of strategic measures that will create a short-term drag on revenue growth, but will ultimately strengthen our business by creating a much stronger and more transparent platform from which to grow.

“By proactively consolidating - and where necessary culling - our considerable tail of legacy websites and focusing a greater proportion of our efforts on monetising both tier 1 and tier 2 websites in addition to incubating new sites, we will significantly improve the medium-term prospects of the Group.

Simms added: “I feel it’s important to reiterate that we continue to operate a global portfolio of content rich websites that deliver significant value for our users. This expertise remains a core competence for our business which I fully intend to capitalise on as management seeks to both enhance and expand our business over the coming years.”