Online publisher VerticalScope Inc., which operates hundreds of websites and online forums, is in the midst of an effort to “realign” its resources, including the elimination of roughly 30 jobs this week. The company confirmed the cuts and said that it is working to respond to changes in the digital-media landscape.
The Toronto-based company has been a major driver of digital revenue growth for Torstar Corp. since the Toronto Star publisher purchased a majority stake in the company in 2015 for $180-million. VerticalScope’s properties include sites such as AutoGuide.com, PetGuide.com and AllOutdoor.com, as well as many forums targeting niche subjects including fishing, tractors, dog-breed ownership, cricket and living with certain health conditions. It has 225 employees.
VerticalScope has been growing through acquisitions, including a $12-million deal last week to acquire consumer forum RedFlagDeals.com from Yellow Pages Ltd.; and the acquisitions in June of cycling websites MTBR.com and RoadBikeReview.com, as well as do-it-yourself site Fixya.com. Last year, the company purchased online marketplace VarageSale.com.
In the first half of this year, traffic to many of its sites has been affected by changes to Google’s algorithm, Torstar executives said on recent conference calls to discuss earnings. The company will be slowing its acquisitions in the coming months, VerticalScope founder and chief executive Rob Laidlaw wrote to employees in a memo obtained by The Globe and Mail.
In February, the company cut roughly 15 jobs, according to people familiar with the matter, mostly in its editorial department; this week’s cuts affected five more editorial positions, as well as positions in marketing and sales, sources said.
The cuts reflect the company’s strategic goals for this year, including putting more emphasis on sites where users produce much of the content – such as forums, which represent more than 90 per cent of its traffic – and less on “portal” sites, where content creation is more costly.
“The reality today is that CPMs [the cost per thousand impressions advertisers pay for ads] on the portal side have come down nearly 50 per cent, and the cost of creating that content continued to rise,” Mr. Laidlaw said in another memo in February announcing the first cuts.
VerticalScope’s revenue grew 16 per cent on a U.S. dollar basis in the most recent quarter, according to information from Torstar’s earnings report, with growth driven by acquisitions.
While confirming the headcount reduction, VerticalScope chief investment officer Chris Goodridge said in an e-mail that the company is hiring in other areas of the business.
“From time to time we do re-align the workforce to stay ahead of the rapidly changing digital media landscape,” Mr. Goodridge said.
In response to a question during the latest conference call, Torstar chief financial officer Lorenzo DeMarchi said the recent dip in traffic did not affect the company’s confidence in VerticalScope’s business model. Torstar CEO John Boynton then emphasized that the effect of Google’s algorithm change highlighted concerns about the market dominance of tech giants such as Google.
“When any one company, globally or domestically, has a market share that big and can make changes that affect other companies ... to that degree, it does raise some big questions on the regulatory front,” Mr. Boynton said on the Aug. 1 call. “… It would be interesting to see what the federal government thinks about that.”