The owner of LadBible and Betches has issued its second profit warning in less than two months, becoming the latest publisher to suffer from declining search traffic as artificial intelligence reshapes online discovery. LBG Media Group now expects full-year underlying earnings to fall between £15 million and £20 million, down from a previous forecast of £22 million issued in April. The company also cut its sales outlook to between £100 million and £107 million, compared with £110 million in its earlier guidance.
Shares Plunge on Weak First-Half Results
Shares in LBG Media tumbled more than 40% in early Tuesday trading before recovering to around 22% lower. The drop followed the disclosure that indirect revenues—derived from the company's own websites and social media revenue-sharing agreements—slumped 41% in the six months to March 31. As a result, pre-tax profits plunged 79% to £1.8 million in the first half, while underlying earnings fell 34% to £8 million. This came despite direct revenues nearly doubling to £37.6 million.
Industry-Wide Shift Away from Social and Search
The Manchester-based publisher has been hit hard by changes in how users discover content. Facebook's algorithm changes, which deprioritise news links, have reduced traffic for years. More recently, the rise of AI-powered search has compounded the problem. Google's AI Overviews feature, which provides summaries at the top of search results, has significantly reduced click-through rates to publishers' websites.
LBG Media chief executive Solly Solomou acknowledged the challenges: “While our strategy to drive repeatable revenue growth is making good progress—with our direct revenue streams almost doubling in the first half—our indirect business was hit harder than expected. As a result, we have lowered our forecasts for 2025-26 and made changes to stabilise our web business, alongside our steps to capture the further opportunity in our direct markets.”
Pivot to Direct Revenue and Cost Cuts
Solomou emphasised the company's pivot toward “long-term value” by boosting direct revenues, cutting costs, appointing new leadership, and leveraging AI to improve processes and adopt a data-driven approach. He said: “LBG Media’s planned shift to more predictable direct revenues with greater visibility on earnings is accelerating. We are seeing an increasing share of wallet from large blue-chip clients, who see our relevant and engaging content on premium digital platforms as an effective way to reach young adults.”
The company's direct revenue streams—which include branded content and advertising sold directly to advertisers—have been a bright spot, nearly doubling in the first half. However, the steep decline in indirect revenue has overshadowed this progress, forcing the company to revise its outlook downward.
Broader Implications for Digital Publishers
LBG Media's struggles reflect a wider trend affecting digital publishers. The combination of social media algorithm changes and the rise of AI-generated search summaries has made it harder for media companies to attract traffic from external sources. Many publishers are now racing to diversify revenue streams and reduce reliance on third-party platforms.
The company's revised guidance for 2025-26 suggests that the recovery may take time. Analysts noted that while the pivot to direct revenue is promising, the speed of the decline in indirect revenue caught the company off guard. The stock's volatility underscores investor uncertainty about the pace of the transition.
