The group behind LadBible and Betches has warned over profits for the second time in less than two months as it becomes the latest publisher to suffer slumping search traffic amid the shift towards artificial intelligence (AI).
LBG Media saw shares plunge by more than 40% at one stage in Tuesday morning trading, before settling around 22% lower after it revealed so-called indirect revenues – from its own websites and social media revenue-sharing agreements – slumped 41% in the six months to March 31.
This left pre-tax profits plunging 79% to £1.8 million in the first half, with underlying earnings down 34% at £8 million, despite a near-doubling in direct revenues to £37.6 million.
The Manchester-based social media publisher alerted over annual profits in April, lowering expectations to £22 million, and said it now expects underlying earnings to come in lower still, at between £15 million and £20 million.
It also cut its sales outlook to between £100 million and £107 million, down from £110 million in its April guidance.
It comes as media firms have suffered a sharp drop-off in search traffic after Facebook changed its algorithm to deprioritise news links across its platform in recent years.
This has been compounded recently by the switch to AI over traditional web searches, with Google launching its AI Overviews summary at the top of results, which means far fewer click-throughs to publishers’ online content.
LBG Group chief executive Solly Solomou said: “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.”
But he said the group was pivoting towards “long-term value” with a focus on boosting direct revenues, while also taking action to cut costs, put in place new leadership and use AI to help improve processes and take a data-driven approach.
Mr Solomou 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.”