Brent Thill: Thank you.
Christopher Halpin: Thanks Brent. Operator, next question.
Operator: Our next question will come from John Blackledge with TD Cowen. Please go ahead.
John Blackledge: Great. Thanks. On DDM Digital, you provided new engagement metrics, including core sessions, which is the bulk of engagement on your key properties. Could you talk about the third quarter growth in core sessions and kind of what you saw in October? And maybe how that plays into kind of revenue trend in 4Q and going forward? Thank you.
Joey Levin: Yes. I’ll start, which is, again, we mentioned this in the letter, but core is where we’re putting the investment and where we think the brands are that have a perpetual value and strong brand strength. And so seeing those grow is nice and seeing those accelerated growth is even nicer. The – that trend – we talked about what happened in Q3 and continued to improve in October. And that’s that includes entertainment, so that’s notwithstanding that there’s not a lot of news in entertainment right now. And so that’s an exciting place to be.
Christopher Halpin: Yes. Just to add for context. This traffic, we thought is good information for investors to highlight the drivers behind the business. One thing we flagged, as Joey said, core, the 19 key brands were investing actively behind. The total sessions is the whole portfolio and the difference, which is the spread of noncore is what drove the decline in total sessions versus the growth in core. It really comprises weaker long tail sites that were part of Dotdash or Meredith where we’re not prioritizing investments as well as third-party sites that Meredith historically did the advertising sales for that we acquired in the deal. So we expect those noncore sites to continue to attrit to probably a de minimis level so the core in total will be the same at some point.
For a sense of those trends, the core properties represented 67% of total sessions in the third quarter of ’22 and are just under 80% of total sessions this past quarter and that will only continue. So that is – we expect those core sites to continue their growth. Hope to have entertainment as Joey said, via a tailwind, and it’s a key story of the business.
John Blackledge: Great. Thanks. If I could ask one more question on DDM Digital. You guys called out the Performance Marketing. Revenue accelerated to 22% growth year-over-year in 3Q. Just kind of what drove that acceleration? Any color on verticals that were strong and that were drivers of that part of the business?
Christopher Halpin: Yes. It’s really the continued execution by Dotdash Meredith on a core thesis of buying – of acquiring Meredith, which was Meredith has tremendous brands, traffic and content but definitely underpunched its weight in modern e-commerce integrations to that content. And we talked extensively through the journey of the integration last year that some of the delays pushed out those e-commerce integrations and really bringing Dotdash’s expertise to the properties. But we’ve had them going this year and you can see the steady growth from flat to 12% to up 22% this past quarter in overall performance marketing. Across categories, this is overwhelmingly goods commerce. Consumers buying products that is driving that.
We have relationships with all the big retailers. We think we’re the biggest partner of many of those. And we think we move from strength to strength with those folks of where we’re integrating and driving. And we expect that to be second derivative positive for a while, including going into this holiday season where we’re excited about the integrations there. And Performance Marketing will be a key tailwind to monetization per session.
Joey Levin: And the only thing I’d add to that is performance marketing, especially in this environment is something where advertisers want to be and want to shift spend, and we have great inventory and great tools to be able to move that. And so I think we’re capturing that overall trend.
John Blackledge: Thank you.
Christopher Halpin: Thank you, John. Operator, next question.
Operator: Our next question will come from Justin Patterson with KeyBanc. Please go ahead.
Justin Patterson: Great. Thank you very much. Good morning. I was hoping you could elaborate on just the work ahead to improve both the service provider experience and the homeowners’ experience. It’s called that out in the letter as one area where there’s still a lot of wood to chop. Thank you.
Joey Levin: Yes. So service provider experience is – I just want to highlight again some of the work that’s been done here. It is – we talked about retention a lot. We also, I think, last quarter talked about it, but would continue to raise meaningful improvements in bad debt, meaningful improvement in the lifetime value of the service professionals coming on to our platform. And this anecdotally, the interactions we’re having with service professionals have, in tone, improved meaningfully. And they see that because I presume and we can measure that, to some extent, and they can measure this better than us that they’re getting a better ROI on our platform, which means we’ve improved pricing and which means we’ve improved quality.
And when those things are happening, pros are happier. And as I said multiple times, pros – when they’re happier, more engaged, make homeowners happier and more engaged. The key fundamental element of what a homeowner comes to our platform for is to match with the service professional. And the more – whether they match with the service professional at all is a huge cliff than the more service professionals, they match with, up to a point is very important. That increases their odds of connecting with a service professional and then that increases their odds of hiring a service professional. We’re seeing each of those levels of the funnel improve right now. And we still have a lot of tools in there that we haven’t launched yet. We’ve improved messaging, for example, and improved messaging on web and mobile and brought those things to parity.
But we have not yet really fundamentally driven the transaction more heavily towards messaging. Still, our interaction between homeowners and pros relies heavily on the telephone. That’s good. That’s helpful. Pros like to receive phone calls, but homeowners are less eager to receive phone calls than they have been historically. And so getting people to message and getting that back and forth started on our platform, I think, is an area where we still have room to improve. Also, we’re looking at acquisition economics and making sure that we’re acquiring both homeowners and Pros that are more likely to match on our platform. And so we’re taking a look at all of our marketing channels, which we’ve been doing for a while. Some stuff that was unprofitable was easy to cut and we’ve talked a lot about that.
