Cycle on the turn? Ziff Davis – a US peer to parts of Future, with a $1.9bn market cap – reported Q2 results on Wednesday evening, and the investor call provided much greater colour on trends in the digital advertising market. On market trends, Ziff Davis noted that its Digital Media business did deteriorate in Q2 relative to Q1, but this solely related to B2B Tech ad spend with Consumer Tech ad spend growing. Management expect Digital Media to grow in 2024 given ongoing acceleration in the gaming / health categories (among others). These are broadly similar trends as for IAC which also reported only a modest slowdown in digital advertising (to +13%) in Q2 this week which – combined with easing print declines – led its Dotdash Meredith division to grow 3%, the fastest for several years. IAC note a ‘solid & broadening’ recovery in the advertising market, and an acceleration in digital growth in Q3. AI reassurance On AI, management highlighted their analysis that of all key search terms that generate the bulk of their revenue, only 8% currently appear with an AI overview on Google, and that this percentage is falling. They have seen no impact on traffic volumes overall and noted that searches with AI overviews have higher click-through rates. Lastly, they made the point that whilst the absolute revenue benefit from AI licensing agreements may be relatively small (IAC management suggested c.$16m p.a. from OpenAI), the key is the reassurance, and hence valuation opportunity, on AI concerns. Consolidation opportunities Ziff Davis separately announced its plan to acquire online tech publisher / review site CNET for >$100m, and the CEO highlighted their desire to deploy the gross cash position on acquiring more digital media businesses, citing their conviction in the value of content and the benefits of growing scale in negotiating with advertisers (alongside lower valuations). He noted that they aim – 18 months post completion of a deal – to be paying 6x forward EBITDA or below. Future trades on just c.4x in FY26E, or c.3x ex Go.Compare.