What NBCU's Investments in BuzzFeed, Vox Could Mean for Advertising
NBCUniversal has been on a path of what some are calling "buying millennials," announcing a strategic investment in BuzzFeed on Tuesday, which follows a similar investment in Vox Media last week. While these deals are surely a play in attracting younger consumers to NBCU's TV and digital assets, they also present an opportunity to expand the company's data-driven ad products.
NBCU is making a $200 million equity investment in BuzzFeed, forming a partnership with the company that could include TV collaborations, movies, the Olympics and joint partnerships with ad agencies and brands, said Kenneth Lerer, BuzzFeed's executive chairman, in a release.
Spokeswomen from NBCU and BuzzFeed declined to comment on specifics of the deal.
This comes less than a week after the company invested the same amount in Vox Media, which owns Vox.com, TheVerge.com and the sports blog network SB Nation.
"It's quite a brilliant combination: NBCU gives BuzzFeed and Vox the credibility they crave, and BuzzFeed and Vox give NBCU the younger audience and diversified and portable content it needs, along with a proven methodology that will allow them to create better content optimized by psychographic insights and then sell great co-branded content against 'audience parting' data," said Jesse Redniss, co-founder, Brave Ventures, a media consulting and investing firm.
There's no doubt there's a sexiness to companies like BuzzFeed and Vox for traditional media companies. Similarly, A&E Networks invested $250 million in Vice Media last summer.
There's the built-in audience of young viewers and potential to adopt some buzzy, shareable content for NBCU's own properties. News could also be one such area ripe for partnership.
"Vox and BuzzFeed to some level are news sites," said Alan Wolk, senior analyst at The Diffusion Group, and could help NBC News' relevance among a younger generation.
Mr. Wolk said NBC News could learn from BuzzFeed and Vox how to package news clips that appeal to millennials.
BuzzFeed and Vox can also be used at marketing tools for NBCU's networks to promote their programming. Mr. Wolk said TV networks have had trouble marketing shows to younger audiences who aren't watching appointment TV, and therefore, aren't seeing promos. BuzzFeed and Vox can potentially serve as promotional vehicles where NBCU can create tie-ins or sponsored content, he said.
Then there's the possible synergies in advertising.
To combat some of the device usage that takes place during commercials, Mr. Wolk said NBCU can create ad packages that include ads to run on those sites at the same time they are airing on TV.
Both BuzzFeed and Vox have been working with advertisers in creating native content and using data to serve these customized ads to its audience. "BuzzFeed is all about adapting and its real breakthrough has been the development of an ad model that works for today's audiences -- the native ad," Mr. Redniss said.
And in April the company unveiled "Pound" (Process for Optimizing and Understanding Network Diffusion), its system for tracking how content spreads, to advertisers. It's a process that BuzzFeed has said does more than just count social media shares and clicks, actually following a story from one user to another beyond social networks to other online portals like email and chat.
BuzzFeed is looking to apply Pound to advertising by using the data to help the company's creative services team produce more shareable branded content.
At Vox, the company recently made its audience ad-targeting platform dubbed "Chorus" available to advertisers. The platform enables advertisers to use Vox's proprietary data and insights from audience behaviors around its content to create optimized branded content.
And for its part, NBCU has been introducing data products like its Audience Targeting Platform, which incorporates set-top box data and information from other sources to identify top performing ad inventory for select ad categories across NBCU's portfolio.
"So, Vox has some very attractive assets in the form of great talent, technology and methodology that can plug directly into [BuzzFeed's] Pound and NBCU's ad and data approaches," said Mr. Redniss, who formerly led digital for NBCU's USA Network.
NBCU's deals with BuzzFeed and Vox would mean NBCU not only has access to Comcast set-top box data and its own digital data, but also BuzzFeed and Vox data and audience targeting capabilities.
"In effect, NBCU can enhance its treasure trove of audience insights data with a rich data set that has very little crossover with its existing data set and now bring this across every screen," Mr. Redniss said.