NBCUniversal has invested $200M in BuzzFeed, with both companies looking for a “strategic partnership.” With this deal, NBCUniversal likely hopes to gain access to BuzzFeed’s younger—and exponentially growing—audience. BuzzFeed seeks money to grow and the opportunity to leverage NBCUniversal to widen the reach of higher-value content (like TV or video from BuzzFeed’s Motion Pictures arm).
WHY IS THIS HAPPENING?
The deal aligns with quickly accelerating marketplace trends, including:
- Changing Content Consumption: As millennials in particular trade traditional TV-based broadcasts for newer media, the older big media networks—now including NBCUniversal—are seeking emerging digital partners (e.g. Time Warner and Internet TV vendor iStreamPlanet, A+E Networks and Vice Media, 21st Century Fox and Draft Kings). The upcoming Olympics may be one of the first times we see this deal in action for NBC. Furthermore, even new media can’t satiate content appetites, evidenced by BuzzFeed’s deals with Yahoo!, Facebook, Snapchat and Apple to host BuzzFeed content in news feeds and apps.
- Growth of Content Marketing: 70% of people would rather learn about products/services through content than ads (Inc. 2014). Brands are already heavily focused on content marketing; it was the number one growth area for companies in 2014, with 74% boosting budget (Econsultancy, 2015). The average B2C organization spends 25% of marketing budget on content (Content Marketing Institute, 2015). BuzzFeed is seeking bigger screens to surface its content. While we typically see a migration from long-form content to short-form, NBCUniversal/BuzzFeed is the opposite.
- Growth of Native Advertising: With 27 million pieces of content shared online each day, breaking through the clutter to engage consumers in the right moment is critical to success. Native advertising has enabled brands to distribute fresh, relevant performance content in the right time and right place. U.S. native advertising spend (driven by content marketing) is expected to rise 34% to $4.3B in 2015 (eMarketer). BuzzFeed has been a poster child for native advertising, and this deal will create new native opportunities.
- Marketing Dollars Shift to Video: As content increasingly becomes the key to engagement, publishers are testing which content resonates best. Facebook and Twitter, in particular, are focusing on video ad products, and BuzzFeed may now be seeking to better monetize video content.
WHAT DOES THIS MEAN for ADVERTISERS?
In recent years, brands looking to engage millennials have turned to BuzzFeed for its highly prominent native advertising opportunities:
BuzzFeed seeks $250M in revenue in 2015 (up from $100M in 2014) (All Things Digital, 2013). Currently, BuzzFeed’s revenue comes largely from native advertising—the “Top 10” or “14 Signs” article-and-image variety, embedded within the stream of similar organic content. But could this format be getting a bit old? If the NBCUniversal partnership does enable BuzzFeed to widen the reach of higher value original content—TV, movies—BuzzFeed may (1) gain licensing revenue from that content (much like how Vice licenses content to HBO) or (2) monetize that content directly with new advertising opportunities.
And in the spirit of BuzzFeed, this advertising could be native-style—matching the visual design of the platform it lives on, with the look-and-feel of organic content. This means that many brands would have to elevate their content production capabilities, focusing on creating or repurposing video.
With potential new opportunities stemming from the BuzzFeed/NBCUniversal partnership, content is becoming even more valuable than it already is.
For more info on Content Marketing, Native Advertising or BuzzFeed/NBCUniversal please contact your performance account team today.