Sarah Sluis and Ryan Joe contributed.
NBCUniversal’s $200 million investment in Vox Media and its expected (though unconfirmed) $200 million investment in BuzzFeed isn’t the big broadcaster’s first date with a digital publisher.
It had a disastrous marriage with top women’s lifestyle publisher iVillage, which it acquired for $600 million in 2006 and eventually merged into its flagship TODAY brand in 2013.
But NBCUniversal’s multimillion dollar investments in Vox and BuzzFeed are by comparison conservative – and they are also the newest in a line of allegiances of traditional media giants with new media companies.
That list includes Disney buying digital video multichannel network Maker Studios, and 21st Century Fox and A&E each acquiring stakes in Vice for 5% ($70 million) and 10% ($250 million), respectively.
Vice, which has a show through HBO and its own cable channel through a rebrand of A&E’s H2 network, might portend the possibilities for Vox and BuzzFeed.
Vice’s partnership with A&E, for instance, gives the former new distribution channels and the latter audience and reach.
NBCUniversal certainly sees the opportunities - its CEO Steve Burke said in a statement it would be “building a collaborative partnership involving editorial content, advertising and technology.” And these assertions align with a plan laid out by its head of ad sales Linda Yaccarino at the 2015 Digital Content NewFronts in May.
“If you think the upfront season begins when TV companies launch their shows, boy do you need to catch up,” she said. “We’re pursuing new licensing, content and distribution deals across desktop, mobile and over-the-top … [as the appetite for] new consumer experiences shifts.”
At the time, Yaccarino was heralding a partnership with AOL, prior to its acquisition by Verizon, in which AOL’s sites and apps would syndicate videos from NBCUniversal’s various networks (Bravo, CNBC, USA, MSNBC, etc).
Could something similar eventually happen for BuzzFeed (which already collaborates with CNN) and Vox? And could it also loosen up the way NBCUniversal inventory is bought and sold across its digital partner publishers?
NBCUniversal could enable higher returns for advertisers at the same or lower acquisition costs, said Brad Smith, SVP of revenue and operations for Cox Media’s supply-side platform business, Videa.
“At the crux of it, linear media has always had these silos in terms of how you bought inventory,” said Smith. “As performance drives media, [TV networks] want the ability to package their inventory with other sets of inventory to improve efficiencies in the market and offer the best buying experience.”
This is important since the broadcast community has been plagued by declines in ad spend. Data from Standard Media Index showed June’s upfront sales figures dropped 19%. Broadcast ad spend in June declined 10% YoY while cable fell 3%.
While NBCUniversal claimed it had, by contrast, seen a 2% increase, it shouldn’t feel too secure. Even ESPN, which industry insiders thought was relatively immune due to its focus on sports, felt the pinch of lost subscribers – which of course threatens its ad revenue.
“If you look at the trends how TV viewership has changed and become fragmented, [NBCUniversal] is trying to hedge their bet and have a heavier portion on digital because the TV business is challenged,” said About.com CRO Brian Colbert.
That NBCUniversal is reinventing itself through partnerships with nouveau digital publishers aligns with its TV upfront themes around data and digital – themes that its peers also embraced – all in the name of better audience targeting.
Consequently, industry experts predict alliances between broadcast conglomerates and big digital publishers will ramp up.
For Vox and BuzzFeed, a multi-million dollar infusion could be invested into content. As mentioned earlier, both could gain new distribution outlets.
NBCUniversal’s properties actually have greater scale than Vox and BuzzFeed. In June, NBC News Digital – which includes TODAY, E! Online and NBCNEWS.com – had a total of 94 million uniques, according to comScore. BuzzFeed had 80 million uniques and Vox Media netted 54 million uniques. (Though Vox and BuzzFeed have strong brand recognition with millennial audiences, which appeals to advertisers and which in turn likely played a role in NBCUniversal’s investment.)
The other benefit Vox and BuzzFeed could reap from their respective partnerships is the ability to build better ad packages. At this juncture, one can only speculate what those packages might look like, or if they'll even exist.
“There could be some good tie-ins across two verticals in particular – politics/news and pop culture,” noted Greg Manago, an executive producer at Mindshare Content+ and Entertainment. “Vox and BuzzFeed literally have the pulse of pop culture on a moment-by-moment basis, and NBC plays in that space with their editorial content.”
By creating a multiplatform offering centered around audience interests, Manago predicts brands can “lean in” to a certain interests or topics to build affinity over time.
And dipping into Vox and BuzzFeed's respective audiences could unlock larger deals for NBCUniversal's advertisers. Krishan Bhatia, EVP of digital strategy and operations for NBCUniversal, told AdExchanger in March clients were increasingly conducting business on a “converged basis” and wanted to evaluate incremental reach they could drive through digital, social, mobile or over-the-top.
Will this cross-pollination ever come to fruition? There would have to be some very delicate coordination with the relevant sales teams. Assuming NBCUniversal's sales staff cross-sells inventory from its digital publisher partners (a big If), Vox and BuzzFeed sales reps would have to adapt to a corporate broadcast sales structure - or vice versa.
Plus, there’s the fact that BuzzFeed strictly sells native advertising, and Vox too focuses on native, sponsored posts, which have different sales processes than banner ads or TV ads.
NBCUniversal, Vox and BuzzFeed did not respond to requests for comment.