Consider that Business Insider has seven different editions of the website: one in the US, one in the UK and five in Asia. An international company like Axel Springer might be interested in leveraging the Business Insider brand to develop more editions around the world, Nisenholtz predicted.
And, in fact, Axel Springer will add a German edition in Q4 of this year.
“The Huffington Post has gone out and used the [content management system], the selling processes and distribution in different countries,” Nisenholtz said. The same practice will expand Business Insider’s reach and turn it into a global brand.
Business Insider’s acquisition is only the latest in a series of investments and acquisitions of digital pure plays by larger media companies.
NBC Universal made a $200 million investment in Vox and a $200 million gamble with BuzzFeed, and A&E Networks took a $250 million stake in Vice. On the smaller side, Elite Daily sold for $50 million to the Daily Mail earlier this year, and Scripps Networks Interactive led a $50 million investment in Refinery29.
The media companies that have garnered the highest valuations – Vox, Vice, BuzzFeed and now Business Insider – haven’t just built audiences, they’ve built brands. That combination of brand and scale, along with a technical infrastructure, is what will give the best media brands a sustained competitive advantage, predicted Troy Young, president of Hearst Magazines Digital Media.
And the frenzy of investment and skyrocketing valuations will likely increase before it dissipates.
“Once you start to create scarcity, that compels investors to act, which increases pricing,” Wieser said.
Additionally, BI, like many of its digital brethren, has a growing slate of video content, allowing it to angle for TV media dollars.
There is also a “content creation” angle for Axel Springer’s services offering to brands.
“The ability to build big digital audiences is going to be important as a marketing function for premium content,” Young said.
Being able to create and distribute video content that reaches millions of views, for example, will set apart the great media companies from the middling ones.