How BuzzFeed Is Using Automated Ads to Power Growth

BuzzFeed’s four-year-old programmatic business is the engine of its advertising growth. That muscle will come in handy as publishers and marketers enter the usual frenzy of the fourth quarter against the backdrop of the delta variant threatening to derail ad creative and campaign budgets. On its road to becoming a public company, the publisher wouldn’t break out specific programmatic revenue, but overall ad revenue for its second quarter increased 79% to $47.8 million. Advertising makes up 53% of its total second-quarter revenues with growth driven by higher pricing on programmatic ads and an increase in the total number of impressions sold. Driving the higher pricing and more impressions is BuzzFeed’s answer to the dwindling efficacy of third-party cookies. Lighthouse, announced in March, helps increase marketers’ audience scale by finding previously unaddressable audiences and cutting down on marketing waste, ultimately selling more effective campaigns that nurture repeat business. Now, BuzzFeed uses some aspect of Lighthouse for almost all clients. “The pandemic has taught us to be flexible,” Ken Blom, svp of ad strategy and partnerships told Adweek, who added that buyers always had access to first-party data through BuzzFeed’s private marketplaces and direct deals. But revenue from selling on the open marketplace is still a big part of BuzzFeed’s business, and buyers there still rely on third-party data. Chief Subscriptions Officers Have a Critical Role to Play in Advertising Efforts Lighthouse on full beam Today, 66% of publishers are driving revenue through their first-party data, according to OpenX research which found that 21% of publishers said first-party data was "very important” to revenue today. Universal IDs are not our strategy, our strategy is cohorts and contextual. Come talk to us and we’ll tell you what we have.—Ken Blom, svp of strategy and partnerships, BuzzFeed Advertisers using Lighthouse are consistently getting between three and four times increases in click-through rate compared with using just third-party data sources, according to Blom. The addition of HuffPost and Complex Networks to BuzzFeed’s audience pool means it’ll have fewer scale woes than other publishers, making it less reliant than others on alternative identifiers like Unified ID or LiveRamp's Authenticated Traffic Solution. Here, BuzzFeed is dipping its toes, going through the legal process with a couple but wouldn’t share which. “Universal IDs are not our strategy," said Blom, "our strategy is cohorts and contextual. Come talk to us and we’ll tell you what we have.” Publishers can make a decision about what ID solutions they integrate, but that only goes so far without advertiser demand, not to mention meeting ad-tech vendors and giants like Google somewhere in the middle. Google’s deadline extension for cookie collapse gives BuzzFeed more time to test capabilities of its own first-party data solutions combined with context, rather than scrambling to release a minimum viable product that marketers might question. Conversations haven’t slowed, as many fear, Blom said, but clients' readiness is a broad spectrum, those who are willing to test are still experimenting. Performance from programmatic pipes With cookies going away and contextual targeting on the rise, the thinking goes that ad buyers would do well to have more direct conversations with publishers to know if, say, the news team is setting up a health desk. “The pendulum is swinging back to direct in some way," said Blom. "The programmatic pipes are good, but how do we make them more performant?” Due to client demand, BuzzFeed has tinkered with a three-year-old ad unit Spotlight to focus on the features inside, what content runs next to it and what the creative looks like. It’s rolled up other ad unit functions that were across the site into the ad, features like streaming video files, full-screen expansion capabilities and what it calls customizable and interactive solutions. These include more tracking features, real-time performance and, of course, weaves in its first-party data so it can run comparative tests and use machine learning to build audience cohorts. Driving performance and utility, the ultimate test in advertising ROI, will help it maintain a growth trajectory if it can prove its programmatic ads work. This strategy of juicing up ad units makes sense for BuzzFeed to keep up with the post-cookie world since it has scale but could struggle to get people to share email addresses to access content (commerce features are a surer bet), said Dan Elddine, svp, data and technology, North America, Essence. “We are starting to see a bifurcation among publishers talking about identity and first-party data solutions versus those talking about ad units and inventory types,” said Elddine. So far, the ad unit has gone down well with entertainment and retail clients. One unnamed entertainment client used the unit to promote a video game launch, growing top-of-mind awareness by eight points. Another campaign advertising a movie release including the date drove an increase in awareness by over 14 points. “Advertising can fuel revenue diversification, it's a foundation and an anchor," said Blom, "it helps what we do with licensing and commerce, if you have advertising without diverse revenue streams you’re leaving money on the table."

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How Former Programmatic Holdout BuzzFeed Is Using Automated Ads to Power Growth

Overall ad revenue for its second quarter increased 79% to $47.8 million

Lucinda Southern

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Lucinda Southern