Research Briefing: BuzzFeed pivots business to AI media and tech as publishers increase use of AI

89% of publishers use AI

BuzzFeed CEO Jonah Peretti outlined his vision to turn the flagship BuzzFeed publication into an AI-driven technology and media company in his annual letter to shareholders last week. At a time of declining referral traffic and other audience attention challenges, Peretti’s solution is for BuzzFeed to focus on its own platforms to drive traffic and pursue generative AI chatbots as a new content format.

“Resetting our strategic direction to focus on our owned and operated sites and apps allows us to directly benefit from the application of technology to our business, especially GenAI…. BuzzFeed, Inc. is stronger and poised to capitalize on the emergence of GenAI to build the defining media company for the AI era,” Peretti wrote.

Whether this will lead to a sustainable business model for a legacy digital publisher remains to be seen.

AI technology is becoming ingrained in media and marketing workflows and processes at a rapid pace, even just from one quarter to the next, according to Digiday+ Research surveys of publishers, agencies and brands conducted throughout 2023. In Q2 2023, just under half of publishers (49%) were using AI. By Q3 2023, 89% of publisher pros told Digiday their company was using AI — a big difference over the course of just one quarter.

However, the “pivot to AI” may be the new “pivot to video” of years’ past (which wasn’t a great strategy for most, to put it kindly). BuzzFeed’s Peretti himself once touted the opportunities in short-form video and creator networks. But that strategy hasn’t led to strong business outcomes for BuzzFeed — its 2023 revenues, excluding Complex, declined 26% to $253 million, Peretti wrote in the letter to shareholders.

Insights and stats:

• As of Q3 2023, publishers were more likely to use AI for internal purposes than external ones. Thirty-eight percent of publisher pros said in Q3 that their companies were using generative AI, specifically, for internal and back-end applications, while 25% said they were using the technology for audience-facing applications.
  
• When it came to specific AI applications, 70% of publisher pros said in Q3 2023 that their companies were using generative AI applications, while 35% of publisher pros said their companies were using voice-to-text technology.
  
• “We could have become more of a media company, more of a content company or more of an agency to make content for clients. We chose to move in the opposite direction to become more of a tech company. The reason is because the ‘tech way of thinking’ — the implicit ideas that underlie the industry — are what will end up defining our shared future. — Jonah Peretti, CEO of BuzzFeed, in his letter to shareholders

Read more about how publishers, brands and agencies are using AI

Digiday+ Research digest

Marketers’ use of X, formerly Twitter, trails far behind its social media competitors, and marketing spend on the platform has dropped dramatically. This is according to a first-quarter Digiday+ Research survey conducted among brand, retailer and agency professionals. Just under a third of agency pros (32%) said their clients currently use X, and an even smaller 27% of brand and retailer pros said their companies use the platform. For context, 94% of agency pros and 96% of brand and retailer pros told Digiday they use Instagram, and 55% of agencies and 73% of brands and retailers said they use TikTok.

The stats:

• Marketing spend on X has seen a sharp decline. Twenty-six percent of brand and retailer pros and 24% of agency pros said in Q1 2024 that their companies or clients spend at least a very small portion of their marketing budgets on X, down from 61% of brands and retailers and 65% of agencies in Q1 2023.
  
• The drop in marketing spend on X essentially follows the timeline of Elon Musk’s takeover. Musk acquired Twitter at the beginning of Q4 2022. In Q1 2023, 61% of brand pros said they spent at least a little on the platform. In July 2023, Musk rebranded Twitter to X, and in Q3 the percentage of brands who said they spent at least a very small portion of their marketing budgets on X plummeted to 24%.

• Brand safety is marketers’ biggest challenge on X. Thirty-nine percent of brand, retailer and agency pros said in Q1 2024 that brand safety concerns are their biggest challenge with the platform.

Read more about marketers’ use of X

Agency executives expressed their frustrations with Meta’s frequent ad platform bugs and lack of proper compensation for ad overspending at a recent Meta day in Slovenia. Some said that when they complain about overcharges, the social network tends to offer credits rather than actual refunds for financial losses caused by bugs. And those losses can be staggering. When marketing agency Hype10 was hit by bugs in February, CPMs shot up from an average of 15 to 150 for about an hour. Despite those challenges, a Digiday+ Research Q1 2024 survey found that Meta’s social platforms (minus Threads) still hold the top spots among social media marketing channels used by agencies.

Insights and stats:

• Ninety-four percent of agency professionals said that their clients currently use Meta’s Instagram, making it the No. 1 social media channel, while 79% of agency pros said their clients use Meta sibling Facebook, which puts it in second place. Google’s YouTube came in third, with 59% of agency pros saying their clients currently use the platform.

• “It’s very frustrating because we’ll inform our clients that an issue has arisen, then we’ll notify our Meta rep to explain that we are seeking recompensation from Meta for the overspend. But what ends up happening is, you don’t really hear anything [back from Meta] about it.” — Max Langlois, founder and CEO of Hype10
  
• “Our ads system is working as expected for the vast majority of advertisers. We recently fixed a few technical issues and are researching a small amount of additional reports from advertisers to ensure the best possible results for businesses using our apps.” — a Meta spokesperson who spoke with Digiday about the bugs on Meta’s ads platform

Read more about agencies’ use of Meta’s platforms

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