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Tight Vertical Integration is the Future of Technology AND Publishing and Social Advertising

Posted by Jon Steinberg on July 3rd, 2012 at 8:35 am

co-authored with Jonah Peretti

There is big and recent trend in technology towards vertical integration. Apple has been doing it for years, but this started as a liability because it made it hard for the company to scale and give consumers choice.

Today it has become an advantage because it makes it possible to laser focus on consumer experience by making everything - processor, hardware, OS, and software all work together seamlessly. Google contracting with Asus on the Nexus 7 tablet, and Microsoft building the Surface tablet as integrated products are two big signs that vertical integration is the new standard for consumer technology. (This is to say nothing of Google's purchase of Motorola Mobility).

At Buzzfeed, we have proven that this also holds true in digital publishing and social advertising. We have have built our own CMS, our own realtime stats system, our own optimization algorithms, hired our our team of reporters, built our own ad platform, and integrated all the piece together into one product that works for our readers and our brand partners. Contrast this to most publishers who have a third party build each layer for them: the CMS is by one company, the stats by another, the related links by a technology vendor, the optimzation by another, etc. It is easier to build a site this way but it makes it hard to really control the total experience to make it great for consumers and brands.

When we first started offering social advertising to clients two years ago, there was some skepticism that people would actually share branded content. Now we have done hundreds of campaigns, and every single one has resulted in sharing and earned media. Not to mention third party research showing that social advertising on our platform far outperforms banners on brand lift metrics.

Our end to end approach is what makes it possible but skepticism was understandable given the state of the industry. Usually one agency creates the ad, another buys the media, a few publishers traffic it, another company measures the results, nobody sees the big picture, and good ideas get lost.

Working with BuzzFeed requires that everyone collaborate on an integrated campaign with creative, media, and measurement all tightly integrated. The results speak for themselves: CTRs that are 10x to 20x industry averages, earned media averaging 38% (median) to 58% (mean) most recently for campaigns concluding in Q1 (with a minimum budget level), and enormous brand lifts. Tight vertical integration isn't just the future of tech, it is the future of publishing and advertising as well.

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