BuzzFeed Inc., Dotdash Meredith, Gannett, Arena Group.
A media company executive briefed shareholders on plans to use generative AI technology for content creation and cost-saving opportunities. For example, using technology to create content faster, gain brand sponsors, and streamline workflows. But their enthusiasm for the potential of generative AI to improve their business came amid disappointing Q4 ad revenue, and discussions about AI technology could have been a way to soften the blow. .
Daniel Kurnos, Internet, Broadcast and Media Analyst at Investment Banking, said: Company The Benchmark Company. Management has discussed automating content production and reducing content production and operating costs, he said. But media executives were vague on the details of how much money AI would save and make at their respective companies.
“I hear some executives are talking about a careful testing phase, but I think everyone is waiting to see how the technology evolves before committing fully either way. added Kurnos.
Increase cost efficiency with generative AI
Media companies have been outlining strategies to cut costs since last summer’s recession in the face of macroeconomic pressures and a sluggish advertising market, but a series of recent earnings calls have seen many CEOs It was the first time I pointed to AI as a way to achieve some of these things. the goal.
Of course, it’s also the first earnings release since the debut of OpenAI’s ChatGPT. Generative AI has become the latest buzzword balloon grabbed by executives to boost corporate prospects, following web3/metaverse and blockchain/cryptocurrency.
“You said you’re thinking about the cost side and some of the early stages of content development. [AI] IAC CEO Joey Levin said at the company’s earnings call on February 14: But it is certainly at the forefront of our minds and we see real opportunities for innovation there. ”
Publisher management continued to look for ways to reduce their own costs, especially as advertising revenue fell last year.Almost all publishers included In this Digiday report Advertising revenue in the fourth quarter declined between 3% and 27% year over year. IAC’s Dotdash Meredith reported that Q4 programmatic CPM dropped 10% to 15% year-over-year on average. Gannett’s digital advertising revenue fell 20.5% year-on-year in the fourth quarter. The company has let go of staff and outsourced certain business functions to reduce costs.
Gannett CFO Doug Horne said on the company’s earnings call on Feb. 23 that it plans to save “at least $220 million” this year. Part of that plan is to use AI to “be more efficient.”
Gannett says he’s made “recent investments” in AI and machine learning tools to simplify routine tasks such as quickly selecting and cropping images, personalizing content, and collecting datasets to bring various sporting events anywhere. I said I could let the reader know what to watch.
The Arena Group CEO Ross Levinsohn recently announced partnerships with AI companies such as Jasper and OpenAI.
Levinsohn, who said profitability and operating cash flow will be the company’s focus this year, noted “improved productivity” since testing the use of generative AI. When the Wall Street Journal reported in his February that The Arena Group was using AI to create articles, Shares are up 18%.
“We do not intend this to replace talented writers and editors. These are just a few examples of how we are aggressively adjusting our cost structure to ensure we meet our adjusted EBITDA targets.”
Arena Group reduced total operating expenses in the fourth quarter by 30% year over year to $35.6 million. The company’s advertising revenue in the fourth quarter increased 46.9% year-on-year. The company won many titles last year, including Parade, Men’s Journal, Men’s Fitness and other avid brands.
Using AI for Revenue Opportunities
BuzzFeed Inc. CEO Jonah Peretti said in the company’s March 13 earnings call that AI-powered content “will move from the research and development stage to become part of our core business.” He hinted at more announcements at BuzzFeed’s Virtual Investor Day in May. 11 last year. BuzzFeed’s ad revenue fell 27% in the fourth quarter.
BuzzFeed President Marcela Martin said BuzzFeed’s AI-powered Infinity quiz, launched last month, was the beginning of the company’s adoption of AI to “improve viewer experiences and open up new avenues of monetization.” is outlined.Custom quiz to guess readers and houseplants Sponsored by Scotts Miracle-Gro.
“We look forward to leveraging AI to provide our clients with more innovative and brand-safe partnership opportunities like this,” she added. BuzzFeed stock hits seven-month high in January When the journal first reported that the company was using generative AI to create quizzes. However, Martin has calibrated investor expectations about how quickly monetization of these content formats will grow, saying it’s part of the company’s long-term business growth plans.
But on the content creation side, the recent integration of AI tools into BuzzFeed’s content management system has allowed more writers to create AI-generated content, Peretti told media on the earnings call. explained to analysts. “Scalability is just beginning,” Peretti said.
When Craig-Hallum Capital Group analyst Jason Kreyer asked about BuzzFeed’s plans to monetize short-form video, Peretti said AI technology could help automate, improve, and streamline the process of creating animated content. said.
Impact on SEO traffic
Barclays analyst Ross Sandler asked IAC’s Levin about the impact of generative AI on Dotdash Meredith, saying that while the technology could generate content “much more efficiently in the future,” “SEO traffic It could be adversely affected,” he said.
Levin’s response on the company’s earnings call is that lifestyle publishers like Bustle Digital Group and Leaf Group are shifting their resources to SEO-driven marketing in anticipation of AI chatbots like ChatGPT taking over the typical role. It was similar to what Digiday previously reported about their plans to shy away from content. Search engine.
“Every new technology is both a threat and an opportunity,” Levin said, adding: But it has no voice. I have no experience. And no brand stands by those results. “
And like BDG, traffic’s reliance on less SEO-driven content isn’t necessarily a new trend, Levin said.
“Nothing above 50% of the traffic leaves Google anymore,” he said. “We are dealing with that and preparing for the past as it relates to search engines. We haven’t relied on that kind of traffic from search engines for a long time.”
