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By Sahil Patel 

Three prominent digital publishers are pooling their video ad space in an effort to better compete against Alphabet Inc.-owned YouTube, other digital platforms and TV networks.

BuzzFeed Inc., Group Nine Media Inc. and Insider Inc. are creating an ad sales alliance to sell video advertising across all three companies' websites, apps and YouTube channels, the companies said.

The group is also in conversations with Discovery Inc., a major investor in Group Nine, as well as other media companies about joining the group, according to executives at BuzzFeed and Group Nine Media. A Discovery representative confirmed the talks.

The alliance, which doesn't have a name yet, will sell ads as an independent body, the companies said. Participating publishers will share ad revenue based on the amount of ads they deliver.

YouTube is the dominant seller of digital video advertising. Alphabet Inc. does not break out YouTube's financials, but analysts have estimated that the video giant brings in more than $15 billion in annual ad revenue.

Other tech giants including Facebook Inc., Amazon.com Inc. and Snap Inc. are also becoming bigger players in the business.

But marketers have repeatedly bumped up against offensive, highly charged or otherwise unwanted content on YouTube. Early this year, for example, marketers including Nestlé SA and McDonald's Corp. suspended advertising on YouTube after a report highlighted inappropriate user comments appearing under videos featuring underage girls.

"We continue to hear from clients that they're looking for a more brand-safe environment, but still needed the scale they get on the platforms," said Christa Carone, president of Group Nine Media, whose brands include NowThis, Thrillist and the Dodo.

The companies said they expect the alliance to help them land larger ad deals. "For all of us to get together in a room like this, we're not going to do a deal that we could have normally gotten on our own," said Ken Blom, senior vice president of ad strategy and partnerships for BuzzFeed.

Publisher ad alliances aren't new, though the strength of Google, Facebook and, increasingly, Amazon in online ad sales is making the case more compelling for some.

In the U.K., the Guardian, the Telegraph and News U.K. banded together last year to form the Ozone Project, which sells ad space across their sites. News U.K. and The Wall Street Journal share a common owner.

"That's why media companies are merging," said Catherine Sullivan, chief investment officer at Omnicom Media Group North America. "Everyone is trying to compete with platforms; this helps, even though they are not going to be as big as the platforms."

BuzzFeed, Group Nine and Insider say they have nearly 100 million subscribers across their YouTube networks and are generating more than 1 billion video views across their own sites and apps every month.

Advertising executives said they don't expect this alliance to pull marketers' ad budgets away from YouTube, but they like the idea of simplifying buying across publishers.

Some advertisers also said the publishers will need to offer something beyond mass reach and brand-safe environments. "There has to be something more proprietary of them coming together -- what else are they offering that's unique?" said Christine Peterson, managing director and digital investment lead at Mindshare USA, part of WPP PLC.

The brand safety pitch is compelling, but there are caveats there, too. "There are trusted news sources some brands don't want to be aligned with because of politics," Ms. Peterson said.

The publisher alliance also comes as digital media companies are more vocally exploring the notion of merging to better position themselves against tech competitors. BuzzFeed Chief Executive Jonah Peretti publicly floated the idea in a New York Times interview last year, tossing out names of potential partners including Vice Media LLC, Vox Media Inc., Refinery29 Inc. and Group Nine.

Vice has had talks to buy Refinery29, people familiar with the matter said in July.

The video ad-sales alliance is not a precursor to a merger, said Ms. Carone. "There is no discussion right now on a merger or an acquisition."

Write to Sahil Patel at sahil.patel@wsj.com

(END) Dow Jones Newswires

September 23, 2019 14:38 ET (18:38 GMT)

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