BuzzFeed describes itself as the world’s leading independent digital media company, leveraging data and innovation to reach hundreds of millions of people worldwide — and a far cry from an organisation born often of cute cat pictures.

Whilst I live in London where our advertising landscape is somewhat unique, I draw inspiration from this U.S.-based company, especially as we aim to future focus the media industry. To say the least, they have an ambitious view of what advertising means to them.

When BuzzFeed confirmed in June its plan to go public, it made an investor pitch saying that it can accelerate growth through newer, fast-growing businesses like commerce. Interesting in itself, yet the details of its presentation to investors shows BuzzFeed still expects to be heavily reliant on advertising, a business in which it has struggled to grow over the past few years.

Speaking of commerce, I recently called on a leading South Pacific publisher who confirmed that he saw e-commerce being a key part of the future sales teams’ armament. I wonder if you do, too?

What exactly is “content”?

BuzzFeed told investors it expects to generate US$654 million in revenue in 2022, up 25% from this year, with traditional advertising accounting for 48% of the total and the rest coming from commerce and content. However, the “content” business consists mostly of new formats such as branded content, making videos and articles that look like editorial items but are actually ads. So that means close to 77% of BuzzFeed’s revenues next year will effectively come from advertising.

By 2024, when the company projects it will surpass US$1 billion in top-line revenue for the first time, these advertising-based revenue streams are expected to account for nearly 70% of the business.

And yet, BuzzFeed’s growth has slowed over the past couple of years as it struggled to compete in the digital ad market with giants like Facebook, Google, and Amazon.

As Big Tech grows, so does BuzzFeed 

The Big Tech companies are swallowing up the vast majority of digital advertising dollars, and their share is only increasing. A report earlier this year from research firm eMarketer said Google, Facebook, and Amazon, combined, accounted for 65% of the U.S. digital ad market alone in 2020 — with Amazon surpassing the 10% share threshold for the first time.

BuzzFeed CEO Jonah Peretti said recently: “Advertising can still be a good business.” He also said, controversially, that BuzzFeed will benefit as the Big Tech platforms take a larger share. The company sells advertising or collects a revenue share from ads appearing next to its content on Google-owned YouTube, Facebook, Snap, and other platforms. So if the platforms grow, BuzzFeed’s platform-based ad revenue grows, too.

Affiliate commerce

BuzzFeed, meanwhile, is also banking on growth in commerce, currently its smallest business, to accelerate its top-line growth. Like other digital media companies, it makes money in affiliate commerce by putting links to retailers’ Web sites within its articles. If readers click on a link and end up buying something, BuzzFeed gets a cut of the revenue.

BuzzFeed also sells products directly in areas like cookware, which relates to its “Tasty” food brand. They generated US$57 million in commerce revenue last year, or 14% of total revenue. The company expects that number to hit US$150 million next year, or 23% of its total, and US$330 million, or 31% of the total, by 2024.

INMA has reported recently about publisher efforts in this space, though none more relevant than “Content-to-Commerce Brings Revenue in a Post-Advertising World.” Legacy leaders in this space include Aftonbladet, Dennis Publishing, The New York Times, South China Morning, and Times Internet. Meanwhile, I have put together a custom link on publisher commerce initiatives from INMA’s Best Practices archive. I also recommend an April report by eMarketer titled Publishers and Commerce 2021.

Is this a trend you need to look at? In an era of things like programmatic, what will we require our sales teams to actually sell in future? How will we structure them? What skills will we require from them?

A safe and effective place to advertiser?

BuzzFeed pitches itself as a more brand-friendly, safe place to advertise. And they point to how ad spending is shifting away from traditional TV and towards digital media, a trend BuzzFeed aims to take advantage of. Do we compare other media and try to stack up ourselves in comparison? How does print hold up with our digital offerings combined versus the likes of, say, Facebook?

RAMetrics data points towards print advertising driving higher levels of Web visits (20% vs. 19% for digital), for recommendations (32% for print vs. 23% for digital), and discussions (20% vs. 14% for digital).

Meanwhile, in terms of where we actually are, The Guardian recently stated that advertising spend across the U.K. media fell by more than £1 billion year-on-year during the pandemic lockdown, which resulted in a 48% decline in ad spend from £2.3 billion to £1.2 billion year-on-year attributed to the lack of spending on traditional media.

However, according to the U.K.’s Sunday Times, global ad spend is expected to grow by more than 10% to US$634 billion this year. Data from Momentum Worldwide suggests pent-up demand for experiences and events could pose increased opportunities for brand sponsorship deals as lockdown constraints are loosened.

Perhaps this is one of the keys to our future revenue streams? Take a look at the summary article of my recent INMA Webinar with The Wall Street Journal and see how they are grasping the event experience mettle.

Can we achieve industry consolidation and collaboration at last?

BuzzFeed’s Peretti also highlighted that media consolidation and collaboration could be the way forward, at least partly because bigger companies might have more leverage to extract better terms from the Big Tech platforms.

BuzzFeed recently acquired digital lifestyle publisher Complex Network, the company’s second acquisition aimed at increasing its scale after purchasing HuffPost from Verizon earlier this year.

Is it time for increasing scale to attract better and more advertising and collaboration with other publishers to sell advertising? The United Kingdom has seen this recently with a project called The Ozone Project, a publishing industry collaboration with a digital ad platform built for brands that claims to reach 99% of the UK’s online adults and offering an easy way for advertisers to reach highly attentive audiences at broadcast scale. All this, in brand safe, known environments, trusted and proven to deliver real business results.

Can working together finally work for publishers in an industry, certainly in my own experience inside large media houses, where politics and personalities always seem to get in the way?

BuzzFeed looks at “advertising” opportunities in a comprehensive way: branded content, partnering with Big Tech, affiliate commerce, a safe place to advertise, and collaboration. How can news publishers match this breadth of vision?

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