April 15, 2016
BuzzFeed's supposed to be the media company that holds the answer to the media business's future in a post-banner world. While the media world is dying, BuzzFeed's been hiring, growing to new markets, winning new investment on high valuations and projecting hockey stick sales growth.
But worrying signals that BuzzFeed was struggling were confirmed in an article by Financial Times, which cited a miss on 2015's revenue target and a halving of 2016's target. To this, BuzzFeed's chairman said "There's nothing cratering in the industry. It's better than ever." Meanwhile, he offered no evidence to the contrary, reminding this analyst of:
Counter to Lerer's assurances and in line with FT's findings, there are some pretty good reasons BuzzFeed may be missing its numbers. I'll present them in true BuzzFeed listicle style (all gifs credited to giphy.com). Here goes:
1) BuzzFeed's tried to position itself and its expected revenue as a software play, but it's just….not.
BuzzFeed founder Jonah Peretti likes to style himself not as a media baron, but a start-up guy. Unfortunately, start-up guys create and ship software for other people to use; right now, BuzzFeed's the only company paying for and using BuzzFeed's software. Without a product to sell, a channel to sell products through or recurring subscription revenue, it's a lot harder for revenue to take that hockey stick-like shape. BuzzFeed may have great software, but it's on a services revenue model, which constrains growth.
2) Snapchat (and everyone else) stole much of BuzzFeed's fire
For a brief and shining moment, BuzzFeed was the hottest ticket to millennial-land you could find. But it can't be entirely chance that BuzzFeed's revenue struggles began about the same time as Snapchat launched its first product, and asked marketers a cool $750K to play (it later came down off that figure). And BuzzFeed's got a lot more competition in the native, in-house content studio game. Vice, Gawker, Mashable, Vox, and even totally unhip outfits like the Washington Post and the New York Times have all launched their own in-house editorial offerings linked to native placement. BuzzFeed's first-mover advantage didn't seem to create an economic moat.
3) Despite the NBCUniversal link, BuzzFeed's not gained any broadcast distribution
BuzzFeed's clearly put many of its growth eggs in the video basket. But it hasn't gained the kind of broadcast distribution that wins the attention of big advertiser dollars. By contrast, BuzzFeed competitor Vice Media recently launched Viceland, a TV channel with international broadcast distribution. Big and highly-distributed programming can create some of the product effects that drive strong revenue growth, but BuzzFeed's video programming hasn't gained that yet and isn't known for any particular program products.
In talking to some marketers recently, I've heard a recurring refrain: "The publisher tells us its in-house content studio gives us something unique and special, something that reflects the media brand's unique voice and brand, but what we see from them doesn't do that." These comments weren't directed at BuzzFeed specifically, but BuzzFeed-like offerings that may or may not include BuzzFeed. It's not surprising that the creators who go on the 'brand team' aren't exactly the superstars, and – as BuzzFeed's been trying to grow quickly – many of its 'branded content professionals' may increasingly just be college grads who think they have a good sense of humor.