BuzzFeed CEO Jonah Peretti claims he’s bullish on the digital company’s future healthy growth — touting a strategy of revenue diversification and working to “fix” the monetization problems BuzzFeed and others have with big internet platforms like Facebook and Google.
Peretti, in a strategy memo issued to staff Friday, said that media industry is in still in crisis and that BuzzFeed’s team is working to address the challenges in the business. BuzzFeed in January announced that it was cutting 15% of its workforce in a move to boost profitability, resulting in around 218 of its 1,450 employees getting laid off. The company hasn’t been alone among traditional and digital media companies in paring back staff, including Vice Media, AT&T’s Otter Media and Verizon’s AOL-Yahoo internet media group (previously called Oath).
“The coming year won’t be a cake walk, but I see a clear path to a bright future for BuzzFeed,” Peretti wrote, adding, “I’m hopeful the same is true for many of our peers.”
Last year, BuzzFeed generated a little over $300 million in total revenue. Of that, $84 million came from Facebook, Google, Amazon and Netflix (up from $7 million five years ago), Peretti said during a session Friday at SXSW with CNN’s Brian Stelter. “I think we’ve seen a shift now towards more austerity [in digital media] because the focus now is not ‘can you outrun everyone,’ it’s ‘can you outlast everyone,'” Peretti said in the interview. “The digital media companies are starting to be run like real businesses.”
A big part of getting to a sustainable future, according to Peretti’s memo, is diversifying BuzzFeed’s sources of revenue to become less reliant on third-party platforms. In 2018, he said, the company generated over $100 million in revenue “from business lines that didn’t even exist in 2017” and projected a similar run rate for this year.
BuzzFeed’s new revenue streams include its own “brand safe” video network; its creators program, working with influencers; new “product spotlight” commerce units; and deals to integrate advertisers into original series and news programming.
BuzzFeed’s Tasty food video and recipes franchise has made the biggest strides in making money from multiple avenues, Peretti noted. Tasty has 99 million followers on Facebook, but almost all of its revenue comes from businesses “we’ve needed to create on our own,” he said. Those include product placements; products like Tasty-branded ice cream and cookware; a Tasty creators program; and original shows.
The first step, though, is to make “working with the big platforms financially sustainable,” Peretti wrote. He claimed BuzzFeed is making “real progress” on this front.
For example, in the first quarter of 2018, BuzzFeed generated about $500,000 in video platform revenue from Facebook; in Q4 2018, that had increased to $3 million. In January 2017, BuzzFeed monetized less than 30% of views on YouTube and by last November, it was monetizing more than 70%.
“Overall, revenue we generate from the biggest platforms — Facebook, Google, Amazon, and Netflix — has grown by 12 times since 2014,” Peretti wrote. “We are committed to reaching our massive audience wherever they are — whether they’re on our O&O [owned-and-operated platforms] or across Facebook, Twitter, Instagram, Snapchat, Netflix, and YouTube.”
BuzzFeed is focused on creating “high-quality content at massive scale and low cost to succeed given the tough but improving economics of the the platforms,” Peretti wrote. He said that’s why the company recently reorganized its content team under BuzzFeed publisher Dao Nguyen to “enable a unified, platform-first, data-driven model for content distribution.”
Unlike some other digital media companies, “we don’t make shitty TV, we make good internet,” with programming that provides a two-way interaction with the audience, Peretti wrote. He cited BuzzFeed’s “AM to DM” daily morning talk show on Twitter and Cuppy the Good Advice Cupcake, which has garnered 2.1 million Instagram followers in less than a year. BuzzFeed News also has produced docu-series “Follow This” for Netflix; for Facebook, its shows include interactive trivia game show “Outside Your Bubble” and interactive dating show “RelationShipped.”
At a high level, the internet is at a “crossroads,” Peretti said, referring to criticism Facebook and YouTube have faced in the past year over the spread of misinformation and abuse by bad actors. BuzzFeed has a “big role to play” by providing high-quality content.
“In one direction, there is a flaming dumpster fire, pushing people apart,” he wrote. “In the other, the internet is a source of joy and truth, connecting people together. We have the chance right now to work together to build a better future.”
Last fall, in an interview with the New York Times, Peretti said he was open to merging with other digital-media companies, floating the idea that bigger entities would be able to get better economic terms for advertising from Facebook and Google.
NBCUniversal is among BuzzFeed’s backers, having invested $400 million in the company.