How does BuzzFeed intend to crack a $1B valuation? By embracing journalism's past
It was just over a year ago that BuzzFeed hired editor-in-chief Ben Smith away from Politico to help build the cat-happy publication into a major media company. In the intervening months, it has acquired a Facebook advertising company, hired a longform editor, set up a video division led by Ze Frank in a new Los Angeles office, and launched an entertainment section. Last week it closed a Series D round of $19 million, even though the $15 million it raised in a Series C round sits in the bank, virtually untouched.
The new round brought the total funding raised to $43.6 million and reportedly valued BuzzFeed at $200 million. More importantly it proved that the media startup was serious about upping its headcount and investing aggressively in expanding its product. It turns out, however, that the company now being praised for its innovative approach is doing this all in a deceptively conventional way.
“We’re doing a lot of different things that are working and have the potential to grow fast, and we want the ability to do that in a lot of different things,” says editor Smith. That means more verticals and more editorial staff. A business section is on the way, and Smith says the publication will be ramping up its technology coverage. Currently, BuzzFeed has between 60 and 70 people on its editorial team, out of a total of about 180 staff, but that number is changing every day.
BuzzFeed seeks to take advantage of new Web dynamics that are starting to offer glimmers of hope for those in the digital news business. (Relatedly, see Business Insider editor Henry Blodget’s optimistic take on the digital news organizations of the future.) As its target audience of Millennials has grown up, so too have the Web tools that are making it possible to reach immense scale while serving advertisers in ways that feel native to the platform. Famously, the publication has capitalized on an age of social sharing, which takes the emphasis away from the homepage and puts it instead on stories that have viral potential. But it has also tapped into the mobile age and eschewed the display advertising that has been producing diminishing returns on the Web and otherwise doesn’t translate well to small-screen environments.
Many media observers see the big-traffic BuzzFeed as a beacon of hope in a struggling industry. Some have even speculated that it could become a $1 billion company, a giddyish number in media terms. The New York Times, for instance, has a market cap of $1.28 billion. It is premature, however, to be bandying around a big number like that. The biggest exits to date among online news companies haven’t got even close to the billion mark. For example, the Huffington Post – co-founded by BuzzFeed founders Jonah Peretti and Ken Lerer – sold to AOL for $315 million, while Bleacher Report fetched $200 million from Turner. No one else has come close.
Still, BuzzFeed has done enough in the last year or so to cause genuine excitement in the industry. Fast Company recently named it one of the 50 most innovative companies of 2012; a few weeks ago Business Insider published an admiring profile of CEO Peretti; and even we here at PandoDaily called it the most innovative news organization of the year, noting that it is a company “committed to going long when many other media companies are content for quick clips or building lifestyle businesses.”
CEO Peretti doesn’t shy away from talking up the company’s transformative powers. In an interview with the Guardian, Peretti said: “I think there’s an opportunity to create a golden age of advertising, like another ‘Mad Men’ age of advertising, where people are really creative and take it seriously.” To that end, BuzzFeed works with advertisers as “partners,” and hosts their sponsored content, which is similar to the publication’s independently produced journalism.
This approach to sponsored content has been seen as one of the most successful adaptations of advertising for the Web. One BuzzFeed “story,” for instance, offers “12 Delicious Game Day Recipes That Even You Can Make,” presented by Pillsbury. The branded content is supposed to be almost as compelling as the editorial content. The Atlantic’s Derek Thompson recently noted that BuzzFeed’s experiments with ads that are suited to their medium is a “clear echo of history,” just as radio and television ads were at one time imperfectly matched to their media. The earliest radio ads, for example, were merely print ads read aloud.
Smith, for his part, is open to the idea that BuzzFeed and its ilk could simultaneously usher in a golden age of editorial. As newspapers and magazines shut up shop or go online-only almost every day, such a comment initially seems absurd. But Smith, flush with the optimism of helming a publication heading in the opposite direction to most of the rest of the industry, holds his line. “The collapse of the newspaper industry has been a horrific moment for lots of great journalists,” says Smith, “but I think we’re coming into a really great moment. Newsrooms may be lighter, but people are able to do so much more reporting, to get so much more done, and the social conversation means beat reporters across different publications are not all going to be rewriting the same story.”
That view might be just a tad idealistic. While it may be true that things like Google searches, mobile Internet, and Twitter have sped up the research, interviewing, and writing processes, the classic concept of the rewrite has done anything but go away. Read some of the tech blogs and you’ll get the drift, but the form is also well evident in other publications. Without it, the likes of the Daily Beast and Business Insider couldn’t exist.
While we’re calling Smith out, we might as well point out that BuzzFeed, too, is itself guilty of “rewriting,” or at least aggregation, when it publishes its many photo-based listicles, much of the content for which is sourced from Reddit, a point well made by PandoDaily contributor Farhad Manjoo over at Slate. These virally-inclined pieces are responsible for the lion’s share of BuzzFeed’s traffic, as evidenced in David Holmes’ September post that highlighted the enormous traffic discrepancy between the publication’s most-viewed pieces and its best-reported stories. Example: “40 Things That Will Make You Feel Old” attracted 4.4 million hits, while “The Strongest Woman in American Lives in Poverty” earned just 213,000 hits.
To be fair, though, lightweight entertainment and lifestyle content has always pulled in more traffic for news websites than has serious news and the same is true in newspapers, where the commercially friendly sports and business sections subsidize the rest of the paper.
Smith isn’t entirely off-base, though, when he claims that fresh content is winning the day. “What people want to Tweet is great original stories, the first stories,” he says. “An hour after a New York Times article breaks, nobody Tweets, ‘Wow, look how fast this other website got up a mediocre aggregated version!’” As our own Erin Griffith pointed out in a recent post, Google’s new “Author Rank” initiative prioritizes original reporting done by verified authors in search results, which strengthens such claims about the importance of originality.
In a sense, BuzzFeed is aping the Huffington Post’s growth trajectory. It started out with low-nutrition posts about cute animals and gimmicky slices of life, but it is now building a strong editorial team and pushing into the mainstream. HuffPo started a similar way, with sensationalist stories and zingy headlines, only to later layer in more traditional news sections such as business and technology. So, while CEO Peretti might be reacting against his HuffPo past in the way he is monetizing the site and in the way its stories spread, it’s not clear that the company’s editorial strategy is really any different.
Without mentioning HuffPo by name, Smith also seems to be trying to contrast BuzzFeed against its predecessor. Over the last five to 10 years, media went on a “detour,” he says, in which publishing strategies were driven by search engine optimization and aggregation. “The two things you were trying to do were to build a portal where you just have one of every story. It didn’t have to be the best story, it didn’t have to be the first one, you just had to have something up there and people would click on it if you wrote a sexy headline.” In effect, he says, you could trick readers into clicking on your content.
That’s not as true in the age of the social Web, where Facebook and Twitter are gaining an increasingly large say in determining what people read. In 2012, 9 percent of Americans who read news on digital devices said they “very often” got news through Facebook or Twitter recommendations. A Reuters poll, meanwhile, found that people aged under 25 are twice as likely to find their news through social media as they are through a search engine. And BuzzFeed has certainly found success in social. According to the stats it publishes with every post, the publication routinely attracts vastly more traffic from Facebook and Twitter than it does from Google.
The social sharing paradigm is completely different to the SEO one, Smith argues. Unlike in the SEO era, when scamming clicks was easy – the most egregious case in point is to be found in HuffPo’s infamous “What Time Is The Superbowl” post – only in the rarest of exceptions is it possible to trick someone into sharing a story, he says. Still, as Peretti told Sarah Lacy at PandoMonthly in September, BuzzFeed looks at customized content for social sharing as almost a science, albeit one far less cynical than the cold calculations of SEO. “In order for an idea to replicate it has to be simple enough for a friend to talk about it at a party,” Peretti told Lacy. “It has to hit something deeply personal that ties in with people’s sense of identity.”
For all the talk of a return to the golden age of advertising and editorial, however, BuzzFeed is going about its expansion in a decidedly traditional way. With big-money editorial hires – such as Ze Frank, Rolling Stone war correspondent Michael Hastings, and former Spin magazine editor Steve Kandell – and the fast addition of new sections, it is relying on business conventions that were forged back in the real golden age of news, when newspapers could print on actual paper, turn a pretty penny on classifieds, and fill up their pages with supermarket ads.
There is also a sense that BuzzFeed might be rushing it a bit. Its vision for its Entertainment vertical doesn’t quite seem fleshed out, with Richard Rushfield plying his introductory letter letter with vague promises of “taking our readers deep into the story of Hollywood” to “ask the questions no one else is asking,” and to “do something different and to capture, every day, the reality of the craziest story on Earth.” Similarly, Smith describes BuzzFeed’s soon-to-be-beefed-up tech section as focused on tech culture as its intersects with Web services and social platforms, which isn’t exactly saying much.
This apparent lack of substance might be expected for a young publication exploring new fields – certainly, PandoDaily could be fairly accused of such editorial wobbles in its early days – but it also plays into the hands of critics who are eager to paint BuzzFeed as a company concerned with metrics-over-substance. Last April, for instance, Gawker Media owner Nick Denton said of CEO Peretti: “Jonah – whether at Huffington Post or BuzzFeed – has always cared more about the volume of discussion and social sharing than its quality.”
A couple of weeks ago, Will Leitch at Gawker Media’s Deadspin mocked the people who praise BuzzFeed. In an essay entitled “It’s Not OK To Be Shitty,” he parodied the genuflecting: “BuzzFeed has put a bunch of pictures of kittens together in a way that is easily passed around by idiots? THEY HAVE FIGURED OUT THE INTERNET THEY ARE SUCH BRILLIANT PACKAGERS OF CONTENT THE FUTURE OF MEDIA.”
While it is true many media watchers have focused on BuzzFeed’s social prowess, bolstered by Peretti’s reputation as a kind of viral wizard, the publication is actually benefiting from a suite of digital characteristics that are coalescing as the Web enters a new, more mature age. The Web is no longer ruled by SEO, aggregation, apps, display ads, or email direct marketing; it is instead governed by cross-platform principles that allow content on the open Web to travel easily between devices, and go to wherever readers are. At the same time, readers are more willing to accept sponsored content being included “in stream” with the normal editorial product rather than pegged to corners and side columns.
Because it has been among the first to successfully gather the various threads of a maturing Web, BuzzFeed has placed itself at the forefront of an emerging era of digital publishing. Alongside it, some of the “new media” stalwarts are starting to look decidedly old hat. Today, the likes of the Huffington Post, Slate, Politico, and the publications in AOL’s stable act like creaky veterans with the problems of legacy Internet companies, including pageview-driven mentalities wedded to SEO and aggregation, and heavy reliance on display ads and the desktop Web. On the other hand, BuzzFeed is not alone in its journey into the new frontiers of digital publishing. Its fellow travellers include Vox Media – which owns SB Nation, The Verge, and Polygon – Atlantic Media’s Quartz, and PandoDaily, which, while all unique in their own ways are adopting similar methods.
Of course, even if the Web has grown to the point where BuzzFeed can make a staff-heavy publication profitable, and can expand in a way that harks back to the days of star reporters and deep sections, it still has its differences from the newsprint era. Most prominently, readers have to get used to seeing listicles about 23 animals defying gravity alongside serious stories about, say, President Obama’s nomination for Secretary of Defense.
You won’t see that in the New York Times, and to Ben Smith, that’s entirely the point. Such odd juxtapositions are part of the new media reality – news delivered via social no longer comes in neat bundles.
“Animal pictures and political writing and world news and writing about sex are all going to be mixed up one after another in a way that is uncomfortable in older media organizations but is actually the reality of how people consume media now,” Smith says. From his point of view, readers have gotten used to that surprisingly fast. Smith adds: “I expected more resistance.”
It might well be the case that in the tablets and Twitter age, news habits die fast.
[Illustration by Hallie Bateman]