January 15, 2024

Expert’s Corner: What Would You Do With BuzzFeed?

A couple of weeks ago, I wrote that BuzzFeed had less than a year to figure things out. Its debt was going to come due and if it couldn’t pay, things would get dire. But it’s one thing to write about how bad things could be and something entirely different to posit how to fix things. And so, I thought long and hard about what I’d do if I was in charge of BuzzFeed.

But then I had a better idea. The AMO community is comprised of unbelievably smart and talented media operators. And so, I thought it would be so much more interesting to ask them what they would do. And so, introducing the first of its kind, Expert’s Corner, where each month, I will ask the AMO Pro members a question. I will then publish those answers and we will all get smarter. Want to be included in the future? Become an AMO Pro member.

The prompt I gave to the group this month was very straightforward: if you were put in charge of BuzzFeed, what would you do to turn the business around?

Six operators stepped up to offer their thoughts: Sean Griffey, co-founder and CEO of Industry Dive; Scott Jamieson, President/COO of Annex Business Media; Matt Reustle, CEO of Colossus; Scott Brodbeck, Founder and CEO of Local News Now; Adam Ryan, co-founder & CEO of Workweek; and Justin DeMaris, CEO of Organic.

There were a few broad themes.

1st-Party Data, Commodities, and DNA

Sean Griffey was the first to jump in where he said:

They need a much stronger first-party data strategy. They have a number of newsletters and email courses but try to find them on the site. It’s near impossible. While they still have a wealth of traffic, they need to convert these people to subscribers and build rich profiles of their interests. Only at that point can they start to build targeted content and advertising products that will withstand the next media evolution.

The problem that Scott Jamieson found was a cultural one:

Agree 100% Sean, but the challenge is in the DNA. When you’ve built such scale on the principle of, well scale, you typically don’t have a culture that lends itself to the smaller revenue highs of targeting. No one gets excited about a $10,000 win.

Matt Reustle presented the big problem for BuzzFeed irrespective of 1st-party data.

I think Sean’s got the best answer for turning the business around. But I can’t imagine signing up for that as an investor. They have no distinct asset – they have a mass market audience which isn’t differentiated so which basically makes them a commodity player with some scale. You rarely want to own a scaled commodity producer long term … you trade a scale commodity producer with the cycles.

Griffey closed the discussion about 1st-party data with this:

I think Matt is correct. They have very few distinct assets.  Hot Ones/Tasty (maybe Huffpo?) are probably the only brands that have any individual value.  My answer was intended to be the first step in creating new brands. They have to figure out a way to create targeted products that resonate with subsets of their very large audience.

Can they do it?  No idea but they have a very large audience to start with right now.  That is an advantage that most media companies don’t have.

Leeroy Jenkins vs. Life Imitates Art

Scott Brodbeck decided to take a step back and focus on the critical problem: the debt. If it can’t figure that problem out, it has no real hope of survival. And so, he came up with two “absurd” and “maybe actually feasible” ideas.

I’ve taken the liberty of naming them.

The Leeroy Jenkins: Stay in the markets, actually, with a reverse merger with The Messenger and a fresh capital infusion. Maybe it’s what that operation needs to get back on track — get greater scale for your video and event pivot and a left-oriented outlet to go with your center-right outlet. Specialize: focus mostly on consumer-level politics coverage, let the Politicos do the inside baseball while your value prop is influencing the everyman. Sell everything not named Buzzfeed or Huffpost. Focus Buzzfeed on pop and internet culture. Also, increase focus on newsletters.

The Life Imitates Art: Just as with Vaulter and Kendall, sell to James Murdoch. He wants to be a positive force in the world, and can do (theoretically, at least) so with Lupa Systems acquiring Buzzfeed. Instead of turning Fox News into some sort of more fair and balanced Frankenstein’s monster, James will have the left-leaning outlets to carry out his altruistic media vision. An alternative here is that, should he get control of Fox from his brother, Fox could acquire Buzzfeed and play both sides of the political spectrum online. The actual business strategy won’t matter until James tires of whittling down his multi-billion dollar fortune. The $50-60 million price tag is relatively cheap, too, and Jonah has already done him the favor of slashing costs.

If you can’t win on your own, just continue merging and selling until you’re either infinitesimal or, perhaps, you might get some scale again.

Back to Basics

When BuzzFeed got its start and was first monetizing, branded content was its bread and butter. It’s only in more recent years that the brand carries banner ads all over the place. And so, Adam Ryan suggests that if the business goes back to basics, it might actually be able to grow once again. He said:

The strength of the business today is the branded content side of the business they make well north of a $100M a year. That’s a massive number for any brand. From my research, it’s one of the biggest of any US media companies now that Vice is debunked.

There’s trust by advertisers in Buzzfeed’s content.

There’s little trust in their distribution. Only 44% of buzzfeeds revenue comes from advertising. Most publishers are much closer to 60-70%.

Advertising has much better margins and renewal rates. This is where the focus needs to be.

First, they need to define the audience they actually have. They use “young” people in their deck. Needs to be better.

Then use a 1st party data strategy to validate / optimize that ICP.

Then focus on the best advertisers for that ICP. With their reach they’ll win many campaigns.

If the campaigns show performance, I see a path to raise CPMs by 30-50% and renewals go up. Which then puts them in a much different position.

Basically go back to basics.

SaaSification of BuzzFeed

We close with a very different direction. What Justin DeMaris suggested was accepting that the chase for scale was doomed, but that if BuzzFeed leaned into its operational chops, it might actually be able to build something interesting for a broader ecosystem of customers. He said:

I’d go a different direction – I think BuzzFeed has a strong, recognizable brand with a millennial audience, but it was more of a first-to-scale advantage on low bar content and isn’t going to be a playbook that can be reproduced because it overall got commoditized so stretching for scale was (hindsight being 20/20) clearly not going to work.

What they have done well though is operationalize that with their toolset for creating social reach and monetizing on the other side. The arbitrage game is also played out at scale, but still has value in niche content – but they haven’t been and won’t be good at picking that niche content themselves or staying on top of the ever changing game of picking which niches will be hot now.

They need to SaaS-ify their operations, offer it white labeled to every social-first brand out there as the platform to power an expansion into owning their own audience on site and shift all of the content strategy risk to their customers, and then refocus on tooling upgrades to offer the same playbook for video-first brands and video heavy content paired with reinvestment in the ads side where they should take a revenue cut on ad monetization. They could even lock in ad monetization for their customers to their own network only since their users are already generally used to that from social platforms and can open it up later once they hit a broader scale.

In other words, let all of the niche players out there use the operational toolset that BuzzFeed has created and then everyone wins. It could work.

What about you?

If you were in charge of BuzzFeed, what would you do to turn the business around? Email me and let me know. And if you’d like to be included in a future Expert’s Corner, become an AMO Pro member and look out for the next call for comments in the Slack.