Why Buzzfeed Doesn’t Make Money

Buzzfeed has never made a profit in 13 years, after being in business that long it is hard to claim you are still a start-up, or as they put it in a statement accompanying the late filing of the UK subsidiary’s annual accounts “still in investment mode”. Which is another way of saying “still losing money”.

The UK subsidiary has quadrupled losses, turnover slumped 35% to £21.6 million, which they say was due to “intercompany revenue” from parent company BuzzFeed Inc. dropping £14.8 million. Whatever those financial shenanigans were they have come to an end. Investors will marvel at how Buzzfeed has burnt through over $500 million of their money which they will never get back.

The pivot to video which was Buzzfeed’s big bet doesn’t appear to be paying any dividends in the UK at least, nor will it until advertisers value the audience. If as, Guido suspects, they have a primarily youthful audience they will not be able to command rates much above Facebook, which means thin margins. Guido has been trying to figure out how to make video or podcasts commercially viable and concluded that until advertisers create audio or video content that needs distribution to his audience, it just won’t be profitable. The Spectator uses their excellent podcast output as a gateway drug to becoming a subscriber, Business Insider and HuffPo are generating significant revenue with sponsored videos. The Economist is very successfully monetising their podcast audience to the tune of millions from corporate advertisers. The Economist demonstrates that if advertisers can be shown you have a valuable audience, they will pay. Buzzfeed’s problem is that their audience is the same “trash audience” that can be bought off Facebook or Google for pennies…

mdi-timer 3rd January 2020 @ 2:42 am 3rd Jan 2020 @ 2:42 am mdi-comment Comments
Profitless Buzzfeed Misses Revenue Target

omg-buzzfeed

The Financial Times reports that Buzzfeed fell short of its 2015 revenue target by 30% and has slashed its 2016 target by 50%. It took Guido 4 years to make a profit. No one ever said it was easy, overnight success generally takes years. Buzzfeed, the cool new kid on the block, has been going 9 years without making a profit. Nine years…

During those 9 years it has burned through hundreds of millions of dollars without paying investors a cent back. Smart people buy into the Buzzfeed concept, that it can reach millenials on their phones and on social networks with viral content as well as disguised advertising in the form of snarky content. They also have a conventional website famous for cat videos and lists. To make advertisers feel better about the online context of their paid content, Buzzfeed has branched out into serious content from serious journalists, with serious investigations and even some politics. It gives the Buzzfeed brand more journalistic credibility. Which goes comparatively unread.

Business Insider, Huffington Post and Vice News are all engaged in an online land grab, promising investors they will grab the global audience first and make profits later. Business Insider sold to Axel Springer for a cool $442 million last year. Outside the US it was not making a profit – though Insiders told Guido they were no longer losing money in London. Insider has a model that makes sense, aiming at time-pressed people interested in business. HuffPo aims to maximise traffic through aggregation and SEO optimisation, selling conventional display advertising – the AOL parent has a massive digital advertising sales operation. Vice is apparently to the millenial generation what MTV was to their parents and appears to be making money hand over fist.

The risk for Buzzfeed investors is that people no longer want the funny GIFs once they graduate, get a job and get busy. This leaves them with teenage “trash-traffic” of appeal only to generic advertisers who won’t pay high prices. Advertisers also worry, now that the novelty has worn off, that the advertorials don’t work or worse still, don’t fit their advertising goals. 

mdi-timer 13th April 2016 @ 4:34 pm 13th Apr 2016 @ 4:34 pm mdi-comment Comments