BuzzFeed appears nearly resigned to digital media’s downward spiral.
Its advert income has been plummeting since going public on the finish of 2021. And the outlook hasn’t gotten a lot better as stiffer competitors between main social media corporations shuts out digital publishers that depend upon social site visitors, alongside elevated competitors round short-form video content material.
“Site visitors referrals from the foremost platforms has diminished as they proceed to prioritize their very own vertical video codecs amid intense competitors for viewers share,” BuzzFeed CEO Jonah Peretti instructed buyers throughout the firm’s Q3 earnings name on Thursday. “This has a direct influence on our capacity to monetize.”
That “direct influence” got here within the type of a 35% YOY decline in Q3 advert income, which dropped from $50 million final yr to $33 million this yr.
Nevertheless, Peretti stated organizational restructuring and layoffs this yr contributed to a small Q3 revenue, resulting in a optimistic $3 million in adjusted EBITDA.
Spending developments down
Regardless of the modest revenue, BuzzFeed’s advert income scenario is grim.
Spending by CPG, leisure, monetary companies and tech advertisers continued to be delicate this quarter, whereas retail spend “grew modestly,” stated BuzzFeed President Marcela Martin.
The dip in advert income requires BuzzFeed to “alter to the brand new realities of an altered digital media panorama,” Peretti stated. It plans to take action by reprioritizing content material that retains customers engaged on BuzzFeed’s owned and operated websites and apps.
What does that appear like in apply? Doubling down on generative AI video games, constructing out a creator community and prioritizing information content material for HuffPost, Peretti stated.
Leaning into information might appear to be an odd technique, contemplating BuzzFeed shut down its Pulitzer Prize-winning BuzzFeed Information model in April. However Q3 was HuffPost’s finest quarter by way of homepage site visitors since BuzzFeed acquired it in February 2021, in accordance with the earnings launch.
Generative AI video games – like Nepogotchi, during which gamers elevate their very own “nepo child” – have confirmed to be a winner for BuzzFeed. Gen AI content material is driving 60% extra site visitors to BuzzFeed’s websites in comparison with non-AI content material, and engagement with gen AI content material grew by double-digit percentages in comparison with Q2, Peretti stated.
But gen AI doesn’t appear to be bringing in sufficient sponsored content material alternatives. Content material income was down 32% YOY, from $38 million in Q3 2022 to $26 million this yr, because of a lower in demand for sponsored content material, Martin stated.
One issue behind the decreased demand was the WGA and SAG-AFTRA strikes, since {dollars} from film and TV tie-ins have been tougher to return by this yr, Peretti stated. Meaning much less sponsored content material just like the “How Would You Die on ‘Sport of Thrones’?” quiz.
Nevertheless, Peretti is bullish on the First We Feast model’s capacity to herald sponsorships – notably its hit present “Scorching Ones,” the place celebrities are interviewed as they eat progressively spicier hen wings.
BuzzFeed acquired First We Feast when it bought Advanced Media in 2021. Although BuzzFeed is reportedly in talks to promote Advanced, it plans to maintain First We Feast as a tentpole in its long-form video portfolio.
Commerce income dropped 3% YOY to $14 million, making it BuzzFeed’s smallest but most resilient income stream. That’s thanks largely to the writer’s long-term partnership with Amazon.
To capitalize, BuzzFeed is in search of extra ecommerce alternatives, together with extra CPG merchandise just like the not too long ago launched “Scorching Ones” Scorching Pockets.
Quick-form video woes
The proliferation of short-form video and fierce competitors amongst social media platforms as they compete with TikTok for viewers consideration share has been the biggest issue contributing to BuzzFeed’s monetization meltdown, in accordance with Peretti.
Efforts by social media corporations to maintain customers engaged on their very own platforms as an alternative of linking them to exterior publishers contributed to time spent on BuzzFeed’s properties dropping by 19% YOY, Peretti stated.
BuzzFeed has tried to observe the development by increasing its personal short-form video choices. However “shorter movies are tougher to monetize than the longer-form content material that was historically standard on YouTube,” Peretti stated in response to an investor query.
Plus, elevated competitors amongst platforms means they’re much less keen to share short-form video income with publishers, he added. In response, BuzzFeed is engaged on promoting extra short-form video on to advertisers.
However Peretti appeared to have soured on short-form video, claiming customers are getting uninterested in “the ADHD kind of scrolling conduct” and are in search of deeper engagement with long-form media. That may sound like copium, however Peretti is severe about boosting time spent on BuzzFeed’s websites, and he advised gen AI video games and longer-form video content material are higher methods to attain that than short-term video.
Nevertheless, he stated, “it can take time for these new initiatives to ramp up and scale and offset the site visitors and monetization challenges mirrored in our monetary efficiency.”
