BuzzFeed Cuts News Staff And Feels Its Own Version Of Facebook Pain

Digital media’s never-ending pivot to video continues thanks to TikTok and the ongoing rise of TV streaming.

As audiences shift away from Facebook, BuzzFeed is betting its investments in short-form vertical video for social media platforms like TikTok and long-form video for streaming will yield big returns, CEO Jonah Peretti said during the publisher’s first earnings presentation since going public in December.

BuzzFeed plans to grow its ecommerce business through deeper integration with video-based social platforms, Peretti said. Currently, it monetizes these platforms only through branded integrations, not through a revenue share or affiliate revenue.

And it is shaking up BuzzFeed News. Current Editor-in-Chief Mark Schoofs and Deputy Editor-in-Chief Tom Namako will be stepping down, and the workforce will be cut through voluntary buyouts. But a business development team will be added to explore ways to increase ad revenue from the news operation.

BuzzFeed’s overall revenue increased by 24% in 2021 to $397.6 million. For Q4 2021, overall revenue increased 18% year-over-year to $145.7 million.

BuzzFeed’s current ad business is diversified across display, video units like pre-roll and mid-roll, programmatic and custom branded content. Ad revenue grew 37% to $205.8 million in 2021, accounting for 52% of total revenue. Content revenue, which includes original studio content and custom content for brands, grew 9% to $130.2 million in 2021 and accounts for one-third of total revenue.

In Q4, ad revenue grew 24% to $69.1 million, and content revenue grew 33% to $59.9 million.

Social commerce challenges

Commerce revenue grew 19% to $61.6 million. Built around affiliate partnerships and IP licensing and centered on social media, it accounts for 15% of total revenue. “Unlike many publishers and platforms that rely predominantly on search to drive commerce revenue, we take a social-first approach,” Peretti said.

But commerce revenue declined 26% to $16.7 million in Q4.

BuzzFeed attributes its decline in commerce revenue and time spent in Q4 2021 to the waning of the pandemic and the reemergence of in-person retail on a macro level.

But audiences are also moving to places where BuzzFeed finds it more challenging to measure and monetize. In Q4 2021, audience time spent declined 4% year over year to 186 million hours.

Because Instagram and TikTok “offer limited advertising revenue share opportunities, we monetize engagement primarily through branded or custom video content,” said BuzzFeed CFO Felicia DellaFortuna.

Reduced audience time spent on Facebook is expected to contribute to a low-single-digit percentage decrease in revenue for Q1 2022, according to BuzzFeed. Hence the need to develop commerce solutions for TikTok and Instagram.

For example, BuzzFeed’s food publication, Tasty, will be creating recipe videos for TikTok that will be monetized via traditional ad placements as well as ecommerce integration with Instacart. BuzzFeed will pursue more opportunities for shoppable video as social platforms continue to invest in commerce tools to keep pace with young people’s consumption preferences, Peretti said.

Although this was BuzzFeed’s first investor call, there was a surprising lack of participation in the Q&A section, with only three analysts chiming in to ask questions that were mainly centered on the pivot to video and the revenue outlook for 2022.

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