In today’s harsh economic climate for digital publishers, BuzzFeed hopes its investments in trendy tech like generative AI and short-form vertical video will eventually pay dividends.
In its Q4 2022 earnings call on Monday, BuzzFeed reported $135 million in revenue for the quarter, down 8% YoY. Ad revenue was $51 million, a 27% drop from Q4 last year, and revenue from sponsored content was $55 million, down 9% YoY.
One bright spot was commerce and other revenues, including live event revenue, which totaled $29 million for Q4 2022, up 76% YoY. Commerce revenues benefited from BuzzFeed’s forays into livestream shopping, as well as in-person events like ComplexCon, said BuzzFeed CFO Felicia DellaFortuna.
But BuzzFeed reported a net loss of $106 million for the quarter, which was largely caused by $102.3 million goodwill impairment charge resulting from a 48% drop in the company’s stock price during December 2022. The company’s stock fell about 10% in after-hours trading following its Q4 report.
Total revenue for 2022 was $437 million, a 39% increase over 2021. However, 2022 also saw a net loss of $201 million, compared to a profit of $26 million in 2021.
“We navigated the dual headwinds of a weakening digital ad environment and the ongoing shift to short-form vertical video, while also integrating Complex networks into the company,” said BuzzFeed CEO Jonah Peretti to investors.
And, in a perfect storm of horrible news, the majority of BuzzFeed’s cash and cash-equivalent balances were held at Silicon Valley Bank (SVB), which collapsed in spectacular fashion after a bank run last week.
However, BuzzFeed is still able to access its funds and doesn’t anticipate any long-term disruption after the Treasury Department, Federal Reserve and FDIC stepped in to guarantee SVB’s deposits, DellaFortuna said.
On the digital advertising front, like what many other publishers have seen, deteriorating macroeconomic conditions forced advertising clients to constrain their budgets over 2022, which negatively impacted ad and content revenue. Complex, which was acquired by BuzzFeed in 2021, was hit particularly hard by the decline in content revenue since content comprised the bulk of its business.
In addition to a pullback in advertiser spend, ad revenue was also impacted by decreased time spent on Facebook, which has been a persistent issue facing publishers for some time now. Facebook has been losing attention share to TikTok, especially among Gen Z and millennial audiences – hence BuzzFeed’s emphasis on vertical video.
BuzzFeed expects Q4’s negative impacts on ad revenue to continue in Q1, projecting overall revenue between $61 million and $67 million.
To make up for lost ground in 2022, BuzzFeed doubled its short-form vertical video across TikTok, Instagram Reels and YouTube Shorts. Quarterly views on Reels and Shorts typically exceed 1 billion, Peretti said, and Q4 viewership of short-form content tripled YoY.
The company sees YouTube’s rollout of a rev share for Shorts as validation of its investment in short-form vertical video.
BuzzFeed is also betting big on its partnership with OpenAI, the announcement of which caused the company’s stock price to double back in January. AI-powered content will move from the R&D stage to being a core part of BuzzFeed’s business in 2023.
For example, Peretti previewed plans to add an OpenAI interface to the CMS used by BuzzFeed writers to generate content. And the company plans to extend the OpenAI interface to its community of readers to allow them to generate personalized quizzes and potentially other content.
BuzzFeed is already using OpenAI to generate infinity quizzes with unlimited possible results. It has also used these infinity quizzes to create sponsored content, like a sponsored quiz by ScottsMiracle-Gro that identified a user’s “plant soulmate.” And at SXSW this week, the company debuted a chatbot game that allows users to launch a simulated career as an online influencer.
BuzzFeed is planning for these AI content-generation products, in addition to vertical video, to open up new areas of monetization. However, Peretti said, “it takes time to ramp monetization of newer content formats.”
