- Respected media analyst Douglas McCabe, of Enders Analysis, said BuzzFeed’s job cull shows it is caught in a “perfect storm.”
- He listed four reasons why the company should be worried, including its plateauing traffic, restless investors, and a content identity crisis.
- BuzzFeed says it is still growing and is “very well-positioned for 2018.”
BuzzFeed’s jobs cull shows how it is caught in a “perfect storm” of problems, according to a respected media analyst.
The media company has laid off 100 staff in recent weeks, 39 of whom worked in the UK. The redundancies have been quick and clean, with trade union the National Union of Journalists describing them as “brutal.”
Douglas McCabe, CEO of UK media analyst Enders Analysis, said the cuts show that “a number of issues have come to engulf BuzzFeed all at once.” A BuzzFeed spokeswoman said the company is still growing and is “very well-positioned for 2018.”
McCabe broke BuzzFeed’s “perfect storm” down into four areas:
1. BuzzFeed’s audience is “plateauing“
ComScore figures show US readership fell nearly 17% from 80 million unique users in December 2015 to 66.5 million in December 2017. It’s a similar story in the UK.
BuzzFeed prefers Nielsen figures, which include Facebook and YouTube video views, and provide what it believes is a more accurate picture of its social-first strategy. BuzzFeed shared with Business Insider data for August to December 2017 – and it’s a steady upward curve.
BuzzFeed’s US audience stood at 145.7 million in August, rose to 163.1 million in October, and fell to 158.3 million in December, according to Nielsen. It represents growth of nearly 9% over the five-month period.
BuzzFeed also pointed to data from Tubular Labs, which analyses social and video audience. It showed it that BuzzFeed was the number one “cross-platform media and entertainment property” for 11 months last year.
2. BuzzFeed has lost “market share” in digital advertising
It is well-known that BuzzFeed missed its revenue targets last year, coming in 15-20% short of its $US350 million (£245 million) goal.
CEO Jonah Peretti has been realistic about the company’s performance, telling the Columbia Journalism Review last week: “I would say we had a good year but not a great year.”
Specifically, he admitted that some of the products it offered advertisers did not deliver enough return because they were labour intensive and more closely resembled TV adverts than BuzzFeed’s social roots.
“There was demand from the market but it wasn’t an area where we felt we had enough of a competitive advantage, and it was something that was really underperforming relative to other products we had,” Peretti said.
It has sought to address this by launching programmatic and display advertising for the first time last year. “We figured that there are also ways we can generate additional revenue from all the content we’re creating that don’t take a lot of extra effort,” Peretti said.
McCabe said the advertising issues are far from unique to BuzzFeed. “The businesses that will be able to continue growing digital advertising are those with enormous scale, or those with almost entirely logged-in usage. In other words, you need to know who your users are – it makes an enormous difference to advertisers,” he explained.
3. The company could be “losing investor sentiment”
BuzzFeed’s backers include NBCUniversal and Hearst, but McCabe thinks they could be getting restless about the company’s prospects.
He said there may be a creeping realisation among investors that what started as a tech venture in 2006 has grown up into more of a traditional media company, with all the higher costs that entails.
“BuzzFeed has perhaps assumed they can grow top-line revenue at the same rate as in the glory days and investors have maybe just started to change their view of what is possible. Not just in terms of top-line growth, but also the cost base,” he explained.
4. BuzzFeed has an identity crisis
McCabe said that because it offers such an “extreme” mixture of high-quality investigative news and viral content, BuzzFeed can leave readers “confused” about its mission.
“BuzzFeed tried to sit in the middle – it is not one thing or the other. That’s an uncomfortable place to be,” he said. “It has got to try and find a balance between what it’s trying to achieve commercially and what it’s trying to achieve editorially. The balance they have got at the moment demonstrates that it’s not really working.”
McCabe did, however, praise BuzzFeed’s editorial ambition. It has led the agenda on a number of issues in the UK this month, including securing a leaked copy of the British government’s economic forecasts on the impact of Brexit.
A BuzzFeed spokeswoman said the company is in good shape for the year ahead after completing its redundancy programme. She said:
“BuzzFeed grew revenue, content views, unique visitors, and time spent in 2017; we’ve expanded our ad offering with new products and programmatic, and rapidly diversified revenue through commerce, licensing, and development for TV and film.
“With a strong, growing portfolio of brands in BuzzFeed, BuzzFeed News, Tasty, Nifty and more, we have greater audience reach and a more diversified business than ever, and are very well-positioned for 2018.”
And as Peretti pointed out to the Columbia Journalism Review, BuzzFeed is still a growth story. “We had another year of growth in 2017, but we’re always trying to grow more and faster,” he said.