BuzzFeed, which aggregates all the viral/goofy/bizarre/hilarious content on the web, just raised $8 million and hired a new president. Now the NYC-based company is making a play to turn the web’s viral content into cash, through a handful of custom ad units that blur content with advertising.
BuzzFeed is betting this could eventually generate more revenue than standard display advertising. How’s that? Because ads that look and behave like content inherently seem a lot more genuine and interesting than standard display ads, which most Internet users have learned to ignore. (“Advertorial” is the holy grail of publishing, long used by magazine publishers and increasingly on the web. But it has to be done carefully.)
And, as a result, BuzzFeed’s customised ads perform much better. Some of its sponsored “story unit” ad units have clickthrough rates as high as 4% to 5%, with an average around 1.5% to 2%, BuzzFeed President Jon Steinberg says. (That’s better than the roughly 1% clickthrough rate Steinberg says he thought was good for search ads when he worked at Google.) BuzzFeed’s smaller, thumbnail ad units have clickthrough rates around 0.25%. (See illustrations below.)
So, what do BuzzFeed’s ads look like today? And how will they look in the future?
First, here’s an exclusive look at a new viral ad unit that BuzzFeed is developing to put brands inside the site’s content — this time in the voting tools. The “is this fresh?” widget could be sponsored by a deodorant brand, for example. This would let a brand “ride along” with content that is already going viral, instead of planning a specific campaign.
Here’s an example of a “sponsored” ad unit that looks just like BuzzFeed content, for the “9 most iconic spokespeople.” The ad is sponsored by Red Stripe beer, and therefore, the Red Stripe pitchman is featured in the ad unit. (Red Stripe is paying for ad impressions on a CPM basis.) If you click through, you get a content page with 9 videos on it, with a Red Stripe commercial first. This deal was brokered through a company called Sharethrough, but BuzzFeed will be selling these directly.
Here’s another ad unit that’s running now (upper-right corner) that looks like content. But the “buy your very own Buckyballs here!” link is an affiliate link that generates revenue for BuzzFeed if people make purchases through it.
Here’s the clickthough data that BuzzFeed’s Jon Steinberg wrote about: