If you didn’t know that, you could guess it, based just on BuzzFeed’s rocketing traffic tally (see chart at the bottom of the story). And the explosion of eyeballs apparently is building a cash cow. Various published reports, citing inside sources, say the company is forecasting 2014 revenue of $100 million to $120 million, said to be approximately double last year’s count, though CFO Mark Frackt declines to comment on BuzzFeed’s finances.
Whatever the topline take, Frackt’s boss, founder and CEO Jonah Peretti, said last summer that the site was profitable — a notable achievement for a technology startup, given that, according to Frackt, it didn’t even begin trying to monetize its content until 2010, four years after its founding.
Even considering its success to date, the organization’s long-term objective is an ambitious one. “We’ve seen tremendous viewer and reader growth since I got here [in 2011], and the fact that the company can be financially successful, coupled with its editorial success, is great,” Frackt says. “But we’re not satisfied. Jonah is looking to build one of the dominant media companies for the 21st century, and we have a lot of work to do to get there.”
Not that Frackt hasn’t been impressed to this point. “The growth is more than I could have predicted,” he says. “As the finance person you try to forecast conservatively, but we’ve really tapped into the zeitgeist of what people want and how they want to engage with it on mobile and social platforms.” BuzzFeed says its content is “purpose-built for the social and mobile worlds.” Half of the site’s traffic is currently coming in from mobile devices, according to Frackt.
Virtually all of BuzzFeed’s revenue comes from native advertising aimed at building brand awareness. But such content, created jointly by advertisers and BuzzFeed, is designed to provide engaging experiences for site visitors and doesn’t have the look or feel of a hard sell, although it is clearly tagged as promotional. That helps advertisers, says Frackt, because it makes viewers more likely to share the ads with their contacts.
Content sharing is at the core of BuzzFeed’s mission. “There’s a lot of ways you can try to gain clicks on social networks. We’re not interested in that,” says Frackt. “We’re interested in a longer-term play. We’re very much geared toward getting people to share content — what is otherwise called word-of-mouth advertising. Social networks have allowed that to happen at a mass scale.”
BuzzFeed took a new direction last year by creating a video division after buying a small web-video company. The division’s videos are currently racking up more than 200 million views a month and the company is ramping up its push to create branded video content. “We feel branded video is going to be the next big revenue component for us,” Frackt says.
Another push, which the company launched in 2012 by hiring Ben Smith away from Politico to be editor-in-chief, is a transition to providing significantly more hard-news content, in addition to BuzzFeed’s traditional content lineup, which includes lists, polls and pet pictures. “New distribution technologies create new dominant media companies,” says Frackt. Time was launched in 1923 as the country’s first weekly news magazine. Radio allowed for the creation of CBS. Cable television spawned CNN and MTV. “All of them started out primarily with lighter content, and then as the distribution platforms matured, the content went upstream and more professional.”
Much of BuzzFeed’s political-news content is distributed via Twitter. “We pivoted in 2012, going from entertainment news and cat pictures to being on the plane with the presidential candidates so that we could be a place where Washington insiders went for information,” the CFO says. “And we understood that the aides and others that work for politicians get a lot of their information from Twitter.”
Today, though, traditional news organizations are beset on many fronts. Ad revenue is decreasing, they’re struggling to drive traffic growth for their web pages and people are proving less likely to click on ads when using mobile devices than laptop and desktop computers. Might BuzzFeed’s foray into hard news be misguided and its success short-lived?
“We’re very focused on all of that, but what differentiates us is that we aren’t burdened by the infrastructure that a newspaper or a TV-focused media company is,” says Frackt. “We’re developing content designed to leverage trends in the way people are consuming it, which is via social networks and mobile devices. And advertisers are embracing the idea of social advertising, which essentially allows them to act as publishers and speak to their consumers in a way that is more engaging than a banner ad, which we don’t feel works effectively.”