BuzzFeed CEO Jonah Peretti has been talking about revenue diversification and balance for years. Following his company’s latest executive departure, the digital publisher will be leaning even harder into that strategy.
On Tuesday, Sept. 17, BuzzFeed sent a memo to staffers announcing that chief revenue officer Lee Brown was leaving the company to take a role at Spotify. Brown is the latest in a string of high-profile executives to leave BuzzFeed this year, including former Tasty gm Ashley McCollum, who departed in September to begin consulting; former CMO Ben Kaufman, who stepped down from his role in August to focus on his role as CEO of Camp (Kaufman will be staying on until the end of the year); and Zé Frank, the architect of BuzzFeed’s video business, who exited the company in March.
In that same memo, Peretti said BuzzFeed will be overhauling the way that its business leaders work together, with Peretti and Ken Blom, BuzzFeed’s svp of ad strategy, bringing its ad sales and commerce leaders together for regular meetings to discuss strategy.
Peretti is on the lookout for a president, a position he expects to fill in the next few months. BuzzFeed has not had a president since 2017, when Greg Coleman departed. Peretti is hunting for someone who can focus on operations and strategy, rather than a well-connected name who might build BuzzFeed’s brand among marketers, according to one source familiar with the matter.
That search comes at a pivotal moment for BuzzFeed. Through the first half of this year, revenues from branded content, which remains BuzzFeed’s largest revenue source, have been mostly flat or down slightly, according to two sources familiar with the matter. There has been strong growth in a number of other areas, including pre-, mid- and post-roll video advertising, commerce and licensing. Peretti’s memo said the growth puts BuzzFeed on track for a 10th year of revenue growth and will be profitable for the second half of this year and the full year in 2020.
As competition in those arenas continues to intensify, and BuzzFeed has decided its point of differentiation will be multidimensional packages that solve for multiple business issues at once. For example, a program to promote LG’s convection ovens features branded content, plus a subscription cookie service powered by Tasty.
But to continue pursuing these kinds of partnerships, BuzzFeed will need to continue to coach up its existing sales force, two sources familiar with the matter said. Just a small handful of BuzzFeed sellers are comfortable talking marketers into these kinds of deals, according to three sources familiar with the matter. BuzzFeed will also have to overcome some hesitancy among brands and agencies, many of whom are unfamiliar or unaccustomed to investing their marketing budgets in this way, agency sources said.
Yet BuzzFeed executives like their chances to sell brands on the opportunity. “In the past, we weren’t getting credit for a lot of the sales we were driving because the research wasn’t there,” Blom said. “But with a strong scaled media business, the research is there for us to do something more innovative, more risky.”
Throughout 2019, BuzzFeed has focused on fitting its components together more tightly. In addition to a substantial reorganization it announced in January, BuzzFeed got rid of a brand development sales team, focused on smaller deals, in favor of a sales organization focused on three areas: emerging DTC-style brands, mid-market advertisers and field sales, who focus on catching bigger fish.
Those groups have spent the year getting coaching on how to sell brands on multidimensional partnerships, rather than simply pursuing quick transactions. Teams of specialists, which are versed in fields such as programmatic advertising, commerce and product development, have spent the year inserting themselves into the RFP process, offering up ideas for how they can collaborate or augment parts of pitches, one source said.
BuzzFeed has made progress on this initiative already. Earlier this year, Brown told Digiday that 80% of the brands advertising on BuzzFeed was spent on more than one area. Among the deals that cost the advertiser $1 million or more, more than three-quarters included a non-advertising component, such as brand licensing, commerce or product development services, a source said.
Yet the market may not be fully primed for what BuzzFeed is offering. While brands are always interested in something that will make them stand out, many are also leery of committing to anything unusually time-consuming or labor-intensive. “All of our clients are interested in that type of conversation,” said Dan Wood, a managing partner at Mediacom. “But they want to do it in a way that is not too draining on their resources.”
BuzzFeed’s sellers also have to navigate a divide that is frustrating many publishers that have diversified into areas such as affiliate commerce, where the teams and budgets that control affiliate and brand marketing are separated into silos. “Right now, they’re naturally cannibalizing each other in the market,” that employee said. “They’re either separate teams, or they’re one team with one budget and two goals.”
That same source saw that issue mirroring the early challenges that BuzzFeed faced in selling branded content, before it became a common investment among marketers. And the expectation within BuzzFeed is that they are setting themselves up for what marketers will want in the near future. But some still see their approach out in front. “I think they’re probably a little out ahead,” said Robert Glazer, the CEO of agency Acceleration Partners.
This story has been updated to note that Ben Kaufman will remain at BuzzFeed through the end of 2019.