BuzzFeed boasts confidence in its diversified business seven months after going public
BuzzFeed Inc. is not immune to the economic challenges lurking in the media industry as a recession is predicted, but COO Christian Baesler is confident that following the merger of BuzzFeed and Complex Networks, which closed in December, the combined company is diversified enough to weather the storm.
And perhaps to do so without the external support of public offerings, as going public via SPAC intended. At the time of writing this, BuzzFeed’s share prices sit at $1.57 per share, well below the initial opening price of $10.00. Admittedly, the stock market is not in the strongest position either, which would put any newly public company at risk.
Despite the impact to advertising that is already starting to be felt throughout the industry, Baesler told Digiday the company is prepared to keep advertisers spending as well as to win new business thanks to the audience scale of BuzzFeed and the cultural influence from Complex — something that is equally important to help its commerce business get back on track after missing its mark in the Q1 earnings report from May.
In the past couple of months, the company’s sales team has been reorganized into one operating body that works across all of its brands including BuzzFeed, Complex, Tasty and HuffPost. But the last earnings report still sparked some red flags that the second quarter wouldn’t be as golden as once expected, including CFO Felicia DellaFortuna predicting programmatic advertising revenue being “soft” the next few months.
While Baesler declined to share much in the way of performance numbers or revenue figures — barred by SEC regulations — he did share his optimism about the company’s current position. Still, indicators of pages being torn from the spring and summer 2020 playbook to be played back two years later could start to show, like the layoffs that occurred of 1.7% of its staff back in March. Ultimately, time will tell how strong BuzzFeed 2.0 can stand on its own.
Below are highlights from the conversation with Baesler, lightly edited and condensed for clarity.
A lot of media companies are starting to feel the impact of the impending recession or are bracing for what seems to be an inevitable economic slowdown. What is BuzzFeed doing right now to prepare for this possibility?
I can’t give you a step beyond what was already shared on what we’re seeing or what we’re feeling in the market, but more in general on that question, I just joined BuzzFeed now six months ago through the acquisition of Complex and so I’m pretty new to the BuzzFeed side and the role I have here. But BuzzFeed has been one of the strongest companies navigating the pandemic and the recession that followed in 2020, with 2020 actually being a year of profitability after a year of losses in the prior year in 2019. Not just through cost savings, but also through revenue growth and diversification. The BuzzFeed team has proven to be very nimble and agile and always innovating around new products, new monetization, new audience channels and ways to engage with the audience in terms of different formats. That’s really shown multiple times that the team is ready for any macro changes, and has been seeing it as an opportunity to innovate.
Similar on the Complex side, when the pandemic first hit in 2020, Complex was a big video business [with its] shows and studio. The Complex team was super quick to adapt to shoot all those remotely. There wasn’t really any fallout or any missed episodes and sponsorship with these episodes continued as they were before. There wasn’t any disruption to the core business. We [also] do ComplexCon every year as our big festival and during the pandemic, we started launching ComplexLand as a massive virtual festival, all to say that whatever the challenges were the last few years and whatever the challenges of the next few years, I feel confident about our ability to always adapt and innovate, and again, actually improve and improve our core business along the way.
Currently, BuzzFeed’s shares are sitting at $1.50 per share. The intention of going public via SPAC was to raise money for the business, but it seems that leading into what could be a slowdown in the economy, BuzzFeed will be relying solely on the money earned from its revenue lines rather than raised funds. How do you think this poses BuzzFeed Inc. for the looming recession?
As a public company, we can’t comment on our stock price, or what’s driving it or what’s happening or how we feel about it. In general, we’re confident about the potential we have as a business and are looking forward to delivering everything that we’re working on in the years ahead to grow this company.
BuzzFeed Inc. CEO Jonah Peretti has used the term “resilient” to describe the company. Do you think post-acquisition of Complex, the company will be able to withstand the hit to the advertising market that publishers are already starting to see?
[We] will always watch closely what we’re seeing in the market and what trends are happening with our partners, [but] also with the audience. Audience behavior also changed in 2020 with the pandemic and with the following recession, a lot of retail was happening online during that time. But more broadly, I think the reason why we combined Complex and BuzzFeed into BuzzFeed Inc. now is because those two businesses are so complementary with BuzzFeed having scale and Complex having an audience that is more male than BuzzFeed.
And then also the products that we offer are more custom in nature on the Complex side – like shows and ComplexCon and ComplexLand – and [on the BuzzFeed side, they are] more scalable and more performance-oriented. So we can serve partners with both.
And in general, if there’s any sort of economical downturn or challenge, what usually happens is that the partners that you work with go fewer and bigger. So, in general, those clients might work with fewer media companies, fewer publishers, and build deeper relationships [there] rather than go broad. And through this merger, we feel like we can satisfy all audiences in terms of all demographics, all genders, and have meaningful brands with massive scale across all of those. So we feel well positioned for any economical challenges.
How have you reorganized your sales teams or changed the conversations your teams are having with advertisers to be able to sell both sides of the business more efficiently?
When we were just Complex or just BuzzFeed before, we would usually check a few boxes, but maybe not all the boxes of what clients we’re looking for, like, again, looking for innovation or something that is groundbreaking. But then they also want efficiency in terms of pricing and making sure it reaches a lot of people. And independently, we were able to solve for some of it, but together, we now feel like we can solve for all of it.
We launched our combined sales offering in April, [and] since then, we have a combined sales team, we have a combined sales support team that really has one seller per client. We are really able to unify our approach across all the brands and all the products we have to service whatever needs a partner might have.
Let’s talk a bit about commerce, since in the Q1 2022 earnings report had commerce revenue making up about 12% of the company’s total revenue, despite projections it would be closer to a quarter of total revenue. BuzzFeed Inc. CFO Felicia DellaFortuna said during the quarterly investor presentation that part of this is due to referrals from Facebook being down. How have you been strategizing to get that business to its projected share for the year?
Commerce is one of our youngest businesses, both for BuzzFeed and for Complex, and we’re still in the beginning stages of learning what works, which platform works [and] which content works best.
We [also] have some different approaches to it. The BuzzFeed side is really about affiliate commerce and inspiring people to shop at retailers, where on the Complex side, it’s about creating original products that have [the] Complex brand on it that we sell to consumers or we collaborate with [artists like] Takashi Murakami on products we sell, which are then more owned and cultural moments that we create.
So it is a highly diversified business already that we have a lot of success around and I’m very optimistic about the future.
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