Dented by layoffs, BuzzFeed charts a path to a sustainable business

In a memo sent to employees Tuesday evening, BuzzFeed CEO Jonah Peretti revealed the company is embarking on a substantial reorganization designed to reduce costs while enabling the company to invest in what’s working. Many different teams, including BuzzFeed Originals (home to quizzes, and birthplace of video stars such as the Try Guys), BuzzFeed Media Brands (home of Tasty and Goodful), Market (home of its commerce content), Branded Production and Publishing are all being grouped into a consolidated Content group, designed to better capitalize on BuzzFeed’s distribution.

BuzzFeed is also scaling back centralized resources for its international bureaus, the memo said, and simplifying its Studio division to focus purely on developing and selling shows to other platforms. BuzzFeed’s commerce business is being merged with its marketing business under Ben Kaufman, now named CMO.

“We restructured to reduce our costs and ensure our future,” Peretti wrote in the memo. “But, knowing we had to do that, we made strategic decisions on how to reshape our organization — so we can operate more efficiently while continuing to deliver for our audiences and grow.”

What’s obvious is, despite the course charted by BuzzFeed CEO Jonah Peretti a year ago with his “9 boxes” diversified revenue strategy, BuzzFeed needed to significantly rein in a cost base that ballooned on the back of nearly $500 million in venture funding. Overall, the cuts have left behind a publisher that is less global and less invested in producing text-focused content or video supported purely by platform advertising revenue. The relatively spare cuts to its commerce and video licensing operations reveal a commitment to those lines of businesses. It also raises fresh questions, both internally and externally, about BuzzFeed’s commitment to news as a category. (A year ago word leaked that BuzzFeed News chief Ben Smith held talks with Emerson Collective about an investment.)

A BuzzFeed spokesperson declined to comment on the record for this story.

A new era for BuzzFeed
In some ways, the layoffs represent the end of an era for BuzzFeed, which pursued breakneck growth for years, often at the expense of short-term profitability. Fueled by a test-and-learn ethos (and boatloads of VC cash), BuzzFeed expanded from user-generated content to deeply reported news and long-form video. It poured a revenue foundation with sponsored quizzes and built a more sophisticated advertising operation that included sales, creative services and a commerce unit that has helped brands launch their own products.

Those businesses, in some form or fashion, will all continue — but in a reduced form.

BuzzFeed Originals, which is the group responsible for the quizzes as well as producing original series such as “The Try Guys,” saw its headcount reduced by 40 percent, according to sources familiar with the matter. BuzzFeed News let go of nearly 20 percent of its reporters, per a report in The New York Times. The company’s creative staff saw significant reductions as well. The week’s layoffs also continued BuzzFeed’s retreat from international markets — everybody at BuzzFeed News Mexico, BuzzFeed Spain, its sole Russian staffer, nearly half of BuzzFeed UK were let go; more than 40 percent of BuzzFeed Australia was notified that their jobs are in jeopardy. In total, BuzzFeed is letting go of almost 220 employees; the company had 1,450 employees prior to the layoffs.

BuzzFeed is now focused on controlling costs rather than experimentation. That will cut close to the BuzzFeed core. Peretti’s founding story revolves around how his own experimentation with online virality played a crucial role in BuzzFeed springing to life.

To make up for some of the loss in manpower, BuzzFeed will lean more heavily on unpaid contributors and editorial fellows to make quizzes, sources said. This year, BuzzFeed will resurrect a fellowships program, but in an expanded form. Fellowships will last 12 months instead of three, and the number of fellows BuzzFeed plans to hire – up to a dozen, one source familiar with the matter said – represents a substantial increase from previous years. Though it’s unlikely those fellows will be tasked with producing hard news, they will be expected to produce a lot of the personality-focused content that BuzzFeed has long been synonymous with.

BuzzFeed also does not expect the layoffs to reduce its overall editorial output, said a source familiar with the matter. The publisher will look to hire freelancers to help with increased demand for video output.

Plagued by platform struggles
To some extent, the week’s cuts were affected by the same platform struggles every media company has experienced last year. One former BuzzFeed employee noted that the changes Facebook made to its news feed in 2018 had a substantial impact on the reach of BuzzFeed’s content, from BuzzFeed News to its branded content; stories that once reliably gathered 200,000 visits through Facebook were suddenly lucky to get 20,000, this source said. That loss of distribution made covering many topics unsustainable, particularly in foreign markets.

BuzzFeed News content was hit especially hard by Facebook’s changes, sources said. But “this was something literally the entire company was facing,” that source said. “I think management did a good, if not convincing, job of telling us that we shouldn’t be obsessing about traffic. But our numbers just plunged.”

In other ways, some experienced staffers were the victim of BuzzFeed’s own success at building a publishing platform. Departing director of quizzes Matthew Perpetua noted that “a LOT” of BuzzFeed’s quizzes traffic came from content produced by unpaid contributors.

‘What is BuzzFeed?’
With the direction the layoffs are taking, some current and former BuzzFeed employees fear the company is losing a core piece of its identity.

Though layoffs are traumatic for any workforce, many BuzzFeed employees were also shaken by the specifics of who was let go. Staffers who were responsible for some of the company’s most defining moments — a breakout viral post about a dress; the hands-in-pans recipe video format — were shown the door, leaving many wondering if some essential ingredient in the company had been let go.

“The mood is: with these people who make the internet weird and interesting gone, what IS BuzzFeed?” one current employee said. “It’s not so much, ‘Hey, are we doing less news and more x.’ It’s like, ‘OK, what are we now?’”

“If you look at the layoffs, what happened is the people who cared about the quality of the content, not just the raw numbers, lost a fight,” said one former staffer.

New direction
Based on the changes, BuzzFeed going forward will prioritize areas that can bring back meaningful revenue for the company — as well as areas that don’t require expensive upfront costs.

Over the past year, BuzzFeed has sought to focus more on video production deals where it’s paid to make shows or has some type of monetization partnership in place with the platform distributor. “AM to DM,” a daily news show it produces for Twitter, was recently renewed for a second season and is profitable. BuzzFeed was also paid by Netflix to produce “Follow This,” a 20-episode documentary series centering on its newsroom. This show had its own dedicated staff, many of whom were hired on a freelance basis. When Netflix canceled the series, the crew was let go, as is typical of Hollywood TV productions.

It also remains committed to commerce, which it has turned from a source of curiosity into an almost $50 million source of advertising and sales revenue, thanks in part to big-dollar projects where it helps advertisers develop a product, in exchange for a substantial commitment of ad spending.

“You’ve got to think about focus, especially when you’re facing hard times,” said Bernard Gershon, president of Gershon Media. “If you’re struggling, you’ve got to focus and make one piece of your business work.”

Read Peretti’s full memo below: