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BuzzFeed plans to cut out “Google and other middlemen” to solve publishers’ attribution problem

What's New in Publishing 06 Jan 2020 11:58

After a tumultuous 2019, BuzzFeed is now edging closer to profitability, thanks in part to recent efforts in generating new revenue streams. The company’s newer lines of business brought in over $200 million last year, and almost every division of the company is now profitable. 

The biggest growth came from commerce, which now makes up 21% of BuzzFeed’s overall revenue, up from just 9% two years earlier. Last year, BuzzFeed drove more than $425M in directly attributable transactions, and this year the figure is expected to be much bigger.

“There has been this idea that digital media companies have been forced to diversify their revenue because times have been tough,” BuzzFeed founder and CEO Jonah Peretti said in an interview. “But the other side of the story is that the internet has really allowed for the creation of a new kind of media company that wasn’t entirely possible in the past.

“For most of BuzzFeed’s history, almost all our revenue came from native advertising. In the past few years, we launched new businesses and today 70% of our revenue comes from these new businesses.”

Let’s take a trip to Dallas as an example. The idea to go to Texas likely originated from content created by a publisher, like this Bring Me video that shows off the Margarita Mile in Dallas. Then the consumer goes to Google and searches “Dallas vacation.” The highest paid link in Google is likely Expedia or another online travel agency (OTA), and eventually the consumer finds a flight and a hotel. The two most important players in this chain are the publisher who inspired a consumer to take action and the companies that actually deliver the product, in this case the hotel and airline. But most of the profit is captured by digital middlemen who didn’t create much value.

The convergence of mobile content and mobile commerce means we can finally make progress on this problem. The traditional marketing funnel can be compressed and consumers can move more fluidly from inspiration to transaction:

The two most important players in this chain are the publisher who inspired a consumer to take action and the companies that actually deliver the product. But most of the profit is captured by digital middlemen who didn’t create much value.

Jonah Peretti, BuzzFeed founder and CEO

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