It appears Buzzfeed may have lost its buzz.
At the very least the fat content startup founded by media mad scientist Jonah Peretti has certainly had its share of bad news of late. First, there was word the company missed its revenue targets, and now the company is laying off 100 – or 6% – of its 1,700 person global workforce.
For many of us, it’s a surprise to hear about Buzzfeed’s struggles given Peretti’s nearly unbroken string of success over the past dozen years. As the creative genius behind the early days of Huffington Post, and later turning Buzzfeed into one of the fastest growing and influential digital media publishers of the past decade, it seemed for a long time that anything Peretti touched turned to gold.
But in today’s world where no publisher is spared the winds of change from platform monopolies like Facebook and Google, Buzzfeed has realized the limitations of late of having what is primarily an ad-supported business model.
In an internal memo to employees, Peretti outlined how Buzzfeed’s ad-driven business model has started to miss a cylinder or two:
“As our strategy evolves, we need to evolve our organization, too — particularly our Business team, which was built to support direct sold advertising but will need to bring in different, more diverse expertise to support these new lines of business.”
So what does a company that built a hugely popular website monetized primarily through advertising do when revenue growth starts to slow?
As it turns out, we may already have the answer.
Over the past year, the company has slowly rolled out a new line of physical products online. Tapping into the impressive success of its lifestyle publications like Tasty, Buzzfeed first started with a cookbook and more recently debuted its own cooking appliance in the Tasty One Top. And last month, the company recently rolled out its first card game, Social Sabotage.
And in his memo today to employees outlining changes, it looks like the company is doubling down on the early success of its products:
“Finally, we are expanding our Product Labs business, which exceeded our expectations in its first full year of operations, into BuzzFeed Commerce which has a strong lineup of new licensing and commerce partnerships, and new products for 2018. BuzzFeed Commerce will work closely with our new BuzzFeed Media Brands team to create new opportunities for our brands in the way it has with Tasty.”
While it’s too soon to say how many Tasty One Tops and card sets the company has sold, my guess is probably a lot. Last year, the company worked with Oster to run a sponsored cooking video that included the Oster grill. Within a day, the Oster grill had completely sold out on Amazon, despite the fact the cooking video didn’t have a link to the Oster grill Amazon page.
Now imagine what happens when the company starts featuring its own grill repeatedly in its cooking videos and asks its readers to buy it?
Perhaps it’s not all that surprising that Buzzfeed is trying to convert its community into paying customers. Companies like ChefSteps and Instant Pot have been able to build successful hardware businesses on a much smaller scale through tapping into their own enthusiastic communities, and with hundreds of millions of video viewers of its cooking videos every month, it seems like it would be a huge missed opportunity if Buzzfeed didn’t try.
Maybe, maybe not. But either way, I am certainly excited to see them try.
You can watch my conversation from the Smart Kitchen Summit with Talia Halperin, GM of Tasty Commerce and Claire King, head of Culinary for Tasty below: