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BuzzFeed is cutting 100 jobs in the US and reorganising its business to reflect a shift away from relying solely on native advertising, at a time when many online publishers are struggling to capture digital advertising growth.
The move follows a report in the Wall Street Journal that the news and entertainment website is set to miss its target of $350m in revenue this year by 15 to 20 per cent. It would not be the first time BuzzFeed has fallen short: last year the Financial Times reported that the company had missed its 2015 revenue target and slashed its internal projections for 2016 by half.
BuzzFeed’s editorial and business operations in the UK will also see job cuts following a consultation process which is expected to conclude in 45 days.
Publishers have found it hard to compete for digital advertising dollars in a market that is dominated by Google and Facebook, which together account for more than 60 per cent of spending in the US and nearly all of the market’s growth.
BuzzFeed, which built its business on creating content for advertisers, is now looking to other revenue streams, including e-commerce, video and licensing, to keep its business growing and meet investors’ expectations. The company is backed by Comcast’s NBCUniversal, which has invested $400m at a valuation of $1.7bn.
“As our strategy evolves, we need to evolve our organisation, 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,” Jonah Peretti, chief executive, said in a memo to staff on Wednesday. He added that this year “for the first time a quarter of our annual revenue will come from sources other than direct sold advertising”.
The business restructuring includes the departure of Greg Coleman, the former advertising executive who has been BuzzFeed’s president since 2014. Mr Coleman will remain an adviser to the company; BuzzFeed has begun searching for a chief operating officer.
Other digital media companies are also feeling the squeeze as lacklustre growth fails to match lofty valuations. Mashable, which was valued at $250m last year, is said to be close to a sale to the tech publisher Ziff Davis for $50m.
Vice Media, which is valued at $5.7bn and whose backers include 21st Century Fox and Walt Disney; private equity group TPG; and WPP, the advertising giant, is also expected to fall short of its revenue target this year, the Wall Street Journal reported.
Also on Wednesday, ESPN, the Disney-owned sports network, said it was eliminating 150 jobs, primarily in studio production, digital content and technology.