OMG: Is BuzzFeed facing serious sales buzzkill?
IRL, is BuzzFeed killing it, or suffering from buzz kill?
The answer, according to a report in The Financial Times, is that the news site is suffering from a major fail. The company has cut its 2016 revenue target in half, slicing it from $500 million to $250 million, the publication reported. That came after the company missed its 2015 target by more than $80 million.
While BuzzFeed's troubles might go viral -- especially among those who look down on its listicle and quiz-heavy content -- the problems facing the site and its rivals raise questions about whether the hype around fast-growing digital sites might be slowly deflating. Mashable founder and CEO Pete Cashmore last week said his company was firing an unspecified number of employees so that it could shift to video and away from world news and politics.
But if all was well in the digital world of viral content, would these companies be facing pressures on their business models? In other words, are readers so glutted with quizzes, lists and "you won't believe this" stories that they aren't clicking on links the way they used to?
Not so, BuzzFeed chairman Ken Lerer told Re/Code.
"There's nothing cratering in the industry. It's better than ever," Lerer told the tech site. "It's just different. And if you want to succeed, you have to open your eyes and realize how it's different, and take advantage of it."
A few theories are evolving to explain what's going on with BuzzFeed's viral content losing its infectiousness. For one, rivals are edging in on BuzzFeed's cachet, creating more competition and potentially lower ad pricing. Secondly, the so called "native content," or stories that it creates for marketers, may not be the success that the company had hoped.
In one case last year, BuzzFeed said it couldn't say whether its campaign for Toyota prompted its readers to visit showrooms or pony up for a car, according to Digiday. But marketers increasingly want proof that such sponsored content is helping spur sales. According to the FT, BuzzFeed is hitting a wall when it comes to growing its native content business, partly because the campaigns take longer to put together than news stories and they involve receiving editorial sign offs from the advertisers.
Whatever the case might be about BuzzFeed's revenue growth this year, the site remains popular with teen and millennial readers, hitting the sweetspot of news and entertainment content for 18 to 34 year olds. But traffic hasn't appeared to have grown during the last year, according to data site QuantCast.
Given the challenges facing BuzzFeed, one question is whether it will manage to keep its $1.5 billion valuation, earned thanks to investments from venture capital firm Andreessen Horowitz and a $200 million investment from Comcast's (CMCSA) NBC Universal.
As BuzzFeed demonstrated last week with its video of employees exploding a watermelon by wrapping rubber bands around it, steady pressure can sometimes lead to messy results.