BuzzFeed’s acquisition of HuffPost has raised questions about the future of the number one digital publisher. When the two teams begin to work side by side, the combination provides advantages for the publishing company that go beyond just a demographically broader audience, launching new products and business opportunities.
Who is a BuzzFeed reader who visits HuffPost on a regular basis? Audiences have a smaller crossover than BuzzFeed’s commercial team expected; Only 10% of readers visit both cases regularly, according to her own research. This presents a technical challenge for new merged businesses, but it also provides them with an enormous amount of leeway for commercial and editorial growth.
BuzzFeed acquired HuffPost in November of last year. At the time, BuzzFeed founder and HuffPost co-founder Jonah Peretti noted that the two companies’ combined reach puts them at the top of media networks globally: “With the addition of HuffPost, our media network will see more users spending more time with our content than any of the our peers.”
It was also an implicit response to the deep cuts across the entire ecosystem of digital first publishers, which were once considered the leading lights of the new publishing era. Ad revenue has not kept pace with the ambitions of these digital natives, and diversification into affiliate revenue and e-commerce was just a good start to offset rather than the end of the journey.
So what business opportunities are there for the combined BuzzFeed/HuffPost group that could regain some optimism about digital publishing? According to BuzzFeed’s commercial director for Europe Casey McDevitt, the opportunities lie beyond the raw scale and in building on the core strengths of both companies.
network of fans
McDevitt acknowledges that BuzzFeed has expanded its commercial focus since the strong days of the company’s founding, which has had an impact on its revenue mix: “When we first started, we were doing the whole hub of the video…but that’s how much we areIt has changed since then, local advertising was a huge part of our business, almost 100% of the business in those days, and now that’s down to 50% of our business.
“cThe CFO always talked about being an octopus climbing a tree – you always need an extra arm to climb to the next branch before that. A great Buzzfeed analogy because if you depend too much on what’s great now, things will change quickly. So yeah, we’re now seeing huge success in the likes of licensing and affiliates. I think this is a business that is here to stay.”
At BuzzFeed, this focus has manifested in the launch of brands like Tasty and its sexual luxury brand, which McDevitt believes are magazine brands that almost happen to exist purely digitally. He argues that affiliate and e-commerce revenue can be rapidly scaled up via HuffPost using BuzzFeed’s existing expertise: “This has been a place where we’ve grown a lot. We’ve built a huge affiliate program with Amazon – just last year we’ve sold 450% year-over-year growth on Amazon Prime Day. Expand that to HuffPost – the huge audience talking about different products and such – we see it as instant opportunity.”
This speed will appear first in HuffPost’s publishing strategy over Amazon Prime Day later in June. The entire strategy was laid out over a two-week period, according to McDevitt, which speaks volumes about how quickly the team adapts.
What is particularly striking about this lack of audience exchange is that it allows the merging company to shift its attention to serving an older audience using the content creation expertise of the BuzzFeed team. This has a significant impact on the business’ ability to generate revenue from sectors such as travel and automobiles, which McDevitt admits is reluctant to spend on BuzzFeed due to purchases from its content and audience.
Outside of this affiliate revenue, BuzzFeed takes an approach that there’s a lot of opportunity around sponsored content. McDevitt states that one of the main areas BuzzFeed can learn from HuffPost’s previous efforts is in its podcasts and sponsored sections: “We haven’t done much in the podcast or newsletter spaces. HuffPost has a lot in there. So Paul Waugh at HuffPost got The Waughzone…Brands want to be in this space, so there’s a huge opportunity out there.”
McDevitt also notes that diversification and partnerships will be an integral part of digital publishers’ strategies in the medium to long term. The over-reliance on third-party platforms and the ominous pivot to video that followed, ultimately, was what caused the decline in importance of digital natives five years ago. This eventually led to decisions such as downsizing HuffPost’s UK news division in the immediate aftermath of the acquisition.
Despite this, McDevitt is optimistic about the benefits of those partnerships. He says, “One of our biggest areas of growth in the past year was from BuzzFeedOh really Deep partnership with Twitter. So, as brands also want to expand beyond this duopoly, Twitter is a great place to do that, to have this huge instructable audience.”
This new focus on partnerships with Twitter has led to series like #WhatToWatch, a partnership with Tesco centered on Tasty, and an upcoming gaming-focused show called Press Play to launch this fall. It talks about the strengths of sharing experiences between companies, as we’ve also seen with Vice building on the strength of Refinery29’s post-merger branded content.
McDevitt also believes that there is a high chance of the third-party cookie’s demise. Publishers with strong internal sub-brands like Tasty or BuzzFeed News have the ability to use contextual advertising to target audiences without having to use invasive technology. In that space, a publisher with a larger network of those sub-brands has an advantage: “We’re going to build the biggest cross-platform. People want to be around real audiences, and that’s what we have.
“You want a loyal audience, real enthusiastic audiences, and people who have actually come back to a destination. Now that we can do that with so many brands around the world, it’s really exciting.”
There is still a lot to work on, both for BuzzFeed and HuffPost, and for digital publishers in general. After last year, sponsorship revenue is only beginning to recover, and there is still a great deal of uncertainty about the future of digital advertising following privacy changes from browsers and platforms. Despite this, there is undoubtedly strength in shared experiences, such as those between existing commercial teams at BuzzFeed and HuffPost.