Digital companies must think beyond traditional media and online commerce to build solid growth.
So what’s next for a digital media company that is scaling back its news staff and struggling to gain a foothold in the supposedly more lucrative e-commerce space? Multiple experts have told BuzzFeed that it must continue to position itself as a profitable player in tech. They should look into Web3, the next generation of blockchain-based internet, which supports cutting-edge tech like NFTs and metaverse.
“It would be consistent with the tech-forward story they are selling to [Wall] Street,”Peter Csathy is the chairman of CREATV Media Media, a media and tech advisory company. “The trick is to convince the Street that it is more than a media company with these numbers … and commerce is also the burgeoning world of Web3.”
As the first digital media company to go public, BuzzFeed faces growing pressure to boost its profit margins — and traditional advertising and content-based revenues will not be enough to convince investors. BuzzFeed emphasized its potential for commerce growth in its preparations for an IPO. This was especially true with its partnership with Tasty, a food brand, and Complex Networks, a youth entertainment company. Each of these companies earn commissions from sales via content, events, clothing, and other merchandising.
“As a private company, BuzzFeed could attempt any new revenue growth strategy with little fanfare outside of the organization,”Paul Roberts is the founder and chief executive officer of Kubient digital ad company. “As a newly public company, there is a tremendous amount of pressure to not only share your roadmap, but to also execute against that roadmap.”
Non-fungible tokens, or NFTs, are another revenue source. These non-fungible tokens (NFTs) are the collectible bits of Blockchain that every artist from Hollywood studios to emerging artists has made into the Next Big Thing. The New York Times and The Associated Press are legacy publishers that have sold NFTs. Articles PhotographySix-figure salaries. Some digital artists are Made tens or millionsYou could auction their work. BuzzFeed could, ostensibly, get in on the action with its brands and content to create digital goods for the metaverse. This immersive virtual reality world could include digital goods.
“It certainly could be … a limited edition Gucci bag NFT, or it could be enabling a celebrity, whom they cover in content, to bring an NFT opportunity to their audience, [like a new song, visual or experience],”Csathy said.
BuzzFeed could also use NFTs to return to its roots. Memes, quizzes and viral content, ingrained in BuzzFeed’s DNA at its height, especially lend themselves to this digital economy.
“They could build a footprint [in NFTs] with entertainment,”Quynh Ma, CEO of marketing company Moving Image and Content said. “The core of their content business is trending on pop culture, unlike Hearst or Condé Nast.”
BuzzFeed may be able to attract a younger audience through the development of more Web3 products. BuzzFeed BuzzFeed started with millennial entertainment, but companies are now targeting Gen Z. Based on a Study 2021Gamblers Pick bets that Gen Z is more likely to be influenced than other generations by platforms such as Reddit or Twitter to invest in cryptocurrency, memes, and NFTs rather than traditional assets.
Jonah Peretti, founder and CEO of Jonah Peretti, hinted at future investments within the metaverse on his first earnings call. He also blamed Facebook’s slow commerce revenue. “As we unify the Complex Networks, HuffPost, and BuzzFeed teams, we see further opportunities to deepen our commerce relationships with our audiences and partners, extend into new categories, and influence shopping behavior to drive growth in this business over time,”Peretti spoke on the call. “And as our platform partners commit significant investments to building the metaverse, we are well positioned to capture our share of this opportunity.”
BuzzFeed representatives declined to comment on this story.
BuzzFeed isn’t alone in its struggles with ecommerce. As the space becomes saturated, consumers shop directly via social media or reduce their spending due inflation, then BuzzFeed will be struggling.
“The commerce business will only get more competitive for publishers as the world comes out of a COVID-induced buying frenzy to a more fiscally conservative period,” Roberts said.
BuzzFeed will likely partner with other brands in order to establish a commerce company if it pursues Web3 products. Doron Gerstel CEO of global ad firm Perion said. “They will need partnerships with people like OpenSea and Nifty, who have already carved out huge swaths of the ecosystem,” Gerstel said. “There is certainly revenue to be captured, but they don’t have the free cash flow of some of the media giants who are already staking their claims. So they need a BuzzFeed-first strategy.”
BuzzFeed could also acquire companies that are experienced in the respective sectors, such as crypto companies and tech platforms, to further cement its status as a tech-driven organization. In the past decade, BuzzFeed’s purchases have included the data company Kingfish Labs, consumer web company Torando Labs, cloud platform GoPop and news site HuffPost.
“Media companies don’t have a good grasp of NFTs yet,”Csathy said. “Looking outside of the box of commerce is truly what will get them into the promise land.”
