After BuzzFeed and Thrillist turned to commerce to fortify their digital publishing businesses, BuzzFeed’s editorial efforts became secondary, while Thrillist’s ecommerce business crippled the entire company.  

BuzzFeed was founded in 2006 by Jonah Peretti, initially making its mark through user-generated content (from The BuzzFeed Community), and later building a journalist staff [Read the BuzzFeed Knowledge Base for more on the company’s history]. Though it received an influx of venture capital in the early 2010s, it was unable to raise post-2016. Since 2017, it has significantly diluted its editorial staff while reprioritizing BuzzFeed Media Brands (identity-driven lifestyle verticals such as Tasty, whose product arm acts as a BuzzFeed private label, which Peretti singled out as a “big” revenue driver in March 2019); a future fashion and beauty franchise; and BuzzFeed Commerce, which launched in November 2016 as the company’s in-house product development arm and also manages licensing and strategic partnerships.

BuzzFeed’s high level of user-generated content and large readership—about 690 million monthly readers, as of January 2019—make commercialization quite promising. Often, the UGC that gave BuzzFeed its name and BuzzFeed staff-produced content is indistinguishable, which helps productize the latter: Compare, for example, “16 Super Famous People Holding Random Things When They Were Poor So They Could Get Them For Free” (a UGC listicle) to “25 Cheap Things To Treat Yourself To Right Now” (a BuzzFeed-produced listicle with affiliate links). In addition to affiliate links and native advertising, which comprised the majority of BuzzFeed’s revenue, the company also capitalizes off of licensing, shoppable ads, and product reviews.

Outside of its ad business, BuzzFeed Commerce (previously BuzzFeed Product Labs) is working to use insights from the BuzzFeed readership for product development, creating higher-margin merchandise in house that it can also market on its site.

Ben Kaufman, who became the head of BuzzFeed Commerce after BuzzFeed acquired his company, Scroll, continued launching products conceptualized out of BuzzFeed content, including the Glamspin, which merged then-viral fidget spinners with lip gloss after finding a crossover in reader interests, and the Tasty Cookbook, a build-your-own recipe collection from the Tasty food video and recipe channel. The cookbook, which sold hundreds of thousands of copies, was created on-demand, vanishing the need to store inventory, which saved capital for the company, but required an expedited supply chain. It also led to the Tasty One Top, a hot plate collab with GE that sold out in its first release and was later spun into a full-blown cooking products line that BuzzFeed sold at Walmart—a partnership that began a year prior when BuzzFeed began featuring Walmart products in affiliate Tasty video links.

Like Goop, Glossier and Food52, BuzzFeed Commerce gives the media business a path to tap into revenue from higher-margin products. The Tasty product line is also a more durable route for BuzzFeed Commerce, which can use wholesale to establish its brand in front of Walmart’s wide customer base, while avoiding the quick rise but subsequently quick fall of viral products like the Glamspin. In turn, the company can productize its other identity-based verticals (as it has already done with its healthy lifestyle vertical, Goodful, which released a 100-SKU assortment to Macy’s in late 2018). As these verticals were born out of reader interests, commerce can follow suit.

BuzzFeed is also pursuing more commercial prospects that may not be wildly beneficial in the short term, but have potential long-term gains. In June 2018, it launched a consulting agency, BuzzFeed Partner Innovations, that for a flat fee offers five-day sessions to companies hoping to conceptualize new products, marketing campaigns, and manufacturing strategies. This allows BuzzFeed to share its knowledge about reader interests. It worked with Maybelline, for example, to ideate the beauty brand’s “summer fundles” (bundles of best-selling products “for an Instagrammable summer”) and Scotts Miracle Gro to conceive Lunarly, a subscription plant service for millennials. Though an agency model rather than a scalable product, the program helps BuzzFeed establish relationships with companies that could be beneficial to its growing commercial footprint down the line, as with Tasty and Walmart. BuzzFeed has also turned to offline retail. In November 2016, it launched a temporary store, Homesick for the Holidays, featuring one of the brands of the Scroll acquisition, Homesick Candles. Brick-and-mortar, however, lacks the potential scale of BuzzFeed’s ecommerce efforts and foray into wholesale, which will provide better short-term results and help the company gets its product brands in front of wider audiences.

BuzzFeed’s attempt to vertically integrate its commercialization efforts will also help the company reap higher margins and cut additional costs. But as BuzzFeed has already shown, it will likely mean pivoting further away from a robust journalism division in order to keep the business afloat. BuzzFeed spent significant funds on building out its news media team, even if the current focus in the company returns BuzzFeed to its roots and maybe be a more natural fit for the brand in the long run. Its journalism readership likely has little overlap with its UGC readership, which is much more monetizable. The BuzzFeed Community can continue to create content that informs BuzzFeed Commerce whose products BuzzFeed can target to its UGC readers.

Thrillist’s revenue model faltered after acquiring, but not integrating the menswear brand JackThreads with its editorial operations.

The digital publishing company Thrillist Media Group was founded in 2004 by Ben Lerer, officially launching in 2006 with a digital newsletter for young men that gave them the 411 on where to eat, drink and shop in their city and evolving into a website featuring multimedia content on 40 cities. In 2010, Lerer purchased a flash sale menswear startup, JackThreads, which he sought to merge with Thrillist’s lifestyle coverage.

JackThreads’ core audience matched that of Thrillist, whose readers could seamlessly shop the brand (the same information associated with their newsletter accounts could automatically be used to purchase products, sold direct-to-consumer). When Thrillist acquired JackThreads, it also inherited some manufacturing capabilities, allowing for even greater vertical integration and cost effectiveness. By 2014, ecommerce accounted for nearly 80% of the Thrillist’s nearly $100 million in annual revenue, and Lerer spoke about his aspiration to built the company into a $1 billion brand.

However, the brand, which was predicated on the once-trendy flash sales, created an unsustainable revenue model for Thrillist. In turn, the company tried to transition to selling JackThreads products at full price, which would raise its brand equity and bring healthier margins to the business. But this effort came too late—a problem that compounded given JackThreads’ overall lack of product differentiation from other online menswear companies.

Thrillist unsuccessfully looked for a buyer and sought new investment to resuscitate the joint operation. Investors were confused as to why the two brands were being pitched together rather than separately, pointing to a lack of integration between Thrillist’s content and JackThreads’ ecommerce. Lerer then announced in 2015 that Thrillist would spin off JackThreads.

Later on, Lerer conceded that his original plan to sell JackThreads directly on Thrillist sites “never really happened in a big way and, over time, one of the main tangible ways the sites partnered was marketing to each other’s users.” Though he raised $54 million in new funding in 2015 and split the brands into two separate companies, he continued looking for a seller to buy JackThreads, which eventually folded in 2017. It’s not clear whether Thrillist would be better off focusing solely on its advertising business, but JackThreads certainly came at a cost to the organization, which was forced to seek other revenue drivers (discussed below).

Both BuzzFeed and Thrillist are plagued by Facebook and Google’s monopoly over digital advertising, which may force them to grow their commerce capabilities more sustainably as well as look to mergers.

In 2016, Thrillist was brought back from the brink with a merger between three other internet media sites—The Dodo, NowThis News, Seeker—forming a holding company called Group Nine Media where Lerer serves as CEO. By 2017, the holding company, which had received a $100 million investment, was valued at $600 million and also acquired a production company, Jash. In March 2019, Group Nine Media and Refinery29 also reportedly began talks about a merger in order to reduce dependency on digital advertising.

With Thrillist in a more stable position, Lerer is now preparing an ecommerce comeback via Group Nine that combines affiliate advertising, licensing and direct-to-consumer products. Lerer has lots of lessons from JackThreads to apply to this new venture and has said upfront that the point will be to develop “organic extensions of [the Group Nine] brands rather than building a totally different standalone commerce business” that they own. While execution will illuminate whether or not this is the case, this vision has greater potential than JackThreads, which Thrillist acquired and essentially tacked onto its audience, instead of developing the brand out of that audience as Glossier and Goop have.

At the same time, Lerer is pursuing alternate sources of revenue, such as events that build off of its travel content. Thrillist has offered smaller-scale restaurant- and bar-based events since 2010, supported by ticket sales and sponsorships, but the new evolution will be larger events financed by ticket sales only. Now that Thrillist can share expertise and resources via the other brands comprising Group Nine Media, it may be better positioned to execute these events. The same goes for Thrillist’s move into TV shows and video content, which it has expanded the past year on its site. But like BuzzFeed’s temporary retail venture with Homesick Candles, these events are expensive to launch and it’s unclear if Thrillist’s audience of young men will be able to fork over the $527 for a weekend getaway.

Thrillist’s merger may have also set a precedent for BuzzFeed, whose founder suggested a potential merger betweenBuzzFeed, Vice, Vox Media, Group Nine and Refinery29 in November 2018 in order to lower advertising costs on Facebook and safeguard the group of struggling media brands from the inevitable challenges ahead.

For a company that built its presence largely on the back of social media Facebook was a significant catalyst for BuzzFeed’s downward spiral—direct-to-consumer product companies including Thinx and Roman have met similar fates, forcing them to look to less-saturated advertising channels. In 2016, Facebook readjusted its algorithm to reduce the amount of content produced by professional publishers like BuzzFeed on users’ news feeds. While Facebook’s decision could have been a healthy wakeup call for BuzzFeed to diversify its growth avenues, the company didn’t acclimate to the new reality quickly enough. Attempts to source revenue from native advertising, banner ads and its product lines have not been able to rejuvenate the business to what it once was.

Despite growth in its commerce arm, BuzzFeed continues to rely heavily on the social media platforms that gave it its start, but that have ever since hampered sustainable growth. Peretti claimed that $100 million of BuzzFeed’s 2018 annual revenue came from businesses that were founded post-2017, which is a move in a positive direction, but he also noted that revenue from some of the biggest social media platforms has grown 12 times over the past five years—a conflicting picture. For example, in 2018, $84 million of BuzzFeed’s total $300 million in revenue stemmed from Amazon, Facebook, Google and Netflix—a nearly 92% increase from 2013. At the moment, BuzzFeed has ramped up its original video content production, funded by Twitter (“AM to DM” daily morning talk show), Netflix (the docuseries “Follow This,” which was not renewed after its first season in 2018) and Facebook (“Outside Your Bubble” interactive trivia game show) in exchange for streaming on their respective platforms.

Despite the number of readers and viewers on these sites that can build BuzzFeed’s brand, the company could own much more of its distribution by featuring original content on its own site. BuzzFeed Studios gains access to a wide viewership via Netflix, but as its single-season docuseries with Netflix illustrates, its longevity is reliant on external decision-makers. This is a departure from BuzzFeed Commerce, which is more vertically integrated. While this may be a sign that BuzzFeed is concentrating on commerce (a bigger revenue driver) than multimedia, the company may also be pushing BuzzFeed Commerce in order to someday use it to support its original content production again.   

Both Thrillist and BuzzFeed can serve as cautionary tales for other media brands eager to jump on a commercial opportunity. In April 2019, for instance, the dating app Bumble published its first print magazine, Bumble Mag as a partnership with Hearst. This content is a natural extension of its app featuring 100 pages of content and advice about dating, careers and friendship that correspond to its mobile features. But more skeptical is its late 2018 announcement of a forthcoming skincare line. While the product teaser, “Break Up With Bad” (a facial oil ‘for breakups and breakouts’) aligns with Bumble’s female empowerment philosophy (its app requires women to make the first move), and Bumble has a solid audience of more than 50 million users and value system that could be monetized, there are major hurdles to productizing a platform from manufacturing to inventory management, marketing to distribution—one made evidently clear by both Thrillist’s acquisition of JackThreads and F+W Media’s decision to launch ecommerce (discussed in Part I of Medium of Exchange).

For one, where will the products live? In the app? On the website? Will they sell direct-to-consumer or wholesale? How will selling the skincare line work alongside Bumble’s subscription-based revenue model for its app? All of these considerations require investments from Bumble and even if most are outsourced, commerce will be a learning curve for the company. Plus, wouldn’t a event-based product be more attuned to the Bumble mission than a physical product in the highly competitive beauty market?

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The Productization Framework

  • What proportion of your ad budget goes to Facebook and Google? How can you reduce reliance on these platforms in order to direct more traffic to your own site?
  • At what point should your media organization introduce commerce? What is your reasoning behind doing so? What holes can you poke in this logic?
  • BuzzFeed grew on the back of Facebook before ad prices began rising to the levels they have reached today. Still, many digital publishing and commercial brands continue to seek growth on Facebook. How can you house the majority of your distribution on your own site? What alternative avenues can you use to grow a loyal and large audience?
  • What type of commerce is best suited for your platform? What resources can you deploy to judge potential commercial opportunities? How best can you integrate them on your platform?
  • Should you introduce commerce via the acquisition of a pre-existing company or is it better to develop commerce in house? What are the pros and cons of both?
  • What proportion of your revenue should ideally come from commerce versus content? How can you strike this balance?
  • If a digitally-native company, how can you extend your presence—either in products or content—offline? What partners can you work with to do so?

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