BuzzFeed is now a public stock, but can it build a winning digital medium?

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BuzzFeed CEO Jonah Peretti stands outside the Nasdaq market site in Times Square as the company goes public through a merger with a special purpose acquisition company on December 06, 2021 in New York City.

Spencer Platt | Getty Images

In this weekly series, CNBC takes a look at the companies that made the inaugural Disruptor 50 list 10 years later.

There have been very few digital media companies to make CNBC’s annual Disruptor 50 list in its 10-year history, in part because it’s a tough industry to make money from.

Even though everyday life has become internet-centric, it’s the gatekeepers of the internet that keep most of the money, like Google and Facebook. The focus on viral content made sense for BuzzFeed with the rise of Facebook and advertising changes. BuzzFeed, which made CNBC’s inaugural Disruptor 50 list in 2013, began in 2006 with a focus on lists, videos and memes that are lifted by social media.

But relying on internet giants is a risk, whether it’s SEO or viral success, as their algorithms and broader business goals evolve in ways that punish the latest digital media model, or the audience simply jumps from the latest fashion to content. .

In the years since its inception, BuzzFeed added more traditional reporting in an effort to bridge the worlds of “snackable” content with breaking news and investigative journalism – it won a Pulitzer Prize and was at the center of the media storm during the Trump presidency. on the “Steele dossier” when its then editor, Ben Smith, decided to publish the document.

It hasn’t been easy financially, and investors have been wary of the future of digital media companies in recent years. BuzzFeed notably missed its revenue targets for 2015.

At the time, news reports indicated that BuzzFeed’s shift to a “distributed” media strategy, with the goal of finding large audiences beyond its own websites and apps, was a big part of the challenge. . Attracting lots of clicks on Facebook and Snap hasn’t necessarily translated into a juggernaut in ad revenue.

CNBC’s Original Troublemakers: Where Are They Now?

Throughout its history, BuzzFeed has made strides in finding new revenue streams. A great example is Tasty, the Facebook video brand dedicated to food, as well as other branded video projects. But it was only a matter of time before the content landscape disrupted the original disruptors, especially with the rise of streaming services and new ways to curate content.

Dealing with technological change is nothing new in media, and battles between content creators and distributors are constant, like negotiations between cable companies and content creators. Digital media companies with aggressive growth plans in a fierce market may end up where BuzzFeed did: rounds of layoffs like in 2019.

But BuzzFeed flirted with profitability a year later (despite a drop in digital advertising due to pandemic quarantines), and the company began to gain momentum, acquiring HuffPost from Verizon Media in a deal. which brought together BuzzFeed co-founder and CEO Jonah Peretti with HuffPost – a site he co-founded in 2005 with Andrew Breitbart, Arianna Huffington and investor Ken Lerer.

By the end of 2020, digital media companies had rebounded, and it was happening alongside the rise of SPACs, the blank check companies that exploded in a hot IPO market as a new generation of equity investors flocked to stocks after the brief pandemic crash. . The public market boom has also given original venture capitalists, including Buzzfeed’s Series A investors, the return they’ve been waiting for since 2008.

The company fell 39% in its first week of trading in December, and its trading did not improve.

As CNBC’s Alex Sherman reported, it was “an inauspicious start to the prospects of digital media companies in the public markets.” But he added that there was something on the bright side: “Although its valuation is disappointing, Buzzfeed’s debut gives its peers something they haven’t had before: a comparison of the valuation of the public market”.

BuzzFeed says that as a public company it will begin to grow the industry, but as Sherman reported, the speed of consolidation will depend on the personality of those responsible.

“Confidence in BuzzFeed’s future prospects can grease the wheels of consolidation. BuzzFeed will need outside confidence in its capital to use it as a viable currency for acquisitions,” he wrote. .

Now the question is whether BuzzFeed, having gone public, can make the right calls for scale, distribution and viewership to regain investor confidence, all in a media landscape where a betting on more disruption is probably safe.

—CNBC Alex Sherman contributed to this report.

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