Earlier this month, BuzzFeed raised US$50 million from Andreessen Horowitz, and now the site is valued at US$850 million.
Let’s take a look at some data first. BuzzFeed was founded in 2006, the site now attracts more than 150 million viewers every single month, more than The New York Times website. Its founder disclosed that BuzzFeed’s revenue in the first half of 2014 was twice as much as the same time last year. Meanwhile, Andreessen Horowitz, one of the most respected investment groups, has predicted that BuzzFeed’s revenue in 2014 may exceed US$100 million. The group has also predicted the changing media landscape which may grow 10 or even 100 times bigger in the next five years (http://a16z.com/2014/02/25/future-of-news-business/).
Although I generally find myself a little bit more guilty every single time I click a link that goes to BuzzFeed, although I truly believe things like LOL and WTF are not categories, hey, guess who was just given US$50 million? Ok, so, why is BuzzFeed worth so much? Let’s now take a look at the list of 3 reasons why it is worth so much:
- People love lists!
News has always been received in a glancing kind of way. Newspapers are printed out daily, weekly and cheaply, they are not published to be read, they are published to be skimmed. These publications now (at least most of them) have now gone digital, but their websites are not skim-able. They make their articles hard to read on a mobile phone while struggling for a seat on a bus or waiting for a train in the peak hours. People turn away to play games or watching videos on their phones. Reading a digital newspaper is just too inconvenient to win the attention. These websites should make themselves more interesting to compete with the addictive enjoyment of the aforementioned two activities. People are naturally interested in what is happening around them or in the world, so news itself is interesting, it’s just that it is not displayed as such.
- 14 Australian Ice Cream Shops You Need to Visit Before You Die
- The 12 Aussies You’ll Meet At Every Music Festival
- Top 5 Favorite Celebs Getting Iced For ALS
- 13 Types of Facebook Couples You Should Neve Become
- 50 Cent Just Challenged Floyd Mayweather to Read a Full Page From Harry Potter (Ok, this number here is different from the others, but you get the idea)
Lists are clean, finite, digestible, and they can be argued. Inserting the word “top” in the title of a list makes it even attractive. “14 Ice Cream Shops”, “12 Aussies”, “Top 5”, etc, let you know how long roughly you will be on that page and what you will be getting. BuzzFeed figured this out, and as a result, most of their articles have a number in it. Is this scientific? It doesn’t matter as long as the eyeballs are all there.
- Ads are also content
People hate ads (to some extent), but websites rely on people clicking on them to make money.
Peretti once sent an email to all BuzzFeed employees explaining BuzzFeed’s strategy (http://cdixon.org/2012/07/24/buzzfeeds-strategy/). In terms of advertisement, he said: ”We don’t show crappy display ads and we make all our revenue from social advertising that users love and share”, he also added, “We focus on publishing content our readers love so much they think it is worth sharing. It sounds simple but it’s hard to do and it is the metric that aligns our company with our readers. In the long term is good for readers and good for business.”
Those who work in front of a computer all day but are not so busy all the time, those “Bored at Work”, contribute a significant number of views. These people look for some fun on the web like snacks. BuzzFeed embeds ads within articles and stories and makes it fun to share. The site makes ads into cute images or short stories and encourages users to engage with the content (i.e. share on social media site)
50% of BuzzFeed views are linked through social media websites, which shows that BuzzFeed really does a good job in making people share.
- It is making money
You may be shaking your head and wondering why a site based on basically nothing but GIFs can raise US$50 million. But if your site attracts more people than The New York Times, builds everything in-house, and is making money the whole time, your site may be worth $850 million as well.
In the same email Peretti sent to BuzzFeeders, he said: “We manage our own servers, we built our CMS from scratch, we created our own realtime stats system, we have our own data science team, we invented own ad products and our own post formats, and all these products are brought to life by our own editorial team and our own creative services team. We are what you call a ‘vertically integrated product’ which is rare in web publishing.
“BuzzFeed is one of the very few publishers with the resources, talent, and focus to build the whole enchilada. And nothing is tastier than a homemade enchilada.”
For Better or for worse, BuzzFeed is changing the media landscape. Have you ever been hooked by BuzzFeed’s article titles when they seems specially catered for you? Like “22 Things Only People From Sydney Would Understand”, well, I clicked.