Agencies want more local video and audience insight from BuzzFeed UK

BuzzFeed UK and its international operations are close to breaking even, the company says. But in order to grow their spending with the publisher, agencies say they want to see more local video and better access to audience insights.

BuzzFeed UK reported narrow losses of £1.9 million ($2.41 million) on a turnover of £33.4 million ($42.3 million) before taxes in 2017 across eight global offices: the U.K., Germany, Brazil, France, Spain, Japan, Mexico and India. The company said the financial results are “reflective of a consolidated international organization, including some but not all of BuzzFeed’s international operations.”

But rather than cutting costs — by laying off staffers and closing offices — agencies and analysts say the path to profitability and growth for BuzzFeed in the U.K. could be to invest more in its local offerings, specifically around video.

Mark Holden, global strategy director at Starcom, said he hasn’t worked with BuzzFeed UK in over a year but in the last six months has run a successful global branded content project that was driven out of the U.S. Mostly, larger video projects are handled by BuzzFeed Studios in the U.S, he said, but there’s an opening for locally produced social video that doesn’t have the polished finished.

“Video is fast-growing and commands a CPM premium. Not being able to build out that capability in the U.K. has hamstrung them slightly,” he added.

In the U.K., BuzzFeed ran successful video efforts like livestreaming political debates and launched an original video series in October 2017, but more focus has been on building out strong investigative journalism and breaking-news capabilities. This ultimately brings credibility over a longer period of time but isn’t always in line with advertisers short-term quarterly goals.

“Brands usually want to do something for a short time, to be on the cusp of new,” said John Thomson, head of media at agency 360i. “Once they’ve done something for a couple of years, it’s what is the next thing? That’s really hard for publishers to come up with.”

BuzzFeed pioneered a lot of innovative well-performing formats that got brands excited. Tasty and its regional offshoots stood out for many, but as the imitators commoditized the format, it quickly became less differentiated. U.K. variant Proper Tasty is growing, however: Last September, it had 66 million Facebook video views, and in November 83 million Facebook views, per Tubular Labs.

U.K. agencies say that BuzzFeed’s verticals like Tasty or Nifty have delivered strong campaign performance. These are clearly defined brands with a consistent offering for advertisers, they say. The flip side is they can be fairly niche, making a sustainable model challenging. The same consistency doesn’t always translate to news and entertainment.

“We look for consistency: There’s genuine news, agenda-setting journalism next to ‘13 Reasons Why.’ That becomes a challenge,” said Dan Wood, head of partnerships at Mediacom, who has previously worked on a number of successful campaigns with BuzzFeed UK, particularly with entertainment clients.

BuzzFeed, which gained huge reach through Facebook, is on the way to diversifying beyond the social network, launching its own app too in early 2018. According to Comscore, the BuzzFeed UK site has fluctuated between 12 million and 8 million unique monthly users in the last year, pulling in 9.4 million in November, Comscore’s most recent month. The U.K. operation appeared to have met sales targets at the end of last year, according to a source with knowledge of the company who said that the U.K. commercial team “pushed themselves incredibly hard but they did it.”

The company now offers a range of advertiser options. Since October 2017, it has run programmatic ads and it has added additional revenue streams including commerce, a membership model and licensing, among others. Last August, on the Digiday podcast, Jonah Peretti admitted that the publisher had been too dependent on one revenue source early on. Two years ago, advertising was three-quarters of total revenue; next year it will be half, and advertising is still growing, he said.

“To see significant growth in the U.K. to match the U.S., we will have to see something different from them,” said Holden. “I don’t think what they are currently doing will drive sustainable growth.”

As with a lot of companies with U.S. headquarters, putting feet on the ground in local markets is a costly investment. When BuzzFeed launched in the U.K., agencies said despite the appeal, the minimum spend of £25,000 ($31,800) was prohibitively high for those wanting to test with smaller budgets on new players. And as with all publishers, competing with the duopoly for ad spend is a battle.

“There is so much data in the industry, but the challenge is how you find practical useful insights from that,” said Wood. “The reality is Facebook and Google are really good at helping us do that.”

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