BuzzFeed: The PR Love Child Crashes & Burns, What’s Next?
BuzzFeed the online news site that PR professionals were scrambling over to get exposure on 18 months ago is today on the skids, with hundreds set to be sacked and investors questioning the value of the Company who is also facing a major defamation action in Australia by Federal MP Emma Husar who they called “A Slut”.
In breaking news the Australian operation announced today that they are set to axe more than half of its 40 staff in Australia as part of the embattled news outlet’s bid to slash costs.
Simon Crerar, founding editor and general manager of BuzzFeed’s Australian operations, said management had informed them that 25 roles in Australia were “facing redundancy” out of about 40 employees.
Once valued at $2.4 billion the US media Company has struggled to attract big tech or appliance brand marketers to their site other than via a click model and several observers have told ChannelNews that the Australian operation could be closed down with the loss of 40 jobs if the Company cannot make profits.
“The restructuring we are undertaking will reduce our costs and improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again.” CEO and co-founder Jonah Peretti said in an email to staff last week.
What he has failed to explain is how he aims to do this when he was not been able to deliver a sustainable long term business model that deliverd profits when the Company was wallowing in investor cash.
A major contributor to BuzzFeed’s downfall was a change in the way that Facebook and Google handled news, this hit the revenue-per-click model that Buzzfeed and several other media organisations were dependent on.
Last week this model was “effectively pronounced DOA” claimed the UK Guardian.
In his email to employees headlined “Difficult Changes”, Peretti, said the company would reduce headcount by 15%, or about 250 jobs.
Buzzfeed made its numbers last year after missing them in 2017 but Peretti told employees revenue growth was not “enough to be successful in the long run”. By reducing costs, he said, “we can thrive and control our own destiny, without ever needing to raise funding again”.
In the US Verizon said it would trim 7% of headcount, about 800 people, from its media unit, which includes HuffPost, Yahoo and AOL.
Investors who have lost money investing in pay per click news organisations were betting that eventually, someone would figure out how to make money from the large audiences that were being fed on sensational and often unsubstantiated stories. Their audiences were often the hard to reach younger demographics who did not necessarily have money to spend.
According to reports in the US, the company all but it hit its target for revenue of $US300 million last year, although it remains unprofitable.
In Australia journalists who were being let go by print media Companies were being hired by the likes of BuzzFeed and Yahoo now their futures are on the line as BuzzFeed moves to cut costs.
In the US the credibility of BuzzFeed journalism was questioned when the online operator came out claiming that President Trump had instructed his former lawyer to lie to Congress.
The story prompted a rare denial from the office of Robert Mueller, who is investigating interference by Russia in the 2016 US elections.
Peretti insists that Buzzfeed has a bright, long term future, others are sceptical as to their revenue Vs cost model.