Month: December 2019

In 2018, BuzzFeed reported revenues of a little more than $300 million and earlier this year, BuzzFeed CEO Jonah Peretti said in an internal memo that a third of those revenues came from entirely new revenue sources, in line with Peretti’s “Nine Boxes” multi-revenue model for BuzzFeed. In that same memo, Peretti noted that most of Tasty’s revenue derives from revenue streams “we’ve needed to create on our own.”

“What Tasty really did was reveal the ways people ingest cooking content,” said Hannah Williams, Tasty’s executive producer. Williams noted that the addition of six new members to the Tasty Talent Program, part of BuzzFeed’s larger Creators Program, represents “a huge expansion of Tasty.” There are now a total of 14 Tasty Creators.

“We’re adding faces behind the hands, showcasing internal talent and integrating into the real-life cooking world with chefs and leaning into the entertainment aspects of food,” Williams said. “We know the role Tasty serves in our viewers’ kitchens. What can we do outside of kitchens and not neglect what works and what people come to us for?”

The new Tasty Creators, three of whom are Tasty producers and three of whom are fixtures in the dining world, were recruited with diversity and audience engagement in mind to develop what Williams described as “identity-driven content.”

Ellen Bennett, one of Tasty’s newest creators, has her own line of culinary workwear, called Hedley & Bennett.

“We love having creators with those very specific identities and creators who are super successful in their own line of work,” Williams said. “That was a huge draw for us, that she has this brand she’s built and established and seen some success.”

Williams said Tasty will be doing even more original series and shows in 2020, based off of the reception newer shows like Chef Out of Water; I Draw, You Cook; and Making It Big have received.

Licensing is also very central to BuzzFeed’s revenue efforts, and Tasty is at the center of that strategy. This year, BuzzFeed anticipates generating $260 million in sales of BuzzFeed-branded products in retail, which is double what the company reportedly made in 2018, according to License Global, a trade publication that covers the licensing industry.

Today, you can buy Tasty-branded cookware at Walmart, as well as Tasty-branded food products from your local grocery store, including collaborations with Nestle and McCormick on lines of ice cream and spices, respectively. The kitchenware at Walmart launched with 90 SKUs in March 2018 and has sold more than 4 million units to date.

“Licensing is mostly done by established brands who have been in the market for a long time, but BuzzFeed sped that process up. They understood they have a strong fan base, and they wanted to differentiate themselves,” said Steven Ekstract, brand director of Global Licensing Group, which publishes trade publication License Global.

Those licensing partnerships are also extending into Tasty’s content production, too. Tasty is also getting into interactive video programming with Walmart backed Eko, and has developed choose-your-own-adventure styles recipe-based videos that promote products that can be purchased at Walmart. Williams said Tasty plans to make more Eko videos in 2020.

Tasty’s brand collaborations that include media, custom content, shopper marketing, which launched in March 2018 with Scotch-Brite, creator deals and events are also driving revenues. It even did a hot-dog themed wedding with Oscar Meyer.

“They’re building tremendous brand equity and loyalty,” Ekstract said. “I wish more digitally native brands would wake up to this. They are a case study for successful brand extensions for a digitally native brand.”

If there’s one thing BuzzFeed can learn from Tasty’s success, it’s how to apply this multi-revenue model to its other brands like Nifty for home and Goodful for health and wellness, something Peretti noted back in 2017, and something the company must focus on to remain profitable.

The average month-over-month change in the absolute number of referrals from Facebook has been close to flat, going up 0.04%, with standard deviation of 8% (8% increase to 8% drop). That change is down from the average monthly increase of 2% Parsely charted last year, despite the much-publicized deprioritization of publisher content Facebook announced at the beginning of 2018. Yet that overall growth in 2018 came with more volatility, particularly in the first half of the year. The standard deviation Parsely recorded in 2018 was 12% (-10% to 14%). In 2017, the swings ranged from -13% to 7%, with an average month over month change of -3%.

Slow and steady are not sexy descriptors. But after years of referral traffic peaks and valleys, many publishers are happy to see the internet’s second-largest source of referral traffic less likely to deliver unpleasant surprises.

“We see it as a reasonable and reliable partner at this point,” said James Finkelstein, the CEO of politics publisher The Hill. “We’re delighted that Facebook is more and more consistent.”

This trend toward steadiness actually began in August 2018, six months after Facebook announced that it would begin deprioritizing publisher content in its news feed. Many publishers felt a steep drop in referral traffic immediately after that announcement. The drop claimed the lives of several media companies.

Yet after six months of unpredictable peaks and valley, Facebook traffic began increasing with relative steadiness in August 2018. On the whole, the number of referrals Facebook sent to publishers in Parsely’s network rose 14% in 2018.

Today, that steady growth continues, though Facebook referrals remain far below the 2017 heyday. “I don’t think we want to [go back to those levels], considering where it got us,” said Kelsey Arendt, a senior data analyst at Parsely.

In that time, of course, publishers have found other uses for Facebook’s platform since then. Most recently, different publishers have ramped up their spending on Facebook, mostly to distribute commerce content or various subscription offers, both to their readers and to people who look like their readers.

That willingness to pay is one of the reasons for this steadiness, said Leigh Silver, the founder of the marketing consultancy SilverSight Consulting. Where publishers’ Facebook strategies in the past used to be grounded in growth hacking tactics, today they are rooted more in disciplined investment.

“The reason you’re seeing it become more consistent is because back in the day, it was much easier to reach people for free,” Silver said. “You could post [certain popular posts] month over month, week over week, and those would be your traffic drivers. Now that traffic is lower because there’s so many paying.”

Those and other things were part of a host of tricks that publishers used to turn Facebook into a crucial source of traffic. “I hate that it took a big shakeup to wake us up from the growth hacking we’d all gotten used to,” Arendt said.

“As supply has become fragmented in different ways, the ability for us to be able to deliver frequency management with any level of accuracy is incredibly difficult,” said Anthony Koziarski, chief media officer at PHD.

Managing how frequently streaming viewers are shown a company’s ad continues to be a struggle for advertisers. As the streaming ad market grows — in terms of ad dollars and ad sellers — so too does the issue of frequency management. The issue has not yet led advertisers to withhold ad dollars from streaming, according to agency execs. But it may jeopardize the money that will flow into the market as ad buyers find ways to minimize overexposures in order to avoid annoying audiences away from ad-supported programming altogether.

“I think there will be a tipping point in which case it could make the spend plateau,” said Samantha Rose, svp of advanced TV and video solutions at Horizon Media.

The many ways that advertisers can buy streaming inventory inflames the frequency management issue. It creates an environment in which an advertiser could run back-to-back ads within a given streaming service with each placement purchased from a different source.

“If you go seven different ways to buy your digital inventory, you’re potentially creating a frequency problem,” said Ed Gaffney, managing partner and director of implementation research at GroupM.

The simplest way to address the frequency management issue is for advertisers to simplify their buying processes by funneling deals through a single source, such as a demand-side platform that plugs into various streaming properties across various platforms. However, that’s unlikely to happen because it would give that seller too much power and there is no one company that can cover enough of the streaming market.

Advertisers are instead taking steps to corral where that money goes by coordinating ad buys across different ad sellers. For example, if an advertiser is buying a TV network’s Hulu inventory as part of a broader package and also buying ads directly from Hulu, it can ask Hulu to block the network’s shows from the Hulu ad buy. Additionally, advertisers can set frequency caps for each company from which they buy ads.

The problem advertisers face is capping frequency across different properties when buying ads through different sources. If an advertiser is running ads across Hulu, Pluto TV and YouTube, it could have each service cap the number of times individual viewers are shown its ad to four exposures per day. However, that could still lead to 12 views across the three services, which may exceed the advertiser’s desired overall frequency cap. “Unique user frequency, that’s the challenge,” said Rose.

PHD has concentrated on limiting audience overlap across the various inventory sources that it includes in an ad buy so that a small minority of viewers do not account for a larger majority of ad views. The agency has adopted a three-step process to flatten the frequency distribution for client’s campaigns.

First, PHD compiles a unified view of its audience’s viewing patterns across TV and digital through data collected by automated content recognition systems that track what people watch on smart TVs. The agency then uses that information to decide which properties can be included in an ad buy while minimizing audience duplication across those properties. Then it measures ad delivery on a daily basis to monitor exposures and whether they are remaining within the given advertiser’s specified frequency threshold. One client that has used this process saved at least 10% of their video ad budget, or “millions and millions” of dollars, according to Koziarski.

An ad seller may not have much incentive to prevent ads from running on its property just because the ad ran too many times on others’ properties. Ultimately it will be up to advertisers to force the change. “It’s our clients’ money. They are the ones who will dictate the change,” said Gaffney.

The issue has not yet led to significant changes in how advertisers spend that money because advertisers still need to sell their products and they see how the streaming audience is growing to help offset linear TV viewership declines, Gaffney said. At the same time, he said that ad buyers and ad sellers cannot afford to wait until it becomes a humongous problem, a sentiment echoed by others.

The more that viewers are overexposed to ads, the more likely they may be to act on their annoyance, such as by shifting their viewing to ad-free streamers or calling out advertisers on Twitter. “That’s what is going to change things,” Rose said.