Month: June 2021

• The deal values 15-year-old BuzzFeed at $1.5 billion and is expected to close by the end of the year.
• BuzzFeed’s SPAC will acquire Complex Networks for $300 million ($200 million cash and $100 million of BuzzFeed equity), bringing together Complex Networks, BuzzFeed, BuzzFeed News, Tasty and HuffPost under one roof.
• BuzzFeed.com had 38.5 million total unique visitors in May 2021, and Complex.com had 16.6 million uniques, totaling a combined audience of 275.4 million last month, according to Comscore.
• BuzzFeed generated $321 million in annual revenue in 2020, and estimates $521 million in revenue in 2021 and $654 million in 2022, according to the company’s presentation to investors. 
• BuzzFeed is profitable, and Complex Networks is on track to be profitable this year, a BuzzFeed spokesperson said.
• BuzzFeed founder Jonah Peretti will remain CEO, and Felicia DellaFortuna will remain as CFO.
• Complex Networks will stay editorially independent within BuzzFeed, like HuffPost. 
• Peretti does not anticipate enacting the same cost-cutting measures HuffPost went through after it was acquired (which resulted in the firing of nearly 50 U.S. employees in March 2021) to Complex Networks.

The state of BuzzFeed’s business and where it’s headed

By 2024, BuzzFeed expects commerce to make up 31% of the combined company’s total revenue. In 2020, it was 13%. After a series of layoffs in 2019, BuzzFeed built a more diversified business, with affiliate links (receiving a commission every time a reader purchases a product via its recommendation lists), licensing and product development, such as its Tasty-branded cookware.

A BuzzFeed spokesperson sidestepped a question about how the business team would be structured and pointed to the ink only just drying on the agreement. The press release stated that Complex will “benefit from the application of BuzzFeed’s data science, distribution network, and lines of business — including commerce — to accelerate revenue growth.”

In 2019, ad revenue made up 41% of BuzzFeed’s business, and custom content (video, lists, quizzes and takeovers created for advertisers) made up 48%. In 2024, the company predicts that will be 44% and 25%, respectively. 

BuzzFeed began exploring an IPO at the beginning of 2020, Peretti said during a press conference about the arrangement on June 24, but put a pin in those plans when the pandemic hit and advertisers in categories like cinemas and travel paused campaigns.

890 Fifth Avenue Partners Inc. is a tech, media, telecom SPAC with $288 million in cash in its trust account. When the deal closes, the parent company will be named BuzzFeed Inc.

What Complex offers

Complex Networks owns the brands Complex, First We Feast, Pigeons and Planes, Sole Collector and the ComplexCon festival, with a focus on pop culture, food, music, and streetwear, respectively. Its verticals attract “a more male and more diverse audience than BuzzFeed,” Peretti said.

Complex Networks brought in around $100 million in 2019, according to The Information. Advertising makes up less than 50% of Complex Networks’ business, with the rest based on commerce, licensing, syndication, events and creative services.

Complex Networks founder and CEO Rich Antoniello will become founder-at-large and shift into a two-year advisory role to BuzzFeed and Peretti. He will counsel on further acquisitions. 

Christian Baesler, currently president of Complex Networks, will become CEO. Justin Killion, current gm and evp for operations & content at Complex Networks, will become its president. BuzzFeed declined to share what the future holds for Complex CFO Celine Perrot-Johnson and CRO Edgar Hernandez.

Jobs may be less at risk this time around

Peretti and Adam Rothstein, executive chairman at 890 Fifth Avenue Partners, denied that bringing BuzzFeed and Complex together will result in significant cuts to staff. BuzzFeed bought HuffPost from Verizon Media in November 2020 for an undisclosed amount; by March the company had let go of 47 U.S. employees and closed its Canada edition, affecting another 23 people.

BuzzFeed’s editorial union has not publicly commented on the arrangement. Complex is not unionized.

During the press conference, Peretti said it would be “different” this time around, citing the economic uncertainty during the peak of the pandemic as one of the reasons for cost-cutting at HuffPost.

“We were managing our costs very carefully,” Peretti said. “As our business is growing… there is a tremendous need for talent and differentiated talent… and there are so many talented people at BuzzFeed and Complex.” He added: “The team at Complex should be excited about this deal.”

“There’s always a reflex that companies merge and whack out a bunch of costs,” Rothstein said, but “growing that topline faster is so much more interesting than cutting costs.”

“If Jonah Peretti and company are serious about not eliminating jobs, then they must believe that scale will enable them to compete for advertising with Facebook and Google in a way that they can’t now,” said Dan Kennedy, a journalism professor at Northeastern University.

With the advertising market improving after the pandemic, BuzzFeed “can afford to put growth first,” said David Nemetz, co-founder of Bleacher Report and Inverse, both of which have been acquired by Turner and BDG, respectively. Unlike HuffPost, Complex Networks “is in a strong position to contribute to the greater BuzzFeed [organization] without significant changes. That said, if another downturn in the ad market comes, then all bets are off.”

BuzzFeed’s M&A plans

Both Peretti and Rothstein, suggested that this merger is the beginning of BuzzFeed leading the consolidation of digital media companies. Rothstein even called BuzzFeed an “M&A machine,” during the press conference.

“There will be more acquisitions,” Peretti confirmed.

Peretti immediately rejected the notion of buying a company like ViacomCBS, but did not have the same reaction to the suggestion of acquiring Group Nine Media, for example. Neither Peretti nor Rothstein would comment on companies they are interested in acquiring.

Other digital publishers, such as BDG, Vox Media and Vice Media, are reportedly mulling going public via SPACs. Group Nine formed a SPAC in December 2020, with plans to merge with another digital media company. There were more SPAC IPOs last year than in the previous 10 years combined.

“Once BuzzFeed and other larger digital media companies go public via SPAC, more consolidation in the industry is inevitable,” Nemetz said. “These newly public digital media companies will need to stoke further growth. The most surefire way to do that will be by acquiring complementary assets.”

A delay was inevitable. 

The reality is it’s too early to understand if any of these solutions are viable alternatives to the third-party cookie. Not to mention some of them weren’t compatible with privacy law across the European Union. And let’s not forget the new proposals that are still being added as the smartest minds in the industry try to find positive-sum solutions. 

“When interrogated, it became clear that Google’s proposals raised more questions than answers, with holes of mistrust appearing,” said Paul Lowrey, head of advertising strategy, insight, and marketing at ad tech company Azerion.

But the search for life after the third-party cookie was never meant to turn out like this. 

Sure, Google has always publicly maintained that the timeline for its cookie replacements was fluid. As recently as last week, it said that it wouldn’t kill third-party cookies without the green light from the competition watchdog in the U.K. But behind the scenes, it was a different story. As one ad exec explained on condition of anonymity: “I just spoke with Google last week, and they said their common sentence: ‘We will launch earliest in Jan. and when we are ready.’”

Normally, Google carries itself with more certainty in ad circles. It tends to work closely with agencies in bringing ad technologies to market. Often, it’s the agencies that convince marketers to pony up the cash for those tests. However, with Federated Learning of Cohorts (FLoCs), Google hasn’t been as outgoing. Rather, it’s keeping the solution on a tight leash. Indeed, there’s not much the ad industry knows about these cohorts beyond the basics. In a nutshell, they are clusters of audiences that could eventually replace third-party cookies’ one-to-one ad targeting capabilities.

“There are zero scaled testings of FLoCs happening now,” said one senior agency exec on condition of anonymity out of concern their comments could jeopardize deals with Google. “We are working to define a testing plan with Google and other partners but expect that it will happen later in the year.”

It’s anyone’s guess as to when advertisers will get their hands on those cohorts now that Google is set to pause the trial next month. That those tests stalled suggests Google doesn’t have the answers to the reams of questions marketers have about cohorts — from their efficacy to whether they’re OK from a privacy regulation perspective. Somewhere along the way, Google’s reach extended its grasp.

Indeed, Google had told marketers that June would be the month they would get to kick the tires on one of the most anticipated — if controversial — parts of its Privacy Sandbox in FLoCs as far back as January. But with six days left of the month to go and marketers are still waiting — and they have no real idea of how long this will last. All Google has said is that it will make improvements to FLoC after the trials are paused, and share more information on future tests in its ad products over the coming weeks. 

“The updated timeline gives marketers enough clarity on the timeline itself — but it only postpones clarity on what the ultimate future state will be, and leaves the ecosystem in a longer period of limbo, wondering what the future state might be and how various problems associated with privacy, addressability, and measurement will eventually be solved,” said eMarketer analyst Nicole Perrin.

Granted, marketers still hope to get their hands on those cohorts before the end of the year. Not that Google has done much to nurture those hopes. The extended timeline is vague on a specific date. And Google execs haven’t been much clearer behind closed doors.

“Marketers have a lot of questions but we’re in this period of uncertainty when it comes to FLoC trials,” said Dana Busick, associate director at buying agency Media Kitchen. “The process is ambiguous.”

Yes, Google has turned on FLoC IDs so they can be assigned to Chrome users, but only for a small percentage in the U.S. as well as across Australia, Brazil, Canada, Indonesia, Japan, New Mexico, New Zealand, and the Phillippines. Without the necessary scale, seeing the true effectiveness of FLoCs was always going to be a challenge. In the U.S., for example, some execs said the FLoC IDs covered as little as 1% of the population, whereas others put that figure at 5%. Even if marketers were able to target and buy ads using those IDs, they wouldn’t be able to learn much because the results won’t be statistically significant.

That said, the trials aren’t a complete dead rubber. 

The IDs could be used to see how FLoC cohorts match up to people’s actual content preferences based on traffic trends. This is fine for those marketers who like hypothetical details, less so for those who want a clearer picture of post-cookie life. Needless to say, expectations have been readjusted. In many ways, FLoC was always going to be tricky to get up and running for a few reasons. 

Firstly, its one-size-fits-all taxonomy isn’t rich enough for the industry, said Aaron McKee, chief technology officer at mobile ad tech vendor Blis. Second, with enough “interest identifiers,” it’s possible to de-anonymize the data, which defeats the entire purpose of being privacy-centric, he added. Lastly, the campaign performance of rigid and limited taxonomies like this is not meeting the industry’s expectations, McKee concluded.

Given this and Google being at the center of such huge change, these things just take time.

“It doesn’t make sense for our clients to be investing many resources into FLoC until those IDs reach at least 20% of the population in the U.S.,” said an agency exec who asked to remain nameless due to their close ties to Google. “What worries me is that Google could change things several times over between now and when they roll these trials out.”

It’s a thought not lost on Google. The company can’t afford to get FLoC and other parts of the Privacy Sandbox wrong.  Not when it has already signaled that the era of direct consumer targeting is ending and the Privacy Sandbox is the future, at least as far as they are concerned. Revisions and delays to the Privacy Sandbox and the subsequent frustrations they cause seem a small price to pay if the labored, and at times baffling, the pursuit of those cookies is anything to go by. That Google has committed to working with various authorities around the world to ensure these solutions don’t favor themselves as a business is a testament to this.

“Google knows the ad-funded internet is only sustainable with a scalable and democratized way for all advertisers to target and measure ads as well as for all publishers to monetize accordingly,” said Wayne Blodwell, CEO at consulting firm The Programmatic Advisory. “It’s great to see Google being so pragmatic about the role of internet advertising. Of course, they have a huge vested interest in getting it right but that ultimately is a very good thing for the digital ad industry and its constituents as Google won’t make moves in the way Apple has.”

The extended timeline allows the industry to more thoroughly and calmly consider Google’s approaches to addressable advertising. There are various questions about those proposed solutions, concerning feasibility and privacy, that still need to be answered. A lack of ability to execute one-to-one audience targeting is a challenge. However, a core breakage in multi-touch attribution or media mix modeling presents a far more complicated challenge for Google moving forward.

The program is currently running its second class of RiseUP with fellows paid $20 per hour to gain experience working for clients that will hopefully lead to a full-time job. The first session ran at the end of last year with three fellows tapped for the program after the agency received thousands of applications. Media Cause hired two of the fellows from the first round; Isaiah Schutz-Ramon and Benjamin Doherty, joined as associate account strategists. (The third fellow decided they wanted to become a designer rather than work in search engine marketing.)

“We found that it’s not a talent problem but an experience problem,” said Eric Facas, CEO of Media Cause, adding that the aim of the program is to help people who may not have the same access as most people who climb the industry’s ladder. “The talent and ability is there. So how do we give people experience to have the opportunity?” 

The fellowship had fellows engage in learning sessions as well as work on non-profit clients to help them gain experience for their portfolio.

“I had the opportunity to work with an amazing nonprofit that does a lot of great work providing free health resources and free professional development seminars for young women in the greater Atlanta area,” said Doherty via email. “Getting to help contribute to such an inspiring mission, all while getting key Google Ad Grant training, led to an invaluable experience that welcomed me into the digital marketing world.” 

“[It] can be hard to break into,” said Schutz-Ramon via email. “I applied to over 257 jobs before RiseUP, but that does not mean you are not capable and worthy of a chance. Once you get your chance, be sure to make the most of it.” 

Aside from running the fellowship in-house, Media Cause is aiming to partner with other agencies giving out its curriculum to have its fellowship program replicated. While many other fellowships and internships with the purpose of improving the industry’s diversity, equity and inclusion exist, Facas believes there can be a problem with accessibility and that’s why the shop is looking to expand its program. 

When creating the program, Facas said that making sure it was paid was crucial to making the program accessible to people. “We took $100,000, which for a small business like ours is a pretty significant amount, and decided to build a fellowship program specifically designed at giving access and opportunity to those that don’t have it,” he said. “If we’re not able to pay people it’s not an accessible program. People working a retail job after college because they need to pay the bills cannot take a free internship or a small stipend internship.” 

Of course, having a paid fellowship to improve DE&I in the industry is “nothing new,” noted Keni Thacker, founder of 100 Roses from Concrete, a platform dedicated to helping black men in advertising. “I applaud the effort, no doubt, but programs like this have been around for a while.” Thacker added that while working to broaden the program beyond Media Cause makes sense, doing so may be troublesome as each agency has its own issues and financial commitments that may make replicating the fellowship difficult. 

Whatever the case may be, Facas believes creating a fellowship like RiseUP is “entirely possible” for other agencies. “You just have to be dedicated to it happening.” 

Hertzan’s team is responsible for overseeing content distribution across its many forms — including Hulu, YouTube and of course its linear channel under partnership with A&E.

“We are in the hit business,” Hertzan said. “Something that becomes a big event on television does well everywhere. That’s one of the learnings of the media business. Good content travels really well.”

Vice TV’s Mission: Mature its content offerings across channels

Vice’s first foray into a bundled video service was an initial experiment with MTV — called VBS.TV — that served as an “early, early AVOD service,” Hertzan said. Then came Viceland six years ago — with programming largely centered around the world of cannabis. It was a “very different era in America,” Hertzan noted.

“People were coming to it because it was challenging the system. It was a thing they were participating in that they didn’t understand why it was illegal, why the laws were the way that they were, but it was inherently a challenger brand,” Hertzan said. “Vice is a challenger brand.”

But as the issue has become more legalized, normalized and accepted, Vice’s coverage, including its video offerings, have evolved too. While Vice has “a lot of legacy marijuana content in our library,” the programming now serves as a “gateway” to Vice’s other shows.

“That old school ‘let’s get crunk’ style of television — we don’t really do it anymore. The audience doesn’t want it, the brands don’t want it. That’s left us,” Hertzan said.

Viceland evolved to tackle bigger subjects that got at what the audience wanted: stories that challenge the system and stories that aren’t told elsewhere. On linear, Vice TV considers what someone in the “cool parent” demographic might want to see — something that might tap into nostalgia for them, from the 1990s when they were in their late high school and college years.

“The Vice brand represents a challenger period in your life. Maybe you lived in Brooklyn, now you live in Cleveland and have two kids,” Hertzan said. “You still want to access that part of your life — being a challenger, being cool again.”

Vice TV works with Vice Insights, an in-house data collection team, to listen to the audience as well as a Vice Voices panel that pre-screens fans of the brand to survey them and gauge their interest in new programming.

“Our strategy is really trying to create well-consumed, really well-produced content that will live in all the different places we put stuff,” Hertzan said. “That seems to drive the distribution.”

Vice uses a windowing strategy based on the content and the demographic of the individual platform. “We’re trying to get people there, but we’re also constantly trying to bring people back,” Hertzan said.

Vice TV, for example, doesn’t want someone to watch one episode of something on YouTube and not sample other content offerings — or return. “When we are putting stuff in other places, and distributing it around the world, and throughout the different platforms in the U.S., we make sure it lives adjacent to other content we think people will like,” Hertzan said.

The legacy cannabis content hinted at an audience with the same brand DNA at the heart of its other shows.

“I don’t think people were coming to watch that content for recreational use — for lack of a better term. There was actually a brand DNA reason behind that,” Hertzan said. That DNA overlaps with the popularity of other shows — including Dark Side of the Ring, a docu TV series about professional wrestling, and While The Rest Of Us Die, a show about government.

The first episode of the new season of Dark Side of the Ring, which had been live for about two weeks when Digiday spoke with Hertzan, had already garnered 1.2 million views on YouTube.

“You have to listen to your audience and there are so many ways you can listen to them now,” Hertzan said. “Go on YouTube and hear what they’re saying. They’re actually talking to you. Go on Twitter and see what they’re saying.”

Vice TV is focused on continuing its success — finding a young, educated, diverse audience in the spaces they want to see the brand.

“I don’t think we want to change the audience or make it more of this or less of that,” Hertzan said. “There’s a lot of ways you can grow a network, a digital base. What we’re careful not to do is grow at the expense of the quality of the audience. We’re focused on keeping that tribe and making more of that tribe come to our content.”

“You might have put 30% or 50% of your budget against it, but today you might say, oh — whoosh — we can maybe do 10%,” she said. “[Clients will] probably maintain lower percentages of budget for testing because we have another two years.”

However, she said while testing budgets might decrease in the near term, conscientious agencies and marketers should continue testing plans because they will help establish benchmarks to gauge what to expect when third-party cookie targeting ends once and for all. The added time gives advertisers and agencies the ability to “really start to understand what those real-time metrics are going to be and “maybe even build models around these results,” said Snowman.

Altered budgets could affect publishers, of course. That’s just the sort of thing people like Nicole Lesko, Meredith Digital’s COO and data strategy, worry about when pondering Google’s deadline extension. The additional time “should help publishers maintain CPM stability and quell some of the more immediate concerns around readiness,” she said. However, Lesko added, “We risk losing momentum if players in the ecosystem view this as an opportunity to re-prioritize or shift focus.”

Real world control groups

Publishers and advertisers were already reeling from Apple’s own disruption to tracking and targeting capabilities brought on by giving people more privacy controls in its recent operating system updates. Google’s extension will allow for testing in real-world control group environments enabled by the distinctions between Apple audiences and those still reachable via third-party cookies or other cookie alternatives that aren’t available through Apple, according to Nii Ahene, chief strategy officer at Tinuiti, which manages ad campaigns on Google and other platforms. “This gives [advertisers] more time to look at the impact on Apple devices, on Safari, on iPhones,” he said.

Justin Scarborough, programmatic director at independent ad agency PMG, said that with more time, advertisers now will have an opportunity to measure effectiveness of approaches for targeting people using Apple mobile devices and its Safari desktop browser in comparison to other targeting methods.

However, because advertisers need to prepare for a time when cookies finally do go away, they need to make sure that they are indeed testing technologies that really do reach people without cookies as opposed to testing technologies that only promise to do that down the road. For instance, he said, when alternate identifier tech providers say they still need cookies to reach a large enough audience, “it’s almost a non-starter at that point,” he said.

Rather than distinguishing between Apple and non-Apple audiences, Snowman said she has been creating custom control groups to test approaches that don’t require cookies or behavioral targeting. For example, she said she has a client that is testing targeting based on aggregated search and geographic data showing how searches for certain product keywords over-index in specific, narrow geographic areas. “To be smart and scientific about it, you create your own control group, and you have a savvy marketer client who says, ‘I’m OK to segment out a portion of my budget for this testing.’”

Extra time aside, Ahene said he fears that the buffer Google has now given could result in complacency despite what he sees as a need for marketers to continue testing cookieless techniques. “My worry is that brands are just going to keep continuing doing what they have done in the past,” he said. “That’s probably most likely going to happen because that’s just the way the industry works.”