BuzzFeed
BuzzFeed grows out of The Huffington Post, perhaps the most successful example of a native, content-producing, general interest digital news product. Between 2010, when it was sold to AOL for $315 million, and this writing in 2015, The Huffington Post was the only sale of a non-video-content-producing digital media company—a pretty clear indication of a stalled market.
The Huffington Post, launched in 2005, was a next-generation instance of digital media, masterminded by Ken Lerer and branded with Arianna Huffington’s name.
The early Huffington Post team included, in addition to Lerer and Huffington, Jonah Peretti and Greg Coleman. Lerer supplied the capital and management, Huffington supplied the promotional wherewithal, recruiting a sterling list of celebrities who would write (or blog) for free, Peretti supplied the traffic-generating strategy, and Coleman, with stints at Yahoo and AOL, supplied ad sales talent.
In 2010, after the sale to AOL, Huffington herself stayed, and Lerer backed Peretti in the development of BuzzFeed, with Coleman joining later.
The specific next-gen advance, or conceit, was to see BuzzFeed as truly new and endemic Web media. Huffington and attendant celebrities represented an old content idea. BuzzFeed, with Peretti’s traffic methods, would generate just as much traffic by its ability to measure and quickly respond to what Web traffic was looking for. It didn’t need brand—or numbers would create the brand. Hence, while it would become widely ridiculed for its cat videos and list features, it almost immediately began to build a large amount of traffic—mostly by its ability to game and respond to Facebook’s dynamic.
This, too, became its fundamental advertising strategy: not your typical adjacency—that is, an ad next to content—but advertising material designed to function like BuzzFeed’s own content. But even here, this was a shift more subtle than it seemed—not so much, as critics said, an effort to blur the lines and confuse readers, but a way to rent BuzzFeed advertisers BuzzFeed’s traffic methodology. BuzzFeed wasn’t fundamentally selling an audience; it was selling a process, a technology, a set of algorithms (in a way, not so dissimilar from Google’s AdSense approach).
Then, in a reversal or advancement in strategy, it hired a news team for the 2012 presidential election, producing cogent political reporting and sometimes breaking stories—but within the confines of endless midway carnival call-outs and lowbrow attractions. In part, it was a television point: news divisions elevated lowbrow network television. News was the branding device. It also had a clear strategic purpose: traffic gaming and aggregation dominated the digital media business (in some more or less cynical fashion) until Google changed the way it ranked such sites, doing significant damage to these businesses overnight. BuzzFeed’s news was an effort to give it bona fides that might protect it in the next sweep of Web detritus.
BuzzFeed was, in a sense, less a media company than a technology play, meticulously and artfully developing a largely automated system (though, belying this, it still required several hundred people to help perform this task) to attract or divert traffic. But, in order not to be defeated or challenged or compromised by powers higher in the technology chain, in savvy fashion it was trying to wrap itself in the protection of a news company.
And, with its news operations during the 2012 campaign, BuzzFeed went from a largely disdained notion, a lowbrow traffic circus, to an exemplar of digital media—even though it still remained principally a lowbrow traffic circus. BuzzFeed became something of the standard-bearer. In early 2014, BuzzFeed floated rumors that Disney had offered to buy it for something less than a billion dollars—but BuzzFeed wanted at least a billion dollars (or wanted to turn rumors of almost a billion into anything remotely near a billion).
On the one hand, there was ever more traffic flowing into it via its symbiotic Facebook relationship, and a bubble-type valuation because of Web media’s consensus that it was the breakthrough model. On the other hand, the reality: while it was claiming its greater-than-Super-Bowl-size audience, it was admitting to revenues of only $50 million a year.
By mid-2014, unable to complete its billion-dollar deal, the company instead took an investment of $50 million from Marc Andreessen’s firm, which was said to value the company at $850 million (given the way venture capital funding works, with a host of preferences for the last-in investors, it was no doubt considerably less than this), and once again promoting it to ne plus ultra status.
Except, other than its continuing promotion, it had yet to boost itself above the revenue model of a single-title magazine. At $50 million a year, it was the size of New York magazine, which had a circulation of 400,000. Conversely, BuzzFeed also seemed to make the argument that it wasn’t really media at all; it was a technology company, one that specialized in attracting traffic for brands—but that again returned to the value of that traffic. And then—now media again—there was BuzzFeed’s new argument that it was going to become an ever more aggressive content producer, announcing BuzzFeed Motion Pictures, that is to say, its plan to break into the television business. Video, in almost all BuzzFeed’s discussions about itself, seemed to represent its escape from the depressed digital gulch, with its valuation hinging on the belief that, somehow, it would escape.
Digital media’s future was beyond digital media.
Vice
A few weeks after the new investment in BuzzFeed, Vice, artfully leapfrogging a competitor, announced that it had raised $250 million from A&E Networks (A&E is owned by Hearst and Disney), valuing the company at $2.5 billion.
Almost immediately thereafter a tech venture firm, TCV, followed with another $250 million for another 10 percent. Time Warner was set to do a deal with Vice a few months before that would have valued the company at $2 billion—but Vice’s valuation rose faster than TW’s ability to act. James Murdoch had already bought 5 percent for $70 million on behalf of 21st Century Fox and got a seat on the board; Martin Sorrell, chairman of WPP, put $25 million in; and Tom Freston, former Viacom CEO, put in his own money and signed up as one of the company’s key advisers. One might be forgiven for thinking of Zero Mostel in The Producers selling a Broadway show many times over.
In Web propaganda terms, this was old media seeking comfort in new, but, more reasonably, it should be seen as new seeking safety in old.
Vice is a temperamental and elastic proposition. Launched before the Internet, it was originally a skateboard-focused magazine in Toronto. Identifying this dude-specific audience, it continued to service it with a dog’s breakfast of media products (events, music, T-shirts, Web), curiously surviving by turning itself into more a demographic marketing company than a platform-specific media company.
And then it stumbled into video—and the new Final Cut Pro world where videos could be produced largely without training or capital investment.
As central to its character is its founder, Shane Smith, showman and promoter, more reminiscent of the media heyday—an only slightly more mild Jann Wenner or Hugh Hefner—than the tech age or even the more constrained modern media industry.
While Vice was suddenly associated with new media, its attractiveness was in part that it was recognizable as old media. Quite distinct in the Web media world, it had a strong voice and sensibility. (Vice, with its many fledgling music writers looking for a byline, is often and inexactly compared to BuzzFeed, with its ever-growing staff of engineers able to game the social media world.) Working with low budgets (it became a famous exploiter of young media workers), it produced massive amounts of content, most of which adhered to a focused taste and character.
What’s more, Vice sold ads, extremely profitable ads. Like much of new media, it blurred the lines between ads and content, and advertising media and advertising creator (effectively acting as an ad agency for many of its advertisers). Unlike much of new media, it was able to sell its ads at a high margin. Many of its advertisers seem to somehow be induced into being merely the most passive of sponsors (o
ften offering big consumer brands like Anheuser-Busch just modest sponsorship credit at the end of a video).
This is hardly the biggest anomaly. The ultimate disconnect was that it sold high-priced ads against a very small audience. You might attach many superlatives to Vice—it may be the hottest, savviest, coolest, richest, Brooklyn-est new media company on the block (Vice, according to Smith, is now the biggest employer in Williamsburg, the epicenter of Brooklyn-ness), but one peerless thing it does not necessarily have is a super-size audience. Vice makes a torrent of YouTube videos but most, according to YouTube stats, have only a limited viewership. The New York Times, in its coverage of Vice’s TCV deal, seemed both eager to believe in Vice and at the same time perplexed by it, quoting the company’s monthly global audience claim of 150 million viewers, but, as well, comScore’s more official and low-wattage number of 9.3 million unique visitors a month.
This is, it should be noted, a key media attribute, to be able to sell something other than numbers—and a new media Achilles’ heel, that it is always selling numbers. Smith is selling that most profitable aspect of media, association, being part of some larger cultural framework: being cool.
Smith also, counterintuitively, launched his company into the news business—making itself a veritable Zelig of multiple international conflicts. Vice’s tipping-point moment may have been Dennis Rodman’s Vice-sponsored embrace of Korean dictator Kim Jong-un, and its step into legitimacy its earnest HBO world report show. And yet this is at a moment when it has never been more difficult to monetize news programming. YouTube, peculiarly, is widely advertising Vice as a kind of new wave 60 Minutes—as though this is something its audience has long missed in YouTube programming. So bizarre is the notion that Vice’s young male audience will watch international news that puzzled media minds can only seem to conclude it must be true—and another epochal media disruption. Instead, of course, it is a kind of mutually beneficial Web promotion. Vice gives YouTube the benefit of a news brand; YouTube gives Vice the benefit of an incredibly expensive national branding campaign (i.e., an old television strategy).
Smith’s central premise, illusory or not, is that he has mastery of a certain audience, and sensibility, and zeitgeist zone—he’s inserted Vice into the cultural consciousness. Again, there is no real-life manifestation of this, no particular set of characters, nor memorable phrases, nor hit shows that he can stand on. Vice is not South Park, with its millions of young devotees over now multiple generations, its cultural impact, and its guaranteed cash flow.
And yet Vice has created an identity and sensibility that people seem able to understand without actually having to experience it. This is media (and certainly media marketing).
And yet while Smith may be the avatar of the new—the quick, the cheap, the young, the cool, the digital—it turns out that his way forward is in fact television. What he wants most is a channel, a network, an offline place to call his own. The outline of his prospective deal at the beginning of the summer of 2014 with Time Warner had TW selling CNN’s Headline News Channel to Vice for a stake in the company (this is where the $2 billion valuation came from, which Vice then traded up to $2.5 billion). Now, A&E is suggesting that it will give up one of its lagging cable stations to Vice. And, in addition, Vice is launching a twenty-four-hour news channel with Rogers Communications, a Canadian cable company.
Smith seems to have cannily traversed the new to return to the old.
Forbes
Forbes is a minor tragedy of brand and journalism. While other magazines were standing on the sidelines, Forbes, launched in 1917, was pursuing by the late nineties and early millennium an aggressively digital transformation.
In part, this was just the result of sheer bravura salesmanship. Before the reality of digital media was established, Forbes figured out that print CPMs—$30 to $60 in the case of Forbes—easily crossed over to the Web. In other words, it briefly looked like magazines could make the same revenue they always had but without attendant production and distribution costs. And Forbes became the leading example of the new world that awaited beyond print.
By the time that fantasy collapsed, largely with the dot-com crash, Forbes’s print business was in substantial decline too, making it all the more imperative to, in the yet-urgent formulation, figure out digital. And once again, pushed on by its sales staff, it did: it increased traffic.
In a sense, at this moment modern Internet publishing was invented—and it was invented at Forbes. What emerged at Forbes over the next few years was an aggressive new publishing model, focused on traffic aggregation and arbitrage, using the Web to promote itself—a reasonable definition of Web virility—matching low CPMs with mass usage, the model that BuzzFeed and The Huffington Post would adopt. Or, depending on your point of view, it was a shell game, in which, through a series of ever-developing stratagems, random eyeballs, most caught unaware and without particular interest in Forbes, were tricked or promoted into coming to the site.
Still, it was a kind of marvel of doing what you had to do to survive, to transform into . . . well, what was hardly clear. All other magazines appeared caught in the headlights, but Forbes seemed confidently to barrel on, showing the way.
Transformation, however, was far from salvation. Digitalmania was hardly replacing print dollars. After selling the Forbes plane, yacht, island in Fiji, palace in Morocco, ranch in Colorado, Fabergé eggs, and Fifth Avenue building, in 2006, a major part of the company itself was sold. The deal with Elevation Partners—an investment fund most notable for Bono being one of its partners—valued the company at about $500 million, putting $237 million into its coffers, with $100 million going directly to the Forbes family.
And then, in 2007, following the financial collapse, devastating many businesses, but perhaps none more so than print publishing, there was a radical restructuring of the editorial side. Lewis DVorkin had been an editor at the magazine who, with an investment from Forbes, had gone off to start a company called True/Slant—a user-created-content concept, meaning that anybody could write, and nobody got paid (at least not more than a symbolic dribble).
In 2010, Forbes absorbed True/Slant and DVorkin was given the primary editorial responsibility at the company, charged with creating a low-cost, high-traffic model.
While Forbes maintained a skeletal staff, in effect, anyone could write for it, with little vetting or oversight or alignment with the Forbes brand. In some sense, there was suddenly no Forbes brand—at least no specific, coherent meaning of it. Almost anybody—PR people promoting something, consultants looking for clients, science and pop-culture recappers, as well as oddball opinionists—could write for Forbes and claim to be a Forbes writer and to have been endorsed by Forbes magazine if they seemed likely to generate traffic.
DVorkin, rail thin with deep-set eyes, giving him something of a grim reaper resemblance, told PandoDaily, a tech news Web site, that traditional journalism was dead and hostile journalists should “get over it.”
Journalists, he said, “need to understand the world is changing.”
But this, in some curious sense, was inaccurate. Arguably, the changed world, the one Forbes now occupied, had proved to be a bleak existence, and the greater media effort, evident at BuzzFeed and Vice, was to return to the world of brand, narrative, consistency, and a more attentive audience.
In the summer of 2014, Forbes was sold to a Hong Kong–based company that proposed to use the Forbes brand, still of some note in many parts of Asia, to promote its own financial products.
8
TECH MEN AS AD MEN
By the middle of the new millennium’s first decade it was powerfully evident that a revolution in advertising was in progress. The clear early casualty was print. Key aspects of newspaper publishing, once selling $50 billion a year in advertising, fell away, central among them virtually all classified advertising—auto, real estate, help wanted—supplying most of a newspaper’s profitability
. There followed significant aspects of display ads—that is, big space, big budget—personal finance (credit cards), major retail (the e-commerce bite), lavish real estate entreaties, large portions of travel budgets, packaged goods, and the pages of weekend movie advertising. And then much of direct marketing was subsumed by the Web. (There are, in general, two kinds of advertising: brand advertising, which has to do with creating desire and building demand and long-term associations with a product, and direct marketing, which is about having you buy a specific product or service as soon as you can and is judged on its immediate return. The purest form of direct marketing is direct mail—magazine subscriptions, credit cards, life insurance. Since postage is expensive and digital communication free, this particular migration was a no-brainer.)
Something else happened to further the revolution and the destruction of print: a large portion of the advertising business converted itself from its dual emphasis on print and television to a new emphasis on digital together with television (these became competing power centers within agencies).
The accepted explanation is that agencies adapted to client demand and audience migration. But, as well, creating digital marketing strategies was much more profitable than creating traditional print or direct marketing campaigns. A print ad was, with only some reductiveness, a copywriter, an art director, and a photo shoot. Building a Web site meant programmers, designers, interface experts, project managers, social media gurus and implementers, and, more recently, native ad writers (not to mention engineers maintaining servers, and staff for responding to e-mails and curating message boards), all generating billable hours. So by the time this conversion was complete—first came stand-alone specialty digital agencies and then all agencies became fully integrated digital players—there was, practically speaking, no one left, save for newbies and career flameouts, to create print advertising, even for clients who wanted print ads. Ad agencies did television or digital. Period.
Television Is the New Television Page 5
