Investors are voicing their frustration loudly at the failure of several large digital publishers to make their target revenue figures for 2017.
Companies including BuzzFeed, Vice Media and Mashable have all made some big promises that they just weren’t able to fulfill this year. BuzzFeed missed the $350 million mark by 15 to 20 percent, according to reporting by The Wall Street Journal. Vice Media is expected to miss its target of $800 million. Maybe most disappointingly, Mashable has chosen to sell itself to Ziff Davis for a mere $50 million, despite a $250 million valuation during its last investment round in March 2016.
The End of Digital Media?
Some people may see these shortfalls and feel like this is the beginning of the end for digital media publishers, but the truth is that the market is really just trying to find its feet.
BuzzFeed, for example, spent a great deal of money this year expanding into journalistic content, as well as television and film. The company explained its shortfall in a statement to investors: “We’ve expanded our ad offering with new products and programmatic, and rapidly diversified revenue through commerce, licensing, and development for TV and film. We have greater audience reach and a more diversified business than ever, and are very well-positioned heading into 2018.”
Younger consumers have shifted their focus from traditional television to digital content, the lag in profits for the companies providing what this audience wants is simply a lack of advertising space. The audience is outpacing the marketing dollars, but history says that this will even out. Facebook’s push into online video advertising could even help to further jump-start these efforts.
Digital Publishers are a Long-Term Bet
Many investors came in on the ground floor of these digital publishers hoping for quick growth and a fast payout, but that’s not the growth pattern that seems to be emerging. As digital platforms like BuzzFeed mature, they’re having to figure out how to scale up some of their brand-based offerings and how to adapt to the market in other ways.
For example, BuzzFeed had refused to sell traditional display ads or banner ads, instead favoring native advertising and video ads until August of this year. At that point, BuzzFeed adopted programmatic advertising, perhaps due to the automated nature of the system. It’s a small thing that will have a huge impact on both the time BuzzFeed spends on advertisements and the income it returns on them, but all of this will take time for the still-young media platform to figure out.Google+