BuzzFeed Chief Marketing Officer and commerce leader Ben Kaufman is stepping down from his position at the end of the year, a move that comes at a delicate time for the digital media company as it seeks to boost revenue and return to profit.
Like many of its peers, BuzzFeed has been looking for new sources of revenue, after relying too heavily on Facebook for traffic and ad revenue. Thanks in part to its growing commerce business, the company expects to break even this year and return to profitability next year, according to people familiar with the situation. While Mr. Kaufman will stay on as an adviser to the company, his stepping down as CMO raises questions about the commerce division’s future success and, more broadly, about whether BuzzFeed can remain on its current, more stable track.
• Kaufman, BuzzFeed’s commerce chief, to become adviser
• Commerce to generate $65 million in revenue this year
• BuzzFeed on track to break even this year
BuzzFeed is emerging from a rocky period. Revenue is growing, but last year it laid off 15% of its 1,300-person staff to cut costs. The company had $100 million in cash as of earlier this year, according to people familiar with the situation. The commerce division was started three years ago by Kaufman. It includes licensing, and affiliate and strategic partnerships and is on track to bring in $65 million in revenue this year, up 70% year over year, with 85% gross margins, the people familiar with the figures said.
The majority of the commerce division’s revenue comes from shopping posts written by BuzzFeed on topics such as “21 Beauty Products You Can Get at Walmart That You’ll End Up Using Over And Over Again,” and BuzzFeed gets a cut of revenue from those purchases. Nilla Ali, the person in charge of that business, is remaining at BuzzFeed, as is Eric Karp, the global head of licensing, and Jake Bronstein, head of partner innovation.
Kaufman came to BuzzFeed in 2016, when it bought his company, Product Lab. He rose quickly, devising effective strategies that combined advertising with product sales for retail partners. For instance, BuzzFeed offers companies such as Walmart a bundle made up of an ad buy and targeted product sales. BuzzFeed sells products on behalf of more than 36 retailers, including Walmart and Amazon, according to the person familiar with the situation. Kaufman became BuzzFeed’s CMO earlier this year.
Kaufman, a serial entrepreneur, had an unusual arrangement at BuzzFeed that allowed him to remain CEO of his own retailer, Camp, while working as the media company’s CMO.
Camp, a New York–based store for kids and families, sells toys, offers cooking classes and hosts children’s parties, among other things. BuzzFeed CEO Jonah Peretti started BuzzFeed when he was still at Huffington Post, so he was amenable to Kaufman doing both, a person close to the situation said. That and BuzzFeed’s status as an investor in Camp also made the arrangement work. But with Camp on track to add four more stores around the country in the next several months, Kaufman has decided to spend more time on that business.
The question now for BuzzFeed is if it can thrive over the next few years as a standalone company.
The question now for BuzzFeed is if it can thrive over the next few years as a standalone company. Peretti has in the past floated the idea that digital media companies should merge to increase their weight when dealing with Facebook, but such rollups have failed to materialize. While BuzzFeed had talks with Group Nine Media about a possible merger several months ago, discussions broke down, according to people familiar with the situation.
A Group Nine Media spokesman declined to comment.
Since then, Vice and Refinery29 have had discussions about a potential merger, raising the question of whether BuzzFeed will need to revisit a deal to gain scale.
“Eventually, all of these companies will consolidate,” said one investor in digital media companies. “The cable companies consolidated, the traditional media companies consolidated. I think this is no different.”