BuzzFeed Needs Display Advertising To Boost Revenue Growth

BuzzFeed -- which eschewed display ads on its site because they cluttered web pages, mostly annoy readers, and can slow page load times -- has done an about-face in deciding to accept the ad format. The site, known for its quizzes and listicles, has decided to introduce display ads on its desktop and mobile websites.

Why now? BuzzFeed will use the ad format to help boost revenue in advance of a planned initial public offering (IPO). Digital News Daily asked two digital media veterans to provide more insight about what's behind the move.

“BuzzFeed is likely seeing the reality of the revenue available for display advertising via programmatic networks. This is a necessary step to grow their revenues. There is too much revenue available for display advertising,” said Ezra Kucharz, former president of digital media at CBS.

Despite the bad rap that display advertising gets, Kucharz said display formats keep things simple. “While every business wants to be progressive about the ad units and types they deploy, marketers like simple. Display advertising continues to deliver and remains a key piece of the marketing mix,” he said.

Mike Kelly, CEO of Kelly Newman Ventures and a former executive with AOL Media Networks, agreed, adding: “Banner ads may be vilified but they're the foundation of automated advertising."

“The macro situation in digital advertising is around data and automation," Kelly said. "Billions of dollars in advertising dollars [demand from advertisers] are shifting from offline to online channels (programmatic and data-driven) that include display. Display represents a huge portion of inventory available. So marketers that want to use these tools and channels have to use at least some portion of display -- not just native or video, which don't have enough supply or reach. To capture these shifting dollars, publishers find that they need to fish where the fish are. In this case, display." 

Investors expect long-term and consistent revenue growth, Kelly explained. “That's hard to come by if you unplug from the majority of the market” -- i.e., digital display advertising. And while BuzzFeed has invested a lot in video content, he said, and is aggressively looking to monetize that content, it “can't afford to pass up billions in programmatic banner spending.” 


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