Digital Media Struggles To Hit Revenue Goals

Print advertising and circulation revenue may be on the decline, but digital publishers aren’t immune to the pitfalls of the media business. Numerous announcements this week reveal digital media companies are struggling to make the revenue they were hoping for.

BuzzFeed and Vice, arguably two of the biggest digital media startups, are both set to miss their revenue targets for the year, according to reports from The Wall Street Journal.

BuzzFeed reportedly was aiming to make around $350 million in 2017, but is expected to fall short of that figure by about 15% to 20%, amounting to a $50 million to $70 million shortfall.

While BuzzFeed also missed its revenue target in 2015 by about 20%, it generated roughly $250 million in revenue last year, up from $170 million the year prior, the WSJ reports. It noted that some sources suggest BuzzFeed’s prospects for an initial public offering next year are looking “remote.”

BuzzFeed told the WJS it will still show revenue growth for the year.

Perhaps this explains the decision this fall by BuzzFeed, once an avid proponent of native advertising, to begin running banner ads and selling programmatically.

At the time, BuzzFeed CEO and founder Jonah Peretti told Business Insider: "The move also benefits our global strategy by allowing us to generate revenue in markets before we've built business teams to implement native monetization.”

Vice Media, conversely, is expected to fall short of its $800 million revenue target this year.

While these media companies will show revenue growth this year, and are reaching larger audiences, it is evident that the duopoly of Facebook and Google are gobbling up ad dollars.

Separately, Mashable announced it is being acquired by trade publisher Ziff Davis for around $50 million; the company was valued at $250 million in March 2016. The tech site's strategy was to use a $15 million funding round led by Time Warner’s Turner Broadcasting in March to develop more video.

Also, Univision is looking for investors to spend up to $200 million for a minority stake in Fusion Media Group, which includes the Gawker Media sites the company bought last year, now known as Gizmodo Media Group, along with the Onion and Fusion TV, according to Recode.

It’s not all bad news for digital media companies. Axios, the 10-month-old startup founded by Politico alums, has raised a $20 million funding round, according to the WSJ, and its revenue comes mainly through short-form native ads.

Axios originally envisioned the site behind a premium paywall, but that plan has been delayed till late next year, as it lures readers to free content and the brand builds a name for itself.

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