What BuzzFeed's Latest Deal Means for Social

The growing clout of BuzzFeed in the media world has not gone unnoticed; the meme-happy, vertical-driven site announced Thursday that it closed a $19.3 million Series D deal headed by venture capitalist firm NEA, with former investors RRE, Hearst and SoftBank and new investors Lerer Ventures and Lazerow Ventures contributing.

2012 was a powerhouse year for the website, which increased its revenue margins more than 300 percent in just one year through content-based, and social, advertising alone. Mobile now represents over a third of the website's total traffic, which also eclipsed the 40 million unique-monthly-visitor mark in 2012.

“We are laser focused on building a media company from the ground up for a world where social is the dominant way people discover and engage with all forms of media,” said Jon Steinberg, BuzzFeed's President and Chief Operating Officer.

BuzzFeed drives social and, more importantly social drives BuzzFeed. And, the website is diving into 2013 with native advertising on the brain. BuzzFeed is one of the poster children for the native-advertising revolution, with ad revenue coming almost exclusively from in-stream, content-driven advertising. Perhaps, this latest round of funding serves as a vote of confidence in BuzzFeed's socially driven ad innovation – a topic Eric Harris, EVP of Business Operations, will discuss during his session at AdMonsters' upcoming Publisher Forum in Sonoma.

If so, it wouldn't be the first time. Nearly one year ago to the day, BuzzFeed snagged a total $15.5 million investment from six firms, three of whom also contributed to the website's latest investment windfall. Eschewing the conventional web for something more social has been a veritable win for BuzzFeed, which recently hired Jeff Greenspan (formerly of Facebook and BBDO) to help expand the website's relationship with brands by offering social, branded content driven by BuzzFeed's proprietary social technologies.

But, for some, it's not all fun and games when the venture capitalists walk in the door – especially in the advertising world. AdWeek's Mike Shields decried the work of VCs in advertising in a recent article. The endless possibilities of the ad-tech gold rush brought dollar signs to investors eyes with lofty promises of optimization and automation, but at the expense of brand advertisers, according to Shields.

“Yet, most brand advertisers continue to sit on the sidelines, not to mention premium publishers who are more than a little disappointed in this mess,” Shields said. “A confusing, overloaded mess, in the estimation of many in the digital world.”

While capital investment has yet to fuzzy up the ambitions of the social-publishing world, of which BuzzFeed sits at center, only time will tell whether or not this new wave of publishing, bolstered by venture capitalists, will experience a bust of its own.

Read the full article at: 
Rocket Fuel