BuzzFeed’s Commerce Slowdown Undercuts Its Investor Pitch Ahead of Stock Listing

When BuzzFeed unveiled its planned deal to go public last June, its pitch to investors centered around the high growth potential of its commerce business. BuzzFeed, like many other media companies, makes money by inserting links to merchant websites in its articles. It’s a way for media companies to participate in the rapidly growing online shopping market—and to diversify away from the highly competitive digital ad market that constitutes their main business.

But BuzzFeed’s optimistic projections about the potential of its commerce business was undercut earlier this month when the company revealed that revenue growth in that area had slowed dramatically in the third quarter and that the fourth quarter was showing similar trends. BuzzFeed, which is due to go public in the next week, will still likely meet its overall revenue growth projections for 2021—but because of faster than expected growth in advertising, not commerce.

BuzzFeed blamed supply constraints and labor shortages affecting the retail sector for the commerce slowdown. But rival media executive Bustle Digital Group CEO Bryan Goldberg told The Information on Friday that “some publishers have gotten way ahead of themselves in telling the commerce story.” Digital publishers are “advertising businesses,” he said, and will thrive when they focus on their core business.