And if that sounds like a lot, the percentages were a lot higher in the previous three years, albeit based on lower editorial budgets.
Gawker reported in a post on its TKTK blog that BuzzFeed’s editorial budget for the first six months of 2014 was $10,449,422, and its cost of revenue—which Gawker said is mostly made up of money spent to buy traffic on Facebook and other websites on behalf of its advertisers—was $5,818,808 over the same time period.
For the prior three years, according to Gawker, the figures were:
- 2013: Editorial budget of $11,739,790, cost of revenue of $9,907,232.
- 2012: $4,724,608, $3,627,594.
- 2011: $858,780, $662,436.
As for other BuzzFeed financial results, Gawker reported that revenue and net profit or loss, respectively, for the following periods was:
- First half of 2014: $46,159,098, $2,748,017 net profit.
- 2013: $64,095,207, $7,038,721 net profit.
- 2012: $20,333.560, net loss of $4,026,079.
- 2011: $4,127,935, net loss of $3,349,741.
CB Insights analyst Michael Dempsey provided Gawker with some context of how to compare BuzzFeed’s financial results with those of other media companies, saying:
You have to remember that BuzzFeed doesn’t operate on any sort of subscription model, is growing at a significantly higher rate versus traditional media companies and also is doing a lot in its original video content, which is largely viewed outside of BuzzFeed.com, almost making this part of the business more comparable to an original content company vs. digital media publication.
Long story short, many public market investors may find the potential valuation multiples high, but the growth and difference between BuzzFeed’s structure isn’t a perfect comparison to the large, public, traditional media companies.
Readers: Are you surprised at how much of BuzzFeed’s editorial budget goes toward buying traffic on Facebook?
Image courtesy of Shutterstock.