For Digital Publishers, Ad-Supported News Remains an Unsolved Puzzle

On Thursday, in announcing the closure of BuzzFeed News, BuzzFeed chief executive Jonah Peretti concluded one of the most highly visible experiments in ad-supported digital newsgathering of the last two decades.

The ambitious newsroom, which launched in 2011, sought not only to legitimize the reputation of BuzzFeed itself but to prove that an esteemed news operation could run almost entirely on the dime of digital advertising.

The theory ran counter to decades of accrued wisdom: Both on television and in print, news has always been a loss leader, subsidized by other sectors but prized for its ability to attract attention and add reputational sheen, said Jon Miller, chief executive of digital media investment firm Integrated Media Co.

Still, even as other news publishers gradually erected paywalls and moved their most valuable content behind them, BuzzFeed News remained insistent that its reporting would remain free to access. 

Along with its peers at Vice Media, Vox Media and Bustle Digital Group, the publisher aimed to prove that with the proper scale and advertising strategy, it could offer quality reporting to readers for free. Indeed, in his memo to staff, Peretti blamed the social platforms for their inability to support “premium, free journalism purpose-built for social media.”

Had BuzzFeed News succeeded, it would have proved an exception to what has increasingly become an article of faith in digital media: Newsgathering is too expensive, and its digital ad yields too paltry, for such a product to survive on advertising revenue alone.

The fate of the publisher reflects a growing awareness that the economics of digital media are not so different from what preceded them, and that few news operations—if any—can exist in the digital era without a complement of alternative revenue streams.

“Margins for media companies producing their own content aren’t the same as those for ad sellers relying primarily on user-generated content and self-service advertising platforms,” said Kate Scott-Dawkins, the global president of business intelligence at GroupM.

This realization has not been confined to BuzzFeed News. In the last year, BDG has shuttered two of its newsgathering operations, Gawker and Input, while Axel Springer has issued cuts or closures at Insider, Morning Brew and Protocol, exempting only Politico and its lucrative subscription business. 

Meanwhile, Vox Media has progressively solicited reader donations to support its news arm, Vox.com. Vice Media has reportedly considered cutting Vice World News to improve its odds of a sale.

If digital media publishers once believed that the Wild West of the open web would unlock new capabilities for financing the news, the opposite now appears increasingly true.

Instead, the same bogeymen that have always plagued the news business—namely brand safety and weaker opportunities for content alignment—continue to do so, and they have been joined by new, digitally-native existential crises.

A host of unsolved challenges

News has never been a terrific environment for advertising, primarily because marketers have little control over the context in which their ad appears, Miller said.

The highly valuable audience of news readers has long mitigated this concern, but brand safety issues remain a key source of anxiety for marketers. In fact, due in part to keyword blocklists, which are rarely updated or revisited, the value of news inventory has remained far lower than verticals like lifestyle or sports content, according to 2022 data from supply side platform Sovrn.

These factors join a laundry list of other realities that make ad-supported news a challenge. 

News often lacks the kind of endemic alignment offered by other categories of content, and it offers only limited opportunity for alternate revenue streams such as affiliate marketing, according to media analyst Charlotte Henry, author of the newsletter The Addition.

Reporting the news costs more than producing most other kinds of written content, and it has only a short, often cyclical period of relevancy. Combined with the brand suitability concerns that depress ad yields, the result is an expensive product that generates comparatively little revenue.

These concerns dovetail with headwinds native to digital environments. The steady decline of open-market programmatic yields means news publishers increasingly need to strike direct deals with marketers to generate meaningful ad yields, a luxury only premium publishers can arrange. 

Likewise, signal loss due to cookie deprecation and shifting privacy legislation have made vast swaths of the digital inventory nearly impossible to monetize. 

Social platforms—the primary sources of scale for many of these publishers—have pivoted away from news in recent years, turning off the traffic spigot and leaving publishers to find their audiences elsewhere. 

In short, like so many other dreams of the last decade, the notion of free, sustainable news has long been rooted in wishful thinking and misguided math. For the next generation of media operators, that realization could be one of the defining lessons of BuzzFeed News.