Over 20% of BuzzFeed's revenue now comes from commerce. Here's why that matters

This post was originally published in Button's free newsletter, Mobile Commerce Weekly, which goes out each Tuesday. Subscribe today!

From mass layoffs to site closures, 2019 was a particularly tough year for an already beleaguered media business.

One exception to the negative news trend, however, is the increasing role that commerce is playing in media business models: 

• Over 20% of BuzzFeed's revenue now comes from commerce. That's up from 9% two years ago. (Disclosure: BuzzFeed is a Button partner.)
• CNET's commerce revenue doubled in 2019. 
• Cyber Week traffic to CNN's commerce site, Underscored, rose 400% compared to 2018. 

What's going on here? The digital advertising ecosystem has not been kind to publishers. While advertisers are spending more money on digital channels, the vast majority of that cash is going to Facebook and Google (i.e., The Duopoly), not to the likes of BuzzFeed and CNET. Nearly 70% of digital advertising spend in the US last year went to the two big tech companies alone.

In response, in recent years publishers have become increasingly eager to diversify their revenue streams beyond advertising. Now, instead of focusing entirely on advertising, more companies today are embracing a more sustainable mix of advertising, subscriptions, and, yes, commerce. 

BuzzFeed wants to cut out the commerce middlemen. Any discussion about the media business today tends to focus on the industry's many liabilities -- its people-heavy cost structure, its scaling challenges, etc. But publishers have an asset that Google and Facebook don't: Direct, trusting relationships with their readers. Readers see a recipe video on Tasty and are so inspired by what they see that they purchase the ingredients to make the dishes themselves. 

But as BuzzFeed CEO Jonah Peretti wrote in a recent post, the problem for publishers is that, while they're often the source of inspiration for transactions, they "don’t capture much of the economic value created." Solving this attribution problem is core to the company's 2020 strategy. 

"The convergence of mobile content and mobile commerce means we can finally make progress on this problem. The traditional marketing funnel can be compressed and consumers can move more fluidly from inspiration to transaction."

Why the shift to commerce matters for media. This audience transition from simply consuming media (which is monetized by advertising) to making purchases (which is based on actions and transactions) mirrors Button's conviction that the future of the Internet will be powered by actions, not ads. Judging from publishers' successful efforts at commerce, this is a future that media companies should embrace.