As the NY magazine piece points out, word of mouth is the holy grail for advertisers: customers talking about your product (or something related to your product) without you paying them to do so is the ultimate recommendation. Madison Avenue legend David Ogilvy said it was “like manna from heaven, but nobody knows how to do it on purpose.” In a nutshell, that’s what Jonah Peretti has been trying to do ever since he himself went viral in 2001, after a stunt he came up with involving a Nike shoe and some bad press for the company’s foreign manufacturing.

This is fundamentally the same reason advertisers are interested in social networks like Facebook and Twitter: because they are hoping to figure out how to both create “social” advertising messages and target them in such a way that they don’t really seem like advertising, thereby encouraging users to share them. The only problem is that no one really knows how to do that (Note: We’re going to be talking about sponsored content and other monetization methods with BuzzFeed president Jon Steinberg, among others, at paidContent Live on April 17).

How does virality work? No one really knows

Everyone can recognize a viral campaign when they see them after the fact, but no one quite knows how to produce them in any kind of scientific way. Microsoft researcher — and Peretti friend — Duncan Watts has studied this area more than just about anyone, and he and the BuzzFeed founder (who co-authored a paper in 2007 on the topic for Harvard Business Review) both have algorithms that try to describe the process. But Watts admits it is far more chaotic and difficult to predict than those algorithms suggest.

“We have this very Newtonian view of causality,” Watts, a square-jawed Australian, shouted over the din. “Like, billiard balls hitting each other, that’s the most complicated thing that we can wrap our heads around.” But his research suggests that the commonly understood, Gladwellian model of virality, with its linear progression through influencers and tipping points, doesn’t really reflect the way viral messages spread.

Even Peretti, who has gained a reputation for being able to engineer virality, seems to concede that it is harder than most people think. The New York magazine piece says the BuzzFeed founder became visibly irritated when told that some advertising industry critics don’t see the site’s sponsored content as being that valuable — with one ad agency executive arguing that showing readers “a bunch of cats” isn’t really helpful when it comes to doing actual marketing. “Could you make a list of cute animals that gets 5 million views? It’s actually really hard,” Peretti shot back.

Some advertisers are resistant to the idea

So one reason why BuzzFeed’s attempt to reinvent advertising is going to be a lot harder than it looks would be simple resistance from the ad industry itself: for all of Peretti’s talk about how sponsored content can bring back the creativity and storytelling aspect of advertising, many agencies and other players don’t seem convinced that putting their brand name on a piece about dogs who look unimpressed is going to help them move more product. The BuzzFeed founder may see this as short-sighted, but it is still a hurdle.

Another barrier is related to this one: namely, the fact that some of BuzzFeed’s sponsored content winds up doing the exact opposite of going viral. According to the NY magazine story, some of the content that Virgin America and other brands spent hours creating in collaboration with BuzzFeed — tinkering with it until they were convinced they had engineered it to be as viral as possible — more or less fell flat and disappeared without a trace. One post had just 350 shares on Facebook, which is the equivalent of a damp squib in social-networking land.

“Other campaigns running on the site… showed smaller results: Geico, 140,000 views; GE, 65,000 views; Pepsi Next, 44,000 views. These numbers don’t quite match the hype around native advertising, which might be why ad agencies sound much less enthusiastic about the medium’s transformative potential than publishers do.”

It’s also expensive — and potentially risky

A third hurdle to BuzzFeed’s ambitions is implied by both of the others, and that is the cost of producing the kind of content that the site wants to lure advertisers into sponsoring. All of the meetings that the NY magazine piece describes, in which a dozen or more editors work on posts and then decide which ones to market heavily (a process that somewhat ironically includes the use of ads on Facebook and elsewhere) makes for an expensive process.

And one final hurdle is the one highlighted by blogger Andrew Sullivan in a series of posts about the evils of sponsored content and of BuzzFeed’s approach in particular: namely, that the site will be unable to maintain the trust of its readers if it blurs the line between editorial and advertising too much. The NY magazine story describes several posts that could easily be mistaken for ads — even though they aren’t — and other posts that began as non-sponsored content and then were more or less recreated as advertising for specific brands.

BuzzFeed has $20 million in new financing, and New York magazine estimates that based on what it charges for a piece of sponsored content, the site could make as much as $40 million in advertising revenue this year. But building a profitable business based on the creativity of human beings in an area as unpredictable as online content — while retaining some credibility — is not an easy task. Just ask the traditional media industry.

Post and thumbnail images courtesy of Shutterstock / Everett Collection as well as Flickr users Nils Geylen and 401K, and Shutterstock / Eldorado3D

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Since it hired Smith to broaden its editorial efforts, BuzzFeed has launched a British edition of the site — as well as new verticals aimed at sports and women — and introduced a business hub (which sparked some imaginative headlines) as well as made a move into longer-form content, such as a feature on the history and evolution of video games. As McBride notes, the site has also done serious investigative pieces about topics such as the failure of the new G.I. bill and the impact of Mitt Romney’s Mormonism on the election.

Serious and entertaining can co-exist

When McBride asks Smith about the dichotomy between the site’s serious journalism and its “viral” entertainment content, the BuzzFeed editor says he thinks drawing that kind of artificial distinction misses the point, since it doesn’t really explain posts like the one about the most inspirational photos of 2011 — which is one of the most-read pieces in the site’s history. Was that post serious journalism or entertaining ephemera? One could argue it was both (and it should be noted that BuzzFeed has been criticized for how it aggregated those photos).

In many ways, a realistic appraisal of BuzzFeed’s chances to become a home for “serious” journalism can only come when we stop thinking of BuzzFeed as a single media animal — the one that is hiring an “animals editor” and asks job applicants for another position to create an instruction manual for making a peanut-butter-and-jelly sandwich — and think of it as a media entity like any other. If the Huffington Post can win a Pulitzer Prize for investigative journalism, why couldn’t its offspring carve out a process for doing that as well?

We like to think of newspapers like the New York Times or the Washington Post as monolithic bastions of “serious” journalism, but the reality is that newspapers have always been a blend of the ephemeral and the important. In most cases, it’s the entertainment column or the fashion feature on a drug-addled celebrity that pays the bills, and allows newspapers to send reporters to Afganistan or undercover to investigate a health scandal. But we ignore those aspects of what they do because we have come to see them as primarily engaged in “serious” journalism.

Read some Sartre, pat a cute dog

BuzzFeed co-founder Jonah Peretti (who was also instrumental in the creation of the Huffington Post) has said that he thinks of what the site does as similar to someone reading a serious novel at a cafe, and then stopping to notice a cute dog — in other words, appealing to the full range of human emotions. And McBride makes a good comparison when she notes that BuzzFeed is a lot like ESPN, a blend of pure entertainment and hard-hitting journalism:

“BuzzFeed’s journalism model is a bit like ESPN’s, an organization I’m familiar with. They both produce a large volume of highly entertaining information, sprinkled with some regular journalism and some high-end stuff. BuzzReads reminds me of ESPN’s 30 for 30 film documentary series, not least because both are produced mostly by outsiders.”

The Poynter writer also points out some of the ways that BuzzFeed needs to improve, including better editing and getting the attention of those in positions of power so that it can actually effect change. If that’s the goal, BuzzFeed may be closer than McBride thinks: a post at National Journal notes that the Republican National Committee is launching a site redesign — and they are doing their best to imitate BuzzFeed. “BuzzFeed’s eating everyone’s lunch,” a spokesman said. “They’re making people want to read and be cognizant of politics in a different way.”

(Note: BuzzFeed president Jon Steinberg will be joining us to talk about the site’s business model at paidContent Live on April 17)

Post and thumbnail images courtesy of Shutterstock / wellphoto

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Never one for understatement, BuzzFeed is promoting the launch with a London event and an animated flyer that shows Queen Elizabeth II riding a tweaked-out corgi dog against a Doctor Who style background:

This is BuzzFeed’s first international expansion and comes after it received nearly $20 million in new funding early this year. According to editorial director, Scott Lamb, the UK site will start by offering “great pop culture content” that represents BuzzFeed’s roots. He explained the strategic goal this way:

“Social is global. We already had a solid audience in the UK, a place that embraces Twitter and Facebook in a huge way, so it made sense for it to be BuzzFeed’s first foray into international waters.” A report from the Next Web says the UK content will come from a four-person team based in London. Meanwhile, a BuzzFeed spokesperson told us that the largest proportion of BuzzFeed’s overall traffic was coming from the UK early Monday morning.

BuzzFeed’s expansion comes at a time when UK and US press outlets are increasingly entering each other’s markets; Britain’s the Daily Mail and the Guardian, for instance, are making a concerted effort for American readers.

BuzzFeed also appears to have brought its trademark native advertising across the pond in the form of “stories” like “15 Kinds of People You Will See at Ultra,” a photo-feature produced by an energy drink maker. BuzzFeed founder Jonah Peretti has long argued that this form of advertising, which can be distributed across social media, is more effective than traditional internet display advertising.

As it dips its toe into Britain, BuzzFeed is also expanding aggressively at home with more long-form content and plans for a business vertical.

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Slate’s latest incarnation is as a data-driven social-media beast.  The site thinks it can use viral wizardry to spray smart writing around the internet and, at the same time, finally earn a profit from being perspicuous. The money question has become pressing because Slate, despite its years as a high-brow conversation starter, has yet to show it can survive without the largesse of a corporate mothership.

So will Slate’s third act pan out? Here’s a look at how its brain trust is approaching data, technology and the evolving ethics of advertising.

Top drawer or traffic whore? Stats and story selection

On a cold January afternoon, I met editor-in-chief of the Slate Group, Jacob Weisberg, and Slate editor David Plotz in the former’s airy corner office on Morton Street in New York’s West Village. The office has large windows and shelves of hardcovers, including Weisberg’s exposition “The Bush Tragedy.”

The men were busy. Weisberg was en route to Davos, while Plotz had ducked out from answering questions on the online discussion forum Reddit. But both wanted to make the case that Slate has what it takes to survive in the age of analytics. “We rely on data, not intuition” said Weisberg. “The big cultural change at Slate is that it’s moved from being a site driven by instinct to a site driven by evidence.”

The remark comes as a rebuttal to earlier observations that Slate relied on creaky technology even as its competitors shot by it with state-of-the-art tools. The New York Observer in 2010, for instance, talked to members of Slate’s staff and concluded that the site’s tech was “Chitty Chitty Bang Bang.”

Weisberg says those days are done and that technology is at the center of the editorial operation. He points to a new Silicon Valley-style product team and a doubling in the amount of “sideways” readers from social media in the last year as proof that Slate has gotten religion on the analytics front.

Weisberg says Nick Denton of Gawker and Jonah Peretti of BuzzFeed have been inspirations in the push for better analytics. The two viral media evangelists have shaken up publishing by using social media metrics to judge what stories to promote. (Peretti will be speaking at paidContent Live in April.)

But if Slate turns to audience activity to inform its story choice, does this also mean pandering? “We have written traffic-whorey stories here and there,” admits Plotz. But these efforts haven’t been particularly successful, he says. Instead, he credits editorial initiatives like “Bad Astronomy” (a feature for science nerds) with drawing new regular readers to Slate.

In this regard, Slate is like other high-minded publications navigating a tough, even contradictory mission. On one hand, they promise smart and independent ideas; on the other, they’re heeding social media metrics that could tug them to the lowest common denominator. While news sites like BuzzFeed cut their teeth on silly cat photos only to climb up the intellectual and media food chain, it’s unclear whether this process can work in the opposite direction.

So far, Slate appears to be threading the needle by growing its readership, while also publishing thought-provoking pieces (like this one about Palestinian versus Israeli textbooks). Slate says December 2012 unique visitors increased 33% percent from a year ago; meanwhile, comScore stats show Slate is faring well against other ideas publications. Here’s a chart that shows how they compare (note QZ and theAtlanticWire are part of the theAtlantic.com) :

Paywalls and pettifogging

The buoyant numbers are good news, of course, but do they mean Slate is finally in a position to make money? In 2010, Plotz admitted that Slate was not profitable. Like nearly every other digital publication, Slate had discovered the hard way that great writing and a loyal readership are not the same as a business plan.

Since then, many publishers have followed the lead of the New York Times and begun to charge for access to all or portions of their digital content. These so-called paywalls have gained acceptance after being a contentious issue for years — in part because an early effort by Slate to implement one in 1998 didn’t work out.

Slate recently floated the idea of a future “membership” scheme for some readers, but Weisberg is adamant it won’t involve charging for content. The topic is sensitive enough to have produced a bizarre Twitter spectacle in which Weisberg’s Mr. Fox avatar berated a respected Forbes reporter as a “pettifogger” (and worse):

@jeffbercovici Jeff, that story doesn't say that! It calls membership a "model," not a "pay model." Quit pettifogging.—
Jacob Weisberg (@jacobwe) December 14, 2012

So what exactly does the membership involve? Weisberg didn’t elaborate beyond saying it won’t be unveiled until at least the end of the year and that it will be “more akin to a public radio-type membership model — you give a contribution and in return you get benefits.”

As Slate hashes out these details behind the scenes, it’s also trying to cultivate another revenue stream, in the form of an expanded events business. These include loose mixers that let readers mingle with Slate writers; Weisberg says more than 700 people recently bought tickets for one of its “gab-fests” in Washington. Slate is also hosting small, more formal events hosted by advertisers. One example is a UBS-hosted panel at which Weisberg hosted a discussion on exports with political poohbahs.

Other media outlets have run into ethical challenges with custom events like this — most notably the Washington Post, which in 2009 proposed hosting private “salon events” at the publisher’s house for powerbrokers and journalists. It sparked a newsroom revolt, and the paper ditched the idea before it ever became a reality. Weisberg says Slate, which is independent but shares a corporate parent with the Washington Post, won’t run into similar problems because its events are all public and on the record.

All this still doesn’t answer the question of whether Slate is now profitable. Asked directly, Weisberg said he can’t say because of Sarbanes-Oxley disclosure rules that require companies like the Washington Post Co. to disclose material information through broad public channels.

Ads, yes – but not for the Church of Scientology

Digital publications these days need multiple revenue streams to survive, but their core remains advertising. And here Slate, which has recently built up its own sales force outside of the Post, and others face the same dilemma: an increasing amount of web traffic comes in through mobile devices (about 30% now, and 50% by 2014 is probably a safe bet) but ad rates are low and no one is sure what to do about that.

“I don’t think we’ve figured out anything other people haven’t,” says Weisberg. “You have a rapidly expanding audience but CPM’s that are much lower. The key is distinguishing how and when people are using different types of mobile devices.  Between tablet and mobile, those two will diverge rapidly over time. Tablet ads will become more valuable while handsets gravitate to a performance model.”

While publishers wait for the right mobile ad models to emerge, many are seizing on so-called “native advertising” as the secret to juicing ad prices. It’s debatable whether it’s really new but the basic idea is to produce ads that mimic the editorial content around it – ads that resemble nearby stories, tweets, pictures, etc. It may or not be novel, but for now it is clear that native advertising can go horribly wrong such as when the Atlantic printed a “story” about the Church of Scientology replete with gushing “reader” comments about the cult’s virtues.

Weisberg says the Atlantic tripped up by violating three principles: printing ad that confuse readers; tampering with the editorial process; and accepting an ad from someone the publication shouldn’t have done dealt with in the first place. “They are enemies of free speech, they are persecutors of journalists, they’re litigious. They’re a crazy cult who’s made life hell for journalists who’ve tried to do their job. Why do business with them at all?”

In terms of Slate’s own advertising, the publication says revenue in 2012 grew 26 percent from the previous year. Its advertisers include , most recently, Coke, Lexus and Samsung. As for the ad opportunities offered by aggregation tools like Flipboard, Weisberg is skeptical and says they are “too passive” and less useful now that “Twitter has cracked the news personalization process.”

Slate has also built a strong lineup of videos and podcasts that Weisberg says are lucrative for the site. Slate is now producing nine separate podcasts, some of which rate highly on iTunes; one episode of the show Lexicon Valley recently notched up 650,000 downloads. Slate would not disclose how much ads, which are read by show hosts, bring in but said “advertisers pay some of the highest rates in the industry” for the podcasts.

This podcast and other non-print revenue will help determine whether Slate can join an increasingly data-driven media world while still remaining an influential liberal publication. While the verdict is still out, Slate’s confidence remains high.

“We have the brain of the New York Times and the body of BuzzFeed,” said Weisberg as he prepared to dash off to Switzerland – where he would later tweet, “Wish Pussy Riot was in Davos instead of so many Russian oligarchs & kleptocrats.”

(Images by Slate and Kletr via Shutterstock)

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If you’re unfamiliar with Branch, which will be part of the startup showcase at our paidContent Live media conference in New York on April 18, the point of the site is to make online discussions feel like the ones that take place around the kitchen table. It does this by allowing you to start a chat from anywhere on the internet, or transport an existing discussion (or screaming match) taking place on Twitter or elsewhere and continue it in on Branch. By clicking “Take it to Branch,” you transform a discussion into an invite-only forum that anyone can read but that requires the moderator’s permission to join.

Branch’s new features are intended to make the site feel more social by showing what the people you are connected to online are talking about — which will, presumably, encourage people to ask to join more conversations. Likewise, the “profile cards” may serve to make the people you see on Branch feel more accessible.

“Now you can click anyone’s name and hop around between the branches they’ve participated in and people they’ve talked to. They’re intended to help you explore the pockets of communities on Branch, not represent the user’s identity,” explained Branch founder Josh Miller by email (emphasis his). As an example, here’s the Branch “card” for my colleague, Mathew Ingram:

So what will all this do for Branch’s popularity? It’s hard to say. So far, the company has received a lot of attention because of Miller’s reputation as a wunderkind (he came up with the idea while working for Senator Diane Feinstein and dropped out of Princeton to pursue it) and because Branch is backed by the founders of Twitter and by tech media star Jonah Peretti. But it’s still not clear if Branch can break through to widespread adoption; as Ingram noted this spring, “closed” conversations reduce flame wars and trolling but also lack the freewheeling feel of the internet. Without easier on-ramps to the Branch discussions, the site may find it hard to appeal to a broader base than tech and media insiders.

One area where Branch does appear to have the potential to take off is as a forum for people to discuss sports or TV. For example, here’s a Branch discussion about the show Homeland that got a lot of traction.

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To get a sense of BuzzFeed’s unique approach to news, take a look at some of the the stories it selected as “most successful” for 2012. They include a Wall Street hooker’s wish she could tell clients they were “bad in bed” but also serious business and political features — and, of course, mega-viral listicles like “21 pictures that will restore your faith in humanity” and “50 people you wish you knew in real life.”

In the coming year, BuzzFeed is poised to shape the rest of the media industry even as it tries to keep up its own momentum. Here are five things to watch for:

Is the mix of highbrow and tabloid sleaze here to stay?

BuzzFeed made its name with fluffy fare designed to be shared by what founder Jonah Peretti calls the “bored at work crowd.” More recently, the site has sought to climb the quality ladder by hiring respected journalists and producing New Yorker-style articles. This raises the question of whether two very different forms of content quality can co-exist under the same title.

In the traditional media world, highbrow and lowbrow fare live in very different silos. The New York Times, for instance, doesn’t publish sensational headlines or sacharine cat spreads. Meanwhile, the tabloid press doesn’t bother much with long political profiles or ponderous articles about art galleries.

BuzzFeed, however, has chosen to straddle both worlds. Other media outlets may be tempted to follow in the hopes of obtaining a mass audience and serious intellectual influence. It’s too soon, though, to know if traditional divisions between highbrow and tabloid news are largely a function of the print age — or if they are instead tied to fundamental principles of trust, authority and branding.

Will BuzzFeed acquire a political identity?

When its content was based on cats, it was easy for BuzzFeed to hide any political leanings. That will be harder as the site reports more about Congress and the economy. The coming year will determine if BuzzFeed stays non-partisan or if it will take on liberal leanings like the New York Times or the Huffington Post, where Peretti was a founder.

While a middle-of-the-road approach may seem safe, other outlets like Daily Kos and Michelle Malkin show that partisanship is popular. It’s also worth noting that BuzzFeed’s mastery of emotive images and viral distribution means it could put a powerful thumb on the scale for controversial issues. Image the treatment BuzzFeed could give topics like immigration (“10 Mexicans who are a lot like you”), gun control (“4 ways a Bushmaster kills kids faster”) or the economy (“5 home remedies you can use after baby boomers drain Medicare”).

Will all those pageviews turn into money?

BuzzFeed, like the U.K.’s Daily Mail, has galloped up the reader ranks with the help of sophisticated analytics tools. In September, BuzzFeed had doubled its traffic from a year ago with 11.5 million unique visitors according to comScore numbers cited in a BusinessInsider account.

The rapid growth will help BuzzFeed stay ahead of a choppy ad market for non-specialty news sites but, in the long run, the site’s success depends on its vaunted native ad strategy. This year, BuzzFeed will be the leading test case for whether native advertising is in fact the future business model for journalism or if, as detractors say, it’s just another buzzword.

What about the mobile morass?

Like every other publisher, BuzzFeed will soon face a situation where half its traffic comes by way of a mobile device where, for most, advertising revenue is still a pittance. The mobile migration will put BuzzFeed’s native advertising strategy even further to the test.

Will a BuzzFeed competitor emerge this year?

As BuzzFeed gains influence, others may be tempted to copy its approach by employing the same package of viral content and analytics. Low barriers to entry mean that we could see the emergence of BuzzFeed clones by the end of the year — either new sites that target BuzzFeed’s verticals or old meda brands that reboot their existing offerings on a BuzzFeed model.

(Image by TijanaM via Shutterstock)

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But how do you make content that can be amplified ad infinitum? What happens when media start writing stories for robots? And can BuzzFeed bridge the gap between social-centric content and long-form political analysis?

On Friday, I hosted a panel at the Monaco Media Forum on the topic of content virality. Here is the video of the discussion with BuzzFeed CEO Jonah Peretti, Unruly Media CEO Scott Button and AOL video SVP Ran Harnevo…

Bonus video: also at the forum, Beet.TV’s Andy Plesser interviewed me about the recent controversy surrounding the BBC over its reporting of sexual abuse…

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The real-estate blog Curbed and its sister food and shopping sites, Eater and Racked appear to be bucking that trend.  The sites, which are owned by Lockhart Steele, cater to local audiences looking for buildings, restaurants or sales. How has he made local pay when others like AOL’s hyper-local network, Patch, have flopped?

“It’s a little counterintuitive. We’re a local company that’s not really interested in local advertising,” says Steele, explaining that the sites’ primary sponsors are national brands with big ad budgets like Ben & Jerry’s or Absolut Vodka.

Steele says big brands use Curbed to tap into local communities of shoppers, foodies or home buyers in different regions. He cites a recent example in which Curbed threw a party in Portland on behalf of Patron Tequila. “We can activate audiences in each of these cities we’re in, and activate a real community.”

Steele says there simply isn’t enough money in local advertising – with one exception. “The one place you can sell local is real estate … It’s the only category of hyper-local that’s really flush with money.”

The Mobile Morass: it’s ok to sit on the sidelines

Publishers are watching with growing consternation as audiences are moving en masse to mobile devices but ad dollars are not. Steele admits he doesn’t know how or when the mobile riddle will be solved but says he is not concerned.

Steele says it’s unrealistic to expect readers to download a publisher’s app unless you offer “non-stop engagement like Netflix” and adds that apps “create another distracting channel that you have to worry about.” He says Curbed is content to watch the mobile experiments of companies like Conde Naste which have been more bullish about apps.

“A lot of interesting start-ups in the digital media space are sitting on the sidelines .. We’re happy  to see big guys throw around hundreds of thousands on development. We’ll keep our powder try and watch others. If someone hits on the right strategy, we’re not above copying it.” In the meantime, Curbed is content to look for niche mobile opportunities like email newsletters and monetizing the screen that launches when a reader first downloads an app.

Why blogs are beautiful & Gawker’s still got it

Steele says his favorite sites are those that use a traditional blog layout like the Awl or Andrew Sullivan. He believes in a format that lets readers “scroll down and know when they’re full,” versus busy homepages like New York magazine which Steele describes as “seizure-inducing” (though he loves NY mag’s content).

Does he still follow Nick Denton, his former mentor and boss at Gawker, where Steele was the gossip site’s longtime managing editor?

“I still think Nick is one of the most interesting people in media. When it comes to product vision in this media space … I think Nick is pushing forward some of the most interesting ideas,” he said, citing Gawker’s recent attempt to transform the idea of reader comments.

Who else? Steele calls Jim Bankoff and Vox Media the “standard bearer for the media space,” He says sites like Vox Media’s The Verge are “the most beautiful on the web” for their seamless integration of text, audio and video.

Display ads are the Future

No really. While prominent display skeptics like BuzzMedia’s Jonah Peretti claim that banners (those ads that stretch across the top and side of web pages) belong to an earlier era of web publishing, Steele disagrees. “Display advertising is the future. Part of the reason is that display is also the past – people made fun of banners when they debuted on Hotwire in 1995.”

Steele’s point is that display advertising is a staple of the internet economy that publishers and advertisers now know how to buy, use and sell. He says companies continue to see these ads as powerful opportunities to build brand image. This is different than revenue from “click-through” ads about which “no one has illusions.”

To make display advertising work, Steele says, it’s important to keep ad sales in-house. “Giving inventory to ad networks puts you in a world of spiraling CPM’s.”

New York is tech and San Francisco is media (and vice versa)

“The old idea that New York created media and San Francisco created great product is out the window,” says Steele, citing Foursquare, the popular location-based social network, which long shared a roof with Curbed. He believes both cities are pushing each other to improve media platforms and publications. But that doesn’t mean he likes them equally.

“I’m a tried and true New Yorker. If lived in San Francisco, I’d have to kill myself. Other than that it’s a great city.”

(Images by Etienne Volschenk, Kiselev Andrey Valerevich and upthebanner via Shutterstock; L. Steele image via Flickr)

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If anyone inside most traditional media companies thinks about BuzzFeed at all, they probably see it as the site that posts “viral” photo galleries of kittens and other web ephemera — or possibly as the site that hired reporter Ben Smith away from Politico to head up its more serious side. But while it may have gone unnoticed by most, the BuzzFeed network has grown into a significant digital-media entity, and Smith’s hiring is just the latest example of the site’s broadening ambitions. Is there anything that mainstream media companies can learn from what it has done, apart from the fact that web users like pictures of cats? As it turns out, an internal memo to staff from co-founder Jonah Peretti has more than a few worthwhile lessons.

The memo, which Hunch founder and venture investor Chris Dixon (who is one of BuzzFeed’s financial backers) posted to his blog, contains some interesting data about how much BuzzFeed has grown in just a few short years: according to Peretti — who also played a key role in the creation of another digital-media success story, The Huffington Post — BuzzFeed passed the 30 million unique visitor mark last month, and he predicted that revenue for 2012 would be more than triple what the company brought in last year. In just the past year alone, BuzzFeed’s staff has multiplied from just 26 to 117. While the network might be a minor player compared to entities like the New York Times, those are still some fairly big numbers.

Peretti’s memo also contains the usual bromides and pep-talk statements that CEOs often include in such staff letters, about how BuzzFeed couldn’t succeed without a great team (which even Peretti admits “sounds a bit cliche and sappy”), but there are a few points that are worth highlighting — in part because they run contrary to the popular perception of the company. There is a lot more going on behind the scenes than just some scraping of 4chan or Reddit groups, something BuzzFeed has gotten some criticism for recently. Here are a few important points I think Peretti is making:

Digital media is a marathon, not a sprint

The BuzzFeed founder says that part of the company’s success is “long-term focus,” which is probably not something many observers would accuse the network of having. From the outside, it looks like all BuzzFeed cares about is getting more hits and clicks for its viral photos or videos (something even fellow digital-media maven Nick Denton of Gawker has criticized it for). But Peretti clearly has a much broader vision than just that. As he puts it:

We could juice our traffic and revenue by dropping everything and focusing entirely on the short term. And that is what companies do when they are trying to flip for a fast payday. But when you are building something enduring, you have to care as much about next year as you do about next week.

A lot of media companies, both mainstream and otherwise, seem to be looking for whatever quick fix they can come up with to boost their pageviews or web traffic so that they can drive revenues from online advertising — but this kind of strategy inevitably suffers if it isn’t well thought out. It may look like BuzzFeed is just throwing together whatever will get clicks, but Peretti sees what the company is doing as part of a long-term plan to create a truly web-native media enterprise.

Social is more than just a buzzword

In one section of the letter, Peretti talks about the principle of “respecting the reader,” which for BuzzFeed means not using pageview-pumping tactics like slideshows, and not cluttering up pages with SEO-friendly keywords or using headlines that misrepresent what is actually in the post. But what he’s really saying is that BuzzFeed isn’t just socially oriented because it makes for good traffic and that helps sell advertising (although that’s obviously the business model) — the site is social in the sense that everything it does is aimed at sharing information readers will enjoy, in a way they will enjoy it. It sounds simple, but many media outlets don’t see it that way — they see the content on their pages as something they have to produce in a specific way because that’s the way they have always done it, or because their editors find it valuable, not because readers have shown any interest in it. BuzzFeed’s success comes from seeing what readers are already interested in and then filtering and packaging it in as easy a format as possible for sharing. That works for political stories the same way it does for cat pictures. As Peretti puts it:

We focus on publishing content our readers love so much they think it is worth sharing. It sounds simple but it’s hard to do and it is the metric that aligns our company with our readers.

The same rules should apply to all content

One of the most interesting aspects of BuzzFeed’s business is that all of the social elements that the company focuses on for the posts it publishes also apply to its advertising. The network has no traditional banner ads or other formats as most media outlets do — its advertising looks and behaves exactly the same way as its other content, an approach that Twitter and Facebook are also taking with their advertising models. And Peretti makes a point in his letter of saying that the various pieces of BuzzFeed are seen as just different elements of one machine with a single purpose: getting people to share content.

People don’t do good work when they feel like losers and are second class citizens within their own company. Fortunately we have avoided that problem. We love the silly, we love the substantive, and we love making advertising that is actually compelling.

Whether BuzzFeed can follow through on its ambition of building a great digital-media entity — like a Conde Nast or Hearst, as Peretti describes it in his letter — is still an open question. Will users be as comfortable with the marriage of cute cat pictures and in-depth political reporting as Peretti is? One could argue that newspapers carry a similar blend of the ephemeral and the serious, but then they aren’t really doing all that well. And social advertising is a similarly risky bet, as even Twitter and Facebook would likely admit.

If nothing else, however, BuzzFeed makes for a fascinating case study in hyper-social media, something that other media companies large and small should be watching carefully.

Post and thumbnail images courtesy of Flickr user Umberto Salvagnin

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For the unfamiliar, BuzzFeed is the brain child of technology and marketing whiz Jonah Peretti, who delights in churning out stories with pretty pictures for the “bored at work” crowd. The site’s bread and butter is stuff like “37 Items the Kardashians have slapped their name on” and “Flock of Angry Kittens gets a Bath” that are intended to generate a maximum amount of Twitter and Facebook hoopla. BuzzFeed  recently launched a politics vertical that offers items like “Eight Images from Mitt Romney’s business career” and “A Very Sad Picture of Newt Gingrich.”

So why is the ever-serious New York Times getting mixed up with this potpourri of pop culture reporting? The move is actually a shrewd one.

First, BuzzFeed recently hired Politico’s Ben Smith to lead up its politics vertical. Smith is one of the very best political reporters of his generation and he made his name in the online environment. His presence will give the NYT-Buzzfeed venture both gravitas and tactical guidance (in addition to the silly stuff, BuzzFeed’s political coverage has also included insightful coverage of health care, immigration and more). The new web video presence will also complement the Times fledgling online show TimesCast Politics.

Second, the New York Times stands to learn of a ton of new social media tricks. Unlike traditional news outlets, BuzzFeed is all about turbo-charging stories for social channels, an approach that recognizes that social is increasingly driving online news consumption. This means that the Times has an opportunity here not only to increase the visibility of its convention coverage but also to develop tools it can employ in other areas of its reporting. The Times could, for instance, be in a position to bring a BuzzFeed-like touch to its MOMA reviews or its World Series coverage.

Finally, a bit of BuzzFeed brashness will be a welcome addition to often dull convention coverage. The gatherings that once provided high political drama are now little more than tedious tub-thumping pageants — maybe more viral video will change that.

“We think BuzzFeed’s energy and keen ear for how political stories play out in the social sphere will be a valuable and interesting contribution to The Times’s video presence,” said Jim Roberts, assistant managing editor of The New York Times in a press release.

[Image by Muriel via Shutterstock]

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