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Does BuzzFeed Know the Secret?

Peretti’s formula for virality really adds up to a more mundane sales pitch: Buy lots of ad impressions and realize a modest, if unpredictable, viral bonus. And BuzzFeed’s creative process is a familiar one, still more art than science. It relies on human talent: Greenspan and his team fancy that they’ve proved themselves as viral pranksters on the playgrounds of Twitter and Tumblr. “Nobody wants to be a shill for your brand,” Greenspan says. “But they are happy to share information and content that helps them promote their own identity.”

Where BuzzFeed gets scientific, Peretti says, is after publication. “We understand how the system works,” he told me. The company practices “viral optimization,” Peretti’s term for promoting the messages that work and ruthlessly starving those that don’t. BuzzFeed has released some selective data about the fractional proportion of sharing it achieves—its so-called “lift”—and claims that for the median advertising post, ten paid views yield around three shares. Peretti adds that the brands that have embraced the format most enthusiastically have better results. Virgin Mobile’s ratio of shares to paid views is better than one to one.

In BuzzFeed’s weekly list of top posters, Virgin Mobile consistently outperforms many editorial staffers. But that’s not an entirely fair comparison, because BuzzFeed pays to place sponsored posts in Facebook’s news feed and on other social-networking sites. (For a company that boasts a formula, this might seem a pretty brazen cheat, but that’s viral marketing in the real world.) Even with promotion, though, none of the Virgin Mobile posts I saw in the pitch meeting did very well. Weeks later, the best-performing—the one about people who were “screwed by life”—had been shared 346 times on Facebook. The one about domain names had just seven shares. Ron Faris of Virgin told me that advertising on BuzzFeed is “a game of singles and doubles.”

Yes, the hits can add up: Virgin Mobile’s posts received around 1.1 million views for the last week in March. Other campaigns running on the site during that period, however, 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.

“Can BuzzFeed be a significant, sustainable business? Yes,” said Rob Norman of GroupM. “But is BuzzFeed the shape of things to come? I don’t think so.” Designing custom ads is a labor-intensive business, difficult to do on a mass-produced scale, and it’s probably not a viable option for companies that lack tens of millions in venture capital. So it may be difficult to follow BuzzFeed’s example, and for publications with a more reverent view of traditional journalism, it may be foolish to try. “BuzzFeed is an opinionated publication with a point of view, and their opinion is cats are funny,” says Palmer, whose firm has worked with the site in the past. But, he adds, “if everybody starts doing that, they’re going to compromise what makes them attractive to their audience from a journalistic point of view.” The Atlantic’s experience earlier this year offers a cautionary counter­example: It was forced to apologize amid great controversy after it published a lightly differentiated online advertorial full of fulsome praise for the Church of Scientology.

Social networks, with their unforgiving chorus of voices, can be dangerous places for brands—as Peretti knows from experience, viral stunts can backfire. But ad-world veterans point out a more immediately obvious drawback: Most advertising produced by publishers just looks amateurish. “Ninety percent of it is really bad, and it makes creative agencies cringe,” says Jason Clement of TBWA\Chiat\Day, who oversaw the digital portion of the successful Old Spice campaign when he was with a previous firm. “I’ve never seen anything on BuzzFeed that felt ownable by the brand. That didn’t feel like LOL, OMG.”

In my conversations with agency executives, I heard this observation many times. BuzzFeed’s advertisements may draw traffic, but are they really selling anything? After all, even Faris admits that he uses BuzzFeed to introduce Virgin Mobile to an audience—only to hit them with a banner ad elsewhere. “It’s not enough to get someone’s time with a bunch of cats,” Gerry Graf says. “It’s not enough to entertain somebody, if you’re actually trying to do marketing.”

Peretti usually presents a cheerful exterior, but that kind of talk inflames his ego. “Could you make a list of cute animals that gets 5 million views?” he snapped when I mentioned Graf’s comment that night at the bar. “It’s actually really hard.” After a moment, he switched tracks: “It’s actually better for us if people don’t take us seriously.”

Peretti complains about “obstructionist agencies,” and when he looks at advertising—with its four dominant holding companies, rococo bureaucracies, and reliance on a lucrative television medium now threatened by ad-skipping technologies—he sees an industry ripe for disruption. He has experience with overcoming dismissal: News organizations treated the Huffington Post with condescension right up to the moment of the stunning AOL purchase. As that precedent suggests, it may be that Peretti only needs to prove his concept to one buyer: Mark Zuckerberg or some other acquisitive tech billionaire. Rumors of sale talks have circulated for years.

But the company’s value, like its potential to upend media and advertising, will ultimately depend on whether Peretti can deliver on the immodest proposition he made back at MIT. When I called Cameron Marlow, the counterparty to his wager—and now the head of data science at Facebook—he told me his friend had evolved in his views. “I think he’s clearly trying to build a business around this idea,” he said, “that maybe you can’t predict, but you can create the right environment for media to be contagious.” In other words, he’s trying to bend nature, not control it, a milder ambition. As Marlow pointed out, none of Peretti’s subsequent stunts ever quite managed to recapture the forward momentum of that first, world-sweeping e-mail. Except, perhaps, the idea of BuzzFeed itself: a meme that iterated, mutated, and reproduced until all of a sudden it was everywhere. Of course, virality can die out just as quickly as it emerges.

“I think the bet,” Marlow says, “is still outstanding.”