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Does BuzzFeed Know the Secret?

Peretti, Jon Steinberg, and Jeff Greenspan.  

When real-life ad people hear interlopers summon up the fictive spirit of Don Draper, they tend to react defensively. “There’s a huge presumption that creativity is dead in order for them to bring creativity back to life,” said Rob Norman, a top executive at GroupM, the world’s largest ad buyer. Yet even advertising people admit—if only privately—that their industry struggles to address the Internet. Within most agencies, talent and resources still tend to flow toward the $65 billion U.S. television-ad market. While online revenue is catching up, Google has captured a huge percentage of it.

The value of a banner, moreover, has been driven down by the ruthless price efficiency of automated ad exchanges. The CPM (cost per thousand impressions) for an exchange-traded banner hovers in the range of $1 to $2—and is sometimes less, according to analyst Dan Salmon of BMO Capital Markets. Steinberg says BuzzFeed charges an average CPM of around $10 for its sponsored posts—but nothing extra if a reader shares a post with others.

Despite BuzzFeed’s newsy evolution, advertisers still talk about the site as a friendly, unthreatening space for their brands’ messages. “What is advertising and what is content has really blurred into one,” says Shiv Singh, who handles global digital advertising for PepsiCo Beverages, which uses BuzzFeed for its “Drink It to Believe It” campaign for Pepsi Next. (A recent installment: “18 GIFs That Are Just Unbelievably Beautiful.”) “There are also times,” Singh adds, “when they realize that, Oh my God, we want to cover this even if Pepsi is not paying us as an advertiser.” He points to a BuzzFeed post on the launch of a Mountain Dew morning beverage—a post Singh hadn’t paid for. There’s a lot of this sort of editorial content on BuzzFeed: breathless previews of the new season of Game of Thones or a post touting a video of a “physicist” (actually an ad copywriter) who built a machine to separate the cookie and cream of his Oreos.

In February, Andrew Sullivan took to his popular blog, the Dish, to write a diatribe titled “Guess Which BuzzFeed Piece Is an Ad,” comparing two similarly enthusiastic posts about Sony’s new PlayStation. The same evening, at a contentious debate with Ben Smith, he suggested, “If journalism is not understood to be separate from advertising, then it has lost something incredibly important in a democratic society.”

Peretti argues that Sullivan—whose site is now subscriber-supported—is the outlier, someone with the luxury of drawing lines that the rest of the media can no longer afford. Most publications would give anything to return to the glossy days of Ogilvy and Bernbach, and if BuzzFeed has found a route back, ethical burdens are likely to fall by the wayside. Currently, BuzzFeed is running 38 ad campaigns, which usually consist of about a month’s worth of posts, and cost an average of around $100,000, according to Steinberg. If those numbers are accurate, and its sales stay constant, a back-of-the-envelope calculation suggests BuzzFeed’s ad revenues could be as much as $40 million this year. (The private company won’t release figures.) That would be about a fifth of last year’s digital revenues for the entire New York Times Company.

Peretti makes for an unlikely adman. He was raised in an atmosphere of East Bay liberalism, the son of a Berkeley professor and a criminal-defense attorney, and in his twenties he was something of an armchair anti-consumerist. He read Adbusters and Harper’s, and published a dense academic treatise about advertising and “resisting the logic of late capitalism” in a journal called Negations. Then he became an accidental anti-­sweatshop activist via his viral e-mail. Afterward, Peretti was inspired to write an essay for The Nation predicting that “peer-to-peer networks” would bring “new forms of social protest.” But friends say he was never really ideological. “I like to think about human psychology,” Peretti says now. “How people share things and why.”

After MIT, Peretti moved to New York to take a job as director of research at Eyebeam Art + Technology Center, a sort of cyberpunk collective started by John Johnson, an heir to the Robert Wood Johnson fortune. “It was this moment of nascent Internet culture colliding with the art world,” Johnson says. Peretti began working with what he called “contagious media,” attracting a group of collaborators like Ze Frank, the artist Cory Arcangel, and Duncan Watts, a Columbia University professor who studied how ideas moved through social networks.

“Jonah, at least initially, came very much from the viewpoint of ‘I can engineer things,’ ” Watts recalls. “I came from ‘No you can’t, you just get lucky.’ ”

Peretti’s first attempts to manufacture virality took the form of conceptual pranks, which he devised with his sister Chelsea, now a successful comedian. For one, Peretti set up a telephone hotline that played a recorded rejection, designed to be given out to guys at bars. Another, “,” purported to be the personal site of a white couple who were trying much too hard to prove they were down. The stunts garnered TV coverage, including an uncomfortable BET appearance, and a show at the New Museum. Not all of his jokes went over so well. When his staff at Eyebeam produced a hoax website that misrepresented the views of a controversial academic who opposed gun control, Peretti ended up facing a federal lawsuit. (The case was settled, and Peretti declined to comment about it.)