Another driver of the cuts is to help the company avoid raising money again, one of the people said. BuzzFeed has raised about $500 million and was valued at about $1.7 billion following its last funding round in 2016.
Its investors include Comcast Corp.’s NBCUniversal—which has invested $400 million—Andreessen Horowitz, Lerer Hippeau Ventures, New Enterprise Associates, RRE Ventures and Hearst Ventures.
Across the industry, online publishers have struggled to sustain fast growth in digital advertising sales and meet the high expectations of their investors, as they run up against the dominance of tech titans such as Alphabet Inc.’s Google and Facebook Inc.
Many firms are now considering deals with rivals to achieve the scale they believe is necessary to compete.
There are signs of growing pressure in the industry. The online publisher Mic recently agreed to sell itself to women-focused publisher Bustle Digital Group for about $5 million. Refinery29, the lifestyle-focused publisher that targets millennial women, laid off 10% of its workforce last fall.
BuzzFeed, for its part, has struggled at times to meet its own ambitious revenue targets and has scaled back its expectations. In 2018, the company basically hit its revenue target of around $300 million, the people familiar with the situation said.
“Unfortunately, revenue growth by itself isn’t enough to be successful in the long run. The restructuring we are undertaking will reduce our costs and improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again,” BuzzFeed Chief Executive Jonah Peretti said in a memo to staff, confirming the cuts.
Launched in 2006, BuzzFeed was among the leaders of a group of digital upstarts that were adroit with social media and rode a wave of venture capital investment to become magnets for digital audiences. It also was a pioneer in “native advertising,” content for advertisers meant to mimic the look and feel of editorial content, but growing that business has become increasingly difficult.
The company began selling ads on automated or “programmatic” platforms last year, after resisting those options, and has sought to develop more nonadvertising revenue.
BuzzFeed has been most associated with creating lighthearted content popular with younger consumers on social media, but it has also thrown considerable resources into its news unit, drawing attention especially for its political coverage. In 2018, the company was a finalist for the Pulitzer Prize in international reporting for stories on a campaign to kill critics of Russian President Vladimir Putin in the U.K. and elsewhere.
The news unit has been a financial drag on the company and has given rise to some controversies. Still, Mr. Peretti has long stood by the importance of the news unit as a crucial part of its mission and something the distinguishes the site. Last year, BuzzFeed launched a membership model for news, soliciting donations from readers.
Last week, BuzzFeed News found itself the subject of intense scrutiny from media and political observers after it published a story that alleged President Trump directed his former lawyer, Michael Cohen, to lie to Congress about negotiations to construct a building in Moscow.
A spokesman for special counsel Robert Muellertook the rare step of disputing BuzzFeed’s reporting publicly, issuing a statement calling aspects of the report “not accurate.” BuzzFeed has said it stands by its reporting.
BuzzFeed has been through other painful rounds of layoffs.
In 2017, the company cut about 100 staffers after missing its revenue target of approximately $350 million by 15% to 20%. The miss led the company to put plans for an initial public offering on hold. In 2016, the company recorded about $250 million in revenue.
The layoffs in 2017 were mostly on the company’s business side. Since then, BuzzFeed closed its operations in France and pulled the plug on its in-house podcast production team.
Write to Lukas I. Alpert at email@example.com and Benjamin Mullin at Benjamin.Mullin@wsj.com