'It has not yielded a great monetization strategy': Refinery29 is laying off 10% of staffers, citing challenges with making short-form videos for Facebook and Snapchat
- Refinery29 is laying off 10% of its employees in video, engineering, and ad sales.
- The digital publisher is on track to miss its 2018 earnings by 5%, according a memo obtained by Business Insider.
- The publisher cites changes to the video ecosystem and cheaper technology options as the reasoning behind the cuts.
The digital-media industry continues to get chopped and this time, Refinery29 is on the block.
This morning, the women-focused digital publisher outlined several new plans, including layoffs. According a memo obtained by Business Insider, Refinery29 is on track to miss its 2018 revenue by 5%, and the company cites revenue challenges with monetizing its short-form videos that populate Facebook, Twitter, and Snapchat as a cause.
"While this type of content has been driving views, it has not yielded a great monetization strategy to justify the same level of continued investment," cofounders Philippe von Borries and Justin Stefano wrote in the memo.
Like other digital publishers including Mic, BuzzFeed, and Vox Media, Refinery29 is cutting back on producing short-form videos to focus instead on premium video franchises. The publisher will also cut back on engineering and reorganize its ad sales team, resulting in laying off 10% of its staffers.
Last December, Refinery laid off 34 staffers - equivalent to 7.5% of its staff - and cited "a correction in the digital media space." Those cuts centered on building up Refinery's original content, live events business, and research arm.
According to the Tuesday memo, Refinery29's international business will grow more than 100% this year while its originals business grows 50%. Its live events business will increase 300%.
"While our 2018 revenue will show continued year-over-year growth, we are projecting to come in approximately 5% short of our goal," the memo reads.
Changes are coming to video
One of the biggest changes to Refinery29's strategy is with video. The company plans to shift resources from "content with a short shelf life" to its premium intellectual property, which includes franchises like Shatterbox and original programming for Facebook Watch.
"The market is ever-changing, so we are putting further emphasis on where we see sustainable growth - and that is in premium IP," the memo reads.
Refinery29 also wants to simplify its ad tech
Unlike legacy publishers that often have troves of logged content and old processes, digital publishers like Refinery29 are well known for building their own tech stacks to handle both their content and advertising.
Part of Refinery29's tech stack includes a custom back-end content management system, which Refinery29 plans to eliminate and use third-party tools going forward to cut costs, according to the memo.
Its ad sales teams are getting shaken up, too
On the ad sales side, Refinery29 plans to restructure its ad sales team into a "unified customer solutions group" and a "sales planning and operations group."
Here is the entire memo that went out to staff this morning:
Dear R29'ers,
Today, we wanted to share several important announcements regarding the direction of our company, which involve us doubling down on our investment in key growth areas, as well as reducing resources in other areas of our business. This will require the very difficult decision to part ways with members of the R29 team.
As CEOs, it is our responsibility to all of you and the company that we make the necessary changes that will drive the business toward long-term success. This means having a rigorous focus on both our future growth and the bottom line of the company.
It's important to note that the overall performance of the business this year has grown in a tough environment and that we have successfully diversified our revenue streams. This includes international, which will be up over 100%; our originals business, which has grown 50%; and our direct-to-consumer business, which includes our award-winning live events and will be up over 300%. We expect all of these to be significant drivers next year. While our 2018 revenue will show continued year-over-year growth, we are projecting to come in approximately 5% short of our goal.
We've identified areas within the business where we can better direct our resources toward our goal of building a next-gen media and entertainment company that powerfully connects with women around the world. While these changes will affect every division of the company, the areas where we will make the biggest shifts are in our video and product and engineering strategies.
We are focusing on the production of premium, evergreen IP
Content is at the core of what we do. R29 is recognized as a leader in video -- from Shatterbox to Shady. That said, the market is ever-changing, so we are putting further emphasis on where we see sustainable growth -- and that is in premium IP. This means we will continue to produce more award-winning programming (both short and long-form) with less emphasis on the production of content with a short shelf life. While this type of content has been driving views, it has not yielded a great monetization strategy to justify the same level of continued investment.
We are simplifying and standardizing our technology
On the Product and Engineering side, we will simplify and standardize the technology we use to support best-in-class editorial workflows. As a company, we believe in supporting our own proprietary technology and product where we can gain competitive advantage. However, parts of our technology, specifically our back-end content management system, no longer need to be built from scratch and third-party offerings can serve our needs in a better and more cost-effective fashion. Going forward, we will re-orient tech and product resources toward differentiated data and front-end experiences that serve our audience in truly unique ways.
We are reorganizing our ad sales teams into one unified Customer Solutions Group
We have evaluated how our commercial team is organized and how we can work smarter and more proactively to deliver strong marketing solutions. This will involve key changes in the people, processes and products of our revenue teams, including the creation of a unified Customer Solutions Group and a Sales Planning and Operations Group.
All of this means that we will be parting ways with approximately 10% of our workforce. This decision was not taken lightly; it is hard but necessary for the company. Everyone at Refinery29 is an important part of our community, and we are proud of the work that each of you contributes. The people affected today are no exception, and we know they have bright futures.
To help ensure that happens, we will be working with departing staffers to provide support as they explore their next career move. We have an incredibly powerful alumni network, and we are working with our investors and partners to offer access to their resources and opportunities within their portfolio of companies.
There has never been a time when our content has been more relevant and necessary in shaping culture globally. You have all played, and will continue to play, a critical role in propelling that forward.
The strength of our brand, the creativity and innovation of this team, along with the commitment and love of our audience of hundreds of millions of women, will continue to cement our leading cultural position in the space.
Please join us in expressing thanks to our impacted colleagues for their contributions and wishing them well.
Philippe & Justin