Playbuzz, the Israeli startup crushing all other publishers on Facebook, just raised $16 million
The Series B round was led by venture capital fund 83North, with additional funding from Saban Capital, and existing investors Carmel Ventures and FirstTime Ventures. That brings the three-year-old company's total funding to date up to $19.8 million, according to CrunchBase.
Founded by Shaul Omert - an Israeli tech entrepreneur and the third son of the former Israeli Prime Minister Ehud Olmert - Playbuzz has grown to more than 80 million unique users, with more than half of its traffic coming from Facebook.
Playbuzz is similar in style to BuzzFeed, with its website populated by fun quizzes, listicles, and polls. But unlike BuzzFeed - which has hundreds of editorial staff - just 2% of its content is created in-house. Instead, Playbuzz relies on user-generated content from individuals but also "five to six thousand" big name publishers such as The Daily Telegraph, Yahoo, and AOL. The content those publishers create doesn't just sit on Playbuzz, they can also embed it on their own sites and apps.
Speaking to Business Insider, Omert said Playbuzz plans to use the additional funding to expand internationally. The company's headquarters and senior leadership team will be relocated from Israel to New York City, and it also plans to open offices in Asia and Europe. The plan is to double headcount from its 60 staff currently by the end of the year.
"What YouTube did for video, we want to do for interactive, high-engagement experiences"
Omert has big ambitions for Playbuzz's impact on the content industry: "What YouTube did for video, we want to do for interactive, high engagement experiences."
Playbuzz has no plans to become a media company, but instead it wants to be the first platform content creators think about using when they look to produce and distribute shareable content.
Omert added: "If you look at YouTube, Twitter, Facebook, really the only way to grow is to be an open platform...there's only so much great content one publisher can produce. It's about being the underlying platform."
To achieve that, Playbuzz plans to increase the number of different content formats it offers from six currently to around 10, including video.
The company is also exploring native advertising to sit alongside its current display advertising, and it already has six advertisers on board in a beta program. Advertisers create the content, which goes through quality control moderation internally at Playbuzz, then Playbuzz helps promote that content on the site and distribute it elsewhere. It also plans to provide advertisers detailed analytics on who is reading and sharing the content. It's a mirror of the BuzzFeed advertising model.
"We want to move an advertiser from a place where they pay $X for 1,000 impressions to being able to offer inventory where they can charge 10X," Omert says.
Looking at the rest of the media industry, Omert comments that there are companies that make upwards of $100 million from native ads (perhaps a reference to BuzzFeed, which said it passed $100 million in revenue in 2014), yet still have low EBITDA (a company's earnings before interest, taxes, depreciation, and amortization) and aren't profitable (BuzzFeed also claims to be "extremely profitable," however.)
Omert won't reveal Playbuzz's revenues, but says the company is profitable. He adds: "If you look at a News Corp or a Viacom, it's not a very smart model. I don't mean to criticize, but they have a different model to us. We are an infrastructure player and don't need that much money [in investment] or employees but we can reach global scale."
"For every quiz we publish, we could use 20 pages or 1 page. We chose to put a good user experience first. That may offer less money from uniques in the short term, but we optimize for the user experience. In the long-term, that makes sense. Facebook sees that Playbuzz users spend five minutes on every page, that 60% share [Playbuzz content], our quiz completion rate is 96%, they see high engagement, and that once users visit they come back," Omert adds.
Ultimately, Playbuzz has been successful because it hasn't tried to trick users with clickbait into clicking on their Facebook posts, only to leave them disappointed when they get to the site, but it aims to be a purveyor of content that users enjoy. So even if Facebook does tinker with its algorithm, it is unlikely to be punished.
Arnon Dinur, partner at 83North who has joined Playbuzz's board of directors following the funding round, explained in a press release why he was so interested in the company: "Playbuzz's dramatic growth and fast adoption points to the market's thirst for a scalable platform to create viral audience engagement. We are thrilled to invest in this category leader, whose meteoric rise in popularity has made it the destination of choice for publishers seeking to engage today's always-connected, always-evolving digital audiences."