Dive Brief:
- The Daily Mail acquired viral content publisher Elite Daily in January 2015 for around $26 million and now appears to be writing off the acquisition after taking a $31 million loss from running the site, according to Recode.
- Elite Daily was founded in 2012 and quickly rocketed in popularity on the viral nature of its content on platforms like Facebook.
- At the time of the acquisition, former head of Daily Mail U.S. operations Jon Steinberg told Business Insider that the move had half of all U.S. millennials visiting the Daily Mail website. As recently as January of this year, on a company earnings call, the publisher said it was "pleased" with how Elite Daily was performing.
Dive Insight:
According to the Daily Mail, Elite Daily had a revenue increase of 44% last year, which sounds strong out of context, but audience retention and revenue growth, coupled with losses that exceeded expectations, led to the write-off. The Daily Mail's situation stands a cautionary tale about the fickle nature of viral content — what is hot with a select audience can quickly become passé — as well as the potential danger of depending on Facebook for traffic to publisher websites.
Viral content by its nature is destined to eventually cool off and, as many publishers have found out over the last few years, it only takes a minor tweak in Facebook’s news feed algorithm to dramatically impact traffic. Digiday recently published a story detailing how many once-big, Facebook-driven viral sites are now almost completely obsolete due to a lack of brand partnerships, "clickbait fatigue" and other factors.
Facebook’s recent issues with fake news is another example of how inconsistent the site can behave towards publishers who share content on its platform. CEO Mark Zuckerberg recently denied fake news on his site had anything to do with influencing the election even as an internal team began banning bad sites from Facebook's Audience ad network. Zuckerberg then backpedaled and suggested more changes were inbound, pointing to the struggles he's had in smoothly transitioning his company to handling more publisher responsibilities — some research suggests nearly half of U.S. adults turn to Facebook as a primary news source — on top of operating the world's largest social network.