Can BuzzFeed usher in a new golden age of journalism and advertising?

It was just over a year ago that BuzzFeed hired editor-in-chief Ben Smith away from Politico to help build the cat-happy publication into a major media company. In the intervening months, it hasacquired a Facebook advertising company, hired a longform editor, set up a video division led by Ze Frank in a new Los Angeles office, and launched an entertainment section. Last week it closed a Series D round of US$19-million, even though the US$15-million it raised in a Series C round sits in the bank, virtually untouched.

The new round brought the total funding raised to US$43.6-million and reportedly valued BuzzFeed at US$200-million. More importantly it proved that the media startup was serious about upping its headcount and investing aggressively in expanding its product. It turns out, however, that the company now being praised for its innovative approach is doing this all in a deceptively conventional way.

“We’re doing a lot of different things that are working and have the potential to grow fast, and we want the ability to do that in a lot of different things,” says editor Smith. That means more verticals and more editorial staff. A business section is on the way, and Smith says the publication will be ramping up its technology coverage. Currently, BuzzFeed has between 60 and 70 people on its editorial team, out of a total of about 180 staff, but that number is changing every day.

BuzzFeed seeks to take advantage of new web dynamics that are starting to offer glimmers of hope for those in the digital news business. (Relatedly, see Business Insider editor Henry Blodget’s optimistic take on the digital news organizations of the future.) As its target audience of Millennials has grown up, so too have the Web tools that are making it possible to reach immense scale while serving advertisers in ways that feel native to the platform.

Famously, the publication has capitalized on an age of social sharing, which takes the emphasis away from the homepage and puts it instead on stories that have viral potential. But it has also tapped into the mobile age and eschewed the display advertising that has been producing diminishing returns on the Web and otherwise doesn’t translate well to small-screen environments.

Many media observers see the big-traffic BuzzFeed as a beacon of hope in a struggling industry. Some have even speculated that it could become a US$1-billion company, a giddyish number in media terms. The New York Times, for instance, has a market cap of US$1.28-billion. It is premature, however, to be bandying around a big number like that. The biggest exits to date among online news companies haven’t got even close to the billion mark. For example, the Huffington Post – co-founded by BuzzFeed founders Jonah Peretti and Ken Lerer – sold to AOL for US$315-million, while Bleacher Reportfetched US$200-million from Turner. No one else has come close.

Still, BuzzFeed has done enough in the last year or so to cause genuine excitement in the industry. Fast Company recently named it one of the 50 most innovative companies of 2012; a few weeks ago Business Insider published an admiring profile of CEO Peretti; and even we here at PandoDaily called it the most innovative news organization of the year, noting that it is a company “committed to going long when many other media companies are content for quick clips or building lifestyle businesses.”

CEO Peretti doesn’t shy away from talking up the company’s transformative powers. In an interview with the Guardian, Peretti said: “I think there’s an opportunity to create a golden age of advertising, like another ‘Mad Men’ age of advertising, where people are really creative and take it seriously.” To that end, BuzzFeed works with advertisers as “partners,” and hosts their sponsored content, which is similar to the publication’s independently produced journalism.

This approach to sponsored content has been seen as one of the most successful adaptations of advertising for the web. One BuzzFeed “story,” for instance, offers “12 Delicious Game Day Recipes That Even You Can Make,” presented by Pillsbury. The branded content is supposed to be almost as compelling as the editorial content. The Atlantic’s Derek Thompson recently noted that BuzzFeed’s experiments with ads that are suited to their medium is a “clear echo of history,” just as radio and television ads were at one time imperfectly matched to their media. The earliest radio ads, for example, were merely print ads read aloud.

Smith, for his part, is open to the idea that BuzzFeed and its ilk could simultaneously usher in a golden age of editorial. As newspapers and magazines shut up shop or go online-only almost every day, such a comment initially seems absurd. But Smith, flush with the optimism of helming a publication heading in the opposite direction to most of the rest of the industry, holds his line. “The collapse of the newspaper industry has been a horrific moment for lots of great journalists,” says Smith, “but I think we’re coming into a really great moment. Newsrooms may be lighter, but people are able to do so much more reporting, to get so much more done, and the social conversation means beat reporters across different publications are not all going to be rewriting the same story.”

That view might be just a tad idealistic. While it may be true that things like Google searches, mobile internet, and Twitter have sped up the research, interviewing, and writing processes, the classic concept of the rewrite has done anything but go away. Read some of the tech blogs and you’ll get the drift, but the form is also well evident in other publications. Without it, the likes of the Daily Beastand Business Insider couldn’t exist.

While we’re calling Smith out, we might as well point out that BuzzFeed, too, is itself guilty of “rewriting,” or at least aggregation, when it publishes its many photo-based listicles, much of the content for which is sourced from Reddit, a point well made by Farhad Manjoo over at Slate. These virally-inclined pieces are responsible for the lion’s share of BuzzFeed’s traffic, as evidenced in David Holmes’ September post that highlighted the enormous traffic discrepancy between the publication’s most-viewed pieces and its best-reported stories. Example: “40 Things That Will Make You Feel Old” attracted 4.4-million hits, while “The Strongest Woman in American Lives in Poverty” earned just 213,000 hits.

To be fair, though, lightweight entertainment and lifestyle content has always pulled in more traffic for news websites than has serious news and the same is true in newspapers, where the commercially friendly sports and business sections subsidize the rest of the paper.