Demand Media (DMD), the world’s largest low-cost content producer, has responded to the massive algorithm change Google just made.Basically, Demand says the change hasn’t hurt its business at all.
Google’s algorithm change was aimed at punishing “low quality” sites that copy content from other sites or add little value for users. We don’t think Demand copies any content, but some of it probably adds little value (We imagine that less of its content falls into this category than most people think, however*).
Now that Demand is flush with IPO cash and has a $1.7 billion market cap, we expect the company will use its resources to buy other branded premium sites that will help it diversify its distribution. So Google will likely become a less critical driver of the business going forward.
In any event, it seems Demand has survived a change that many people think was aimed right at it:
Here’s Demand’s blog post, from Larry Fitzgibbon, EVP of Media and Ops:
How our content reaches the consumer – whether it’s through direct visits, social media referrals, apps or search – has always been important to and monitored closely by us. We also recognise that major search engines like Google have and will continue to make frequent changes. We have built our business by focusing on creating the useful and original content that meets the specific needs of today’s consumer. So naturally we applaud changes search engines make to improve the consumer experience – it’s both the right thing to do and our focus as well.
Today, Google announced an algorithm change to nearly 12% of their U.S. query results. As might be expected, a content library as diverse as ours saw some content go up and some go down in Google search results.This is consistent with what Google discussed on their blog post. It’s impossible to speculate how these or any changes made by Google impact any online business in the long term – but at this point in time, we haven’t seen a material net impact on our Content & Media business.
Coming out of the IPO quiet period this week, we knew the topic of Google’s search engine changes was top of mind for many people — so we discussed it on the earnings call, in a couple of follow up interviews and are now issuing this statement. However, we generally don’t comment or speculate on changes by major search engines. They make changes nearly daily in a quest to give consumers the best possible experience, as do we.
Finally, in our Q4 earnings call on Tuesday we talked at length about the nature of our content and the consumer experiences we are delivering. Beyond our success helping consumers discovering our content via search, we also shared metrics around direct visits, repeat visits and social visits. We believe these metrics are leading indicators that our properties are developing into recognisable consumer brands that are delivering real value to an increasingly loyal community.
We believe these kinds of indicators are a result of our firm commitment to the interests of consumers, and that is where we continue to focus our efforts.
Larry Fitzgibbon is Demand Media’s EVP of Media and Operations, and manages the company’s rapidly growing network of consumer properties.
*Journalists who get paid handsomely to write articles like the ones Demand Media produces by the bushel-ful are understandably horrified by the idea that their output might only be worth, say, the $10-$20 per article that Demand pays. And certainly Demand has produced plenty of crap (as any company would that published thousands of articles a day). But since the journalists are the ones who write the articles about Demand Media’s content, it’s not surprising that it is usually categorized as “low quality.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.