The leading online McContent producer, Demand Media, has hired Goldman Sachs to explore a fall IPO, Ken Li at the FT says.Demand is massive–$250 million in revenue–and someone’s already jawboning about a $1.5 billion valuation.
(If the revenue figure is accurate, this sounds a bit steep–6X revenue–but it’s reasonable if Demand’s growth rate and profit margins are high enough).
Like AOL’s Seed and Associated Content, Demand produces huge volumes of content at a low price per page using armies of freelancers. Most of the company’s traffic is presumably driven by search engine optimization, which is both a blessing and a curse. (It’s great as long as it works, but leaves the company vulnerable to Google algorithm changes).
The prospectus will apparently be filed in mid-summer, with a look toward a November IPO. We look forward to seeing the company’s financials.
(“McContent” sounds pejorative, but note that McDonalds, from whence the term derives, has turned high-volume low-cost production into one of the world’s most successful companies.)
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