The Demand Media Way

On one level, this appears to be working, as Bradford says that even though the company saw a decline in traffic after Google rejiggered its algorithm, Demand is back up to pre-Panda levels. ComScore has Demand at 68 million uniques per month in May 2012, up from 64 million in May 2011, though hitting a year-over-year low in July 2011 with 57 million uniques. Its stock recently jumped 7 percent on news that it was the sole bidder for 16 of the 26 new top-level domains created, meaning if you want a site ending in .actor, .democrat or .republican the road runs through Demand. It was a typically aggressive move by the publisher, which traces its roots to founder Richard Rosenblatt’s huge portfolio of thousands of domains.

Still, there is a sense in many quarters that Demand is overly reliant on Google’s algorithm. A shift in Google’s algorithm in early 2011 hit some Demand properties, although the company downplayed the effects.

“We’ve made a lot of changes over the last two years as Google has made changes to its algorithm, as well as Bing who has made changes to their algorithm,” Bradford said. “We expect there will be many more to come, and we consider ourselves to be very nimble and best in class at understanding what consumers want — what real people are looking for — and being able to create that. There’s not a day of rest for us when it comes to understanding and creating great content that’s discoverable. And that includes dealing with an algorithm.”

The largest trend that has happened in the last five years for consumers, according to Bradford, is the idea of being authentic, of being real. Search lets you look for what you really need — instead of being told what you need — but social media in general, Facebook in particular, lets you express your relationships.

“We’re doing a very data-driven approach to creating content on what people are looking for, what they’re sharing and what they want to know,” Bradford said.

The process has changed the way the company distributes content. What used to be solely simple text articles instructing people on a topic, the company now often relies on video. These days, Demand creates its content based on a few things: the ability to have someone share it, the ability for it to be discovered in search and the ability to drive direct traffic to it. The company, says Bradford, won’t create something unless it hits those criteria.

One of the consistent and loudest knocks on the company is that is a content farm. The company has regularly pushed back on that label. While Demand has about 10,000 freelance writers and copy editors, it is more likely to boast of its brand-name content properties, like Livestrong and Raechel Ray’s food channel on eHow. That’s a message that is met with a mixed perception among ad buyers.

“They assimilated a lot of low-paid freelance content and turned it into cheap impressions for sale, mostly via Google, and so they’re subject to Google’s whims to some extent,” said Preston Bealle, svp at Mediasmith.

And yet others take a more cautious approach.

“We view it as a network,” said Casey Squier, group director of media strategy at ID Media. “Given all these new changes, its relationship with YouTube, I think it’s worth taking a look a second time.”

The company says it has found a healthy revenue model in helping publishers create content they don’t have the bandwidth to serve (Demand powers USA Today’s travel section, for example. USA Today sells display ads on the site and shares revenue with Demand). Through its platform, Demand also helps brands create content.

“They are really good about partnering with brands to create original content that is solution-oriented on behalf of the brand,” said Dave Marsey, group director of media at Digitas.

For example, Demand worked with Loreal, which owns makeup.com, to provide insights and data to help create content.

“We’ve written a specific playbook for them around the right context and right content and right ad experience, so the messaging should match specifically what you’re looking for,” Bradford said. “We think about using Facebook, Twitter, Google, YouTube, mobile devices. So serving up that experience, we’re able to create content in a short period of time based on data and serve it up anywhere and have it be discoverable.”

Demand wants to give advertisers closer targeting towards the intent of the consumer. It’s not targeting if someone’s in email or is looking at major news stories that generate huge traffic numbers, like the royal wedding or tsunami coverage. It’s about intent.

“There’s a lot of judgment in media on what people want,” Bradford said. “We try to take the judgment out of it and create some economic value and return, and understand the distribution we can get for it.”