Are Google Instant Changes Impacting Demand Media?

Google Instant has also brought with it some apparent changes to the search engine algorithm used by the company. Fortune magazine editor Dan Primack has an interesting -- if completely unsubstantiated-- theory about what is happening. Primack told PC World that the algorithm changes might have been triggered by Google to drive traffic away from online content publisher Demand Media.


Demand Media announced its intention to file an Initial Public Offering last Friday. Since then, daily traffic for the company's related sites and articles have dropped from seven million page views each day to two million according to Quantcast. Hidden in the IPO's risk factors is possible direct competition from Google. Demand Media derives 25 percent of its revenue through cost-per-click keyword advertising through Searchzilla. In its IPO offering, Demand Media said that Google would have a competitive advantage if it decided to enter the content generation business.

What exactly is Demand Media's revenue stream? The PC World article sums it up neatly:

"Demand Media's business model calls for marshalling armies of creatives to produce articles, photos, and videos for its website. Demand Media uses an algorithm to identify hot trends on the Internet and steer its creatives to produce content for those trends. It creates revenue from keyword-related advertising tied to the content. And since the content is tied to hot trends, it collects top dollar from advertisers hungry to tap into those trends."

Many observers believe that the changes to Google's search algorithm reward quality over quantity, a change which could limit the efforts of Demand Media along with impact how SEO firms create optimized content. Primack told PC World that Google's changes and their impact on Demand Media might not be a coincidence.

"The massive drop-off occurred a few days prior to the IPO filing, and has stayed consistent over the past two days of Quantcast reports," he said. "It certainly could be an error the fall is not mirrored by indirect traffic analytics groups Compete or Alexa but let me offer an alternate (and unsubstantiated) theory: Google changed something in its search algorithm to lower the demand for Demand."