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Demand Media Downplays Impact Of Latest Google Changes

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Demand Media (NYSE: DMD) says changes Google (NSDQ: GOOG) made to its search algorithm have in fact reduced traffic to its sites, including its flagship eHow. However, the company is downplaying the overall impact, saying in a statement that the changes have resulted in only “moderately lower” year-to-date page view growth and adding that its page view growth this quarter will in fact be comparable to — or greater than — the growth it saw during the same period a year ago.

Demand Media put out the statement in response to a report this week-end by SEO firm Sistrix, which stated that, in the wake of the latest Google changes, traffic to eHow from Google may have been down as much as 50 percent. Sistrix had said earlier this year that a previous set of changes Google had made to its algorithm had in fact benefited eHow.

Demand Media says in its statement (and in a follow-up blog post by EVP Larry Fitzgibbon) that third-party reports trying to gauge the effect of the changes have “significantly overstated” the negative impact on eHow. The company doesn’t, however, put its own number on what the impact was.

Stifel Nicolaus’ Jordan Rohan says in a report this evening the overall impact is likely “less than $10 million in revenues in 2011.” To put that figure in perspective, analysts estimate that Demand Media will report $311 million in sales this year.

Last month, Demand’s European sales and business development VP Stephanie Himoff told us there was “no material change in our business” after Google’s initial round of algorithm changes. “Search engines change their algorithm all the time — that’s how they run their business — it’s a good thing, their goal is to organise information. We also want to get whatever comes from Facebook and Twitter, use all those signals to understand what people are looking for.”

One Response to “Demand Media Downplays Impact Of Latest Google Changes”

  1. For Demand to say that it’s not affecting them is ridiculous. If the change by Google didn’t affect them, just release your numbers. But they can’t. And due to it being a public company, they have to be careful with what they say.

  2. Freedman1

    I totally agree with Randolf. In fact, this is not only impacting Demand, but it is also impacting other writer’s mills such as and Associated Content. Just ask the writers who contribute to these sites — they will tell you about the dramatic drop in their views and pay. This change is likely part of an overall move that is government motivated to ‘remake’ yet another aspect of America and even worse, control the content that Americans ought to be free to view is they wish. If no one does anything about this, America is going to end up having a communistic state run media monster similar to China’s whereby the mainstream media is even more of a lap dog than it presently is because the government is “officially” its master.

  3. Even if the reported impact is “less than $10 million in revenues in 2011” this is going to be the most profitable bit of their turnover as they came at 0$ traffic aquisition cost, while all their other revenues are either from domain name registration (very low margins!) or with a hefty traffic aquisition cost bill (Adwords, etc) on top. The free Google traffic demand media was pretty much demands whole profit margin and this is now history, so they should stop downplaying their situation…