Demand Media Downplays Impact Of Latest Google Changes

Demand Media

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.”

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