04:51 AM

Demand Media Escapes The 'Farm' Focuses On Expert Content

(Joanne Bradford, Chief Marketing and Revenue Officer for Demand Media.)

Demand Media, the media publisher and Internet registrar company, is on a roll: its revenues are up and so are pageviews. And it's no longer called a "content farm" the derogatory term that's applied to companies with a "content-lite" strategy designed to sell low quality advertising.

I spoke with Joanne Bradford, Chief Marketing and Revenue Officer for Demand Media's content business. Here are some notes from our conversation.

- Demand Media is heavily focused on quality. Each article is "touched" by 14 different people in an editorial process designed to ensure high quality.

- Writing assignments are no longer open to anybody. The focus is on experts and writers are tested on how well they know a subject.

- Demand prefers experts over celebrities, when recruiting writers.

- Demand has partnered with many top media publications, such as USA Today, National Geographic to produce editorial sections for them, such as on travel. The content is owned by Demand but the revenues are shared between the partners.

- Google's Panda algorithm (designed to weed out low quality content sites) initially affected Demand's pageviews but they are now above where they were before Panda.

- Demand pays some editors a salary and believes in a good work/life balance, not the 17 hour days some new media reporters keep. [The Rise And Shine Of The 17 Hour-a-Day Journalist - SVW]

- Video is important and Demand is producing 150 shows. Professional video crews produce and edit the videos.

-Demand has three successful Youtube channels.

- Its top sites are eHow, Cracked.com, and Livestrong. The goal is to provide evergreen content for "real life," how to plan a graduation party, etc.

- The content is all "reactive" in that the company looks at the things people are searching for and then commissions the content. The lifespan of the content is from three to 10 years.

- Demand has a large group of people that study the changes in Google's algorithm. There is a constant realization that Google could do something that would disasterously affect its traffic. Only about 15% of people come directly to its sites, 85% come via search.

- Demand runs masses of A/B tests constantly, related to format of articles, length, page layouts, etc.

- There isn't much interest in "robo-journalists" copy generated by computers. For sports or finance information, that might work but not for the type of content that Demand wants.

Foremski's Take: Demand has certainly done a good job in distancing itself from the "content farm" category by pointing to its large collection of experts producing original content. But there's still a lot of very basic content being churned out by its 10,000 strong editorial teams -- which is fine, there's a place for that.

Following its IPO, its valuation ($DMD) exceeded that of the New York Times Company ($NYT), now it has fallen to about two-thirds the market value of NYT.

A comparison of the two companies is a good lesson in how two media companies are responding to changing media markets.

The New York Times, with its "experts" (and its content-lite About.com) is struggling and continues to make cuts in operations. Demand Media is growing and can invest, rather than cut, in areas that it already knows have high potential readership.

Demand Media is all about the algorithm, its own and Google's. It can estimate the revenue from each piece of content based on what people search for and the rates advertisers are paying. It constantly analyzes Google's algorithm and makes changes in its own editorial algorithms.

However, it means it cannot be proactive, it can only follow the whims of a readership that already knows what it wants, because they are actively searching for it. From a business point of view that makes very good sense, from an editorial point of view that's not quite as rewarding as using editorial judgement and taking a risk with new subjects, new ideas.

But taking risks is not what Demand Media is set up to do, its entire ethos is to manage risk by focusing only producing content it knows it can sell. That's something which the New York Times and hundreds of newspapers, don't do, and most probably would never want to do. I can't imagine an editorial meeting where ideas are shot down on the basis of low search volume for a particular topic.

There are reports that Demand Media has discussed the possibility of going private, and there was some interest by a private equity firm, but AllThingsD reported that those talks had failed about a month ago.

Is Demand shopping itself around now? Ms Bradford says that there is no reason for her media tour other than good news from the latest financial quarter and a chance to talk with the press about its successful strategy.

For other publishers there's some easy lessons to learn from Demand Media, especially in what layouts, formats, and type of content works online. The huge amount of testing against a large amount of traffic, (over 100 million uniques a month) means that others can crib from the look and feel of its online publications.

There's no need to develop algorithms and pay for data on search topics like Demand does, the results are plain for all to see. This transparency is the same for all media companies, you can see where they get their revenues, and how they get them. Which also means that if any media company does figure out the best way to profit, amidst the chaos of disruption, then everyone else does too. For now, at least in some areas, Demand has some things figured out quite well.