InvestorsHub Logo
Followers 247
Posts 9363
Boards Moderated 5
Alias Born 07/30/2009

Re: ICEQUITY post# 47

Wednesday, 02/23/2011 2:40:06 PM

Wednesday, February 23, 2011 2:40:06 PM

Post# of 87
DMD $$ Demand Media On The Offensive Over Its Online Model

Demand Media Inc. Common Stock (AMEX:DMD)???
Intraday Stock Chart

Today : Wednesday 23 February 2011
Click Here for more Demand Media Inc. Common Stock Charts.

By John Letzing, MarketWatch

SAN FRANCISCO (MarketWatch)--After spending months constrained by a quiet period related to its recent initial offering of shares to the public, Demand Media Inc. (DMD) declared Tuesday that it will now aggressively counter criticism of its online-media model, which has earned it a reputation as a "content farm."

Charles Hilliard, Demand Media's president and chief financial officer, said in an interview that the company plans initiatives "to just get out and begin talking to people," following a quiet period that began around the time that the company filed its IPO registration in August.

Demand Media Chief Executive Richard Rosenblatt said during a conference call with analysts, following the company's fourth-quarter earnings report earlier Tuesday, that the firm is "finally" now able to publicly defend the quality of its content--a vast collection of narrowly targeted, how-to pieces that are generated by thousands of freelance contributors.

"It's not countering, it's really just telling the story and getting out and talking to media and discussing the facts," Hilliard added during an interview, while noting that much of the criticism has been due to Demand Media's "disruptive," and therefore relatively unfamiliar, model.

The growth in the number of visitors to Demand Media sites such as eHow.com "indicates they do value our content," Rosenblatt commented during the call, pointing out that pieces such as those on how to ripen avocados "while arcane to some, is exactly what consumers want."

All of Demand Media's content is subjected to "rigorous quality-control standards," the chief executive said. Pieces like "How to make flying paper lanterns" and "How to make a roof rake" are attracting a growing audience, according to Rosenblatt.

Also on Tuesday, Demand Media sought to counter another prevailing notion: that its model may be under threat due to stricter standards at popular search engines.

Google Inc. (GOOG), which operates the dominant search engine in the United States and in many overseas markets, has said that it's seeking to tweak its technology in such a way as to avoid presenting users with the sites that could be labeled as content farms.

In a company posting last week, principal engineer Matt Cutts wrote that Google has been exploring ways to alter its computer algorithms to better detect "content farms, which are sites with shallow or low-quality content."

In a related note, Cutts explained that Google was launching an extension to its Chrome Internet browser, which can block specified websites.

Rosenblatt acknowledged that the majority of traffic to the company's flagship site eHow.com comes via search engines, though he stressed that an increasing number of visitors are arriving by directly typing the site's address into a Web browser.

Demand Media also provides its content through media partners, including USA Today.

Hilliard estimated that Google makes hundreds of algorithm changes per year. "With that as a backdrop, our results speak for themselves," he remarked, referencing the 35% growth in fourth-quarter net revenue posted by Demand Media earlier in the day.

Rosenblatt said that Demand Media follows Google's guidelines for optimizing sites to receive attention in its popular search engine "as closely as we can."

"We consider ourselves very 'white hat,'" Rosenblatt added, using the term for search-optimization methods that conform to established rules.

Demand Media's shares debuted at $17 in late January. The Securities & Exchange Commission enforces a quiet period, during which a company may not promote itself publicly, from around the time an IPO registration is filed until a certain number of days following the pricing of its offering.

The company said Tuesday that its overall fourth-quarter revenue rose 33% compared with the same period a year earlier, while its loss attributable to common stockholders narrowed.

Not accounting for preferred stock dividends, the company said net income for the period ended Dec. 31 was $1 million, compared with a loss of $3.9 million in the period a year earlier.

Shares of Demand Media fell slightly in late trading, following its earnings report, to $22.74.

The company told analysts during its conference call that it anticipates pressure on its margins this year, as Demand Media expands internationally and assumes more of the costs of being a public company.

Hilliard said Demand Media had a little more than 600 employees as of the end of 2010, and plans to add more than 100 more this year.

-By John Letzing, 415-439-6400; AskNewswires@dowjones.com