What happened to Demand Media's traffic? Glitch? Google?
By Frank Ahrens
Demand Media is a company that pays freelancers to create Web content, such as text or video, based on what's hot on the Internet and what is likeliest to be attractive to advertisers. The company runs Web sites such as eHow.com, Livestrong.com and Cracked.com, an extension of the satire magazine.
The privately held company founded in 2006 has been successful, with rising revenue and narrowing losses. The company filed an IPO last week, figuring it was time to go public. One analyst predicted it would be a $1 billion IPO, though today's value is more like $125 million.
That's when things got interesting.
The Internet being the Internet (event + instant speculation - actual facts = surefire traffic generator!), several theories popped up to try to explain the big fall-off.
The first blames Google, saying the search giant somehow tweaked its algorithm to hurt Demand Media, which acknowledged the superior position of its rival in its IPO filing, writing:
"Google's access to more comprehensive data regarding user search queries through its search algorithms would give it a significant competitive advantage over everyone in the industry, including us. If this data is used competitively by Google, sold to online publishers or given away for free, our business may face increased competition from companies, including Google, with substantially greater resources, brand recognition and established market presence."
Demand Media cannot comment because it is in an SEC-required "quiet period." Google has not commented.
The traffic fall-off could be attributed to something as non-nefarious as a mechanical glitch. According to this blog, a Quantcast spokeswoman said that Demand Media's "measurement tag had fallen off," which sort of sounds like a dog running around without a collar.
August 11, 2010; 5:25 PM ET
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