The Sad Case of Demand Media and the Future of Online Content

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By Jacob Maslow

search on tabletDemand media (NYSE:DMD) had a very compelling value proposition: What if one company bought up all these hot content websites and created content based on what people are searching for? It’s a pretty straightforward proposition. There’s obviously a lot of demand and the whole point of this media company is to create content that meets the demand. Nice and simple. No big mystery.

For quite sometime, Demand Media was riding high. A lot of its online properties were getting a lot of love and traffic from Google (NASDAQ:GOOG). Many of these were monetized by on page advertising, and Demand Media looked like it was on the road to make money on a sustained basis. Unfortunately, Google changed its algorithm to stop rewarding content mills. Not surprisingly, content networks like Demand Media took a massive hit. Their traffic crashed overnight. After they have somewhat recovered, Google kept changing its algorithm, and it’s been a yo-yo like experience ever since. Demand Media’s experience should act as a cautionary tale for online entrepreneurs. Here are three lessons that most people get when analyzing Demand Media.

Content mills versus content brands

You cannot be too obvious about asking your user base regarding the kind of content they need. Instead, your content decision should be based solely on the engagement and conversations you had with your customers. You also need to pay attention to their actual behavior through your properties to get a clear understanding of the value you are delivering. It’s not enough to deliver on a keyword search or to produce content based on long-tail keywords. You have to deliver based on the intent of the searcher. This is how you deliver real value to the lives of content browsers.

Google: The future is all about brands

Demand Media found out the hard way that the best way to play in the online content space is to develop serious brands. We’re not talking about brands built on keyword tricks or simply sniping traffic off Google. We’re talking about brands that form their own center of gravity as far as traffic attraction is concerned. Still, there is a lot of hypocrisy in how Google pretty much vaporized a lot of Demand Media’s value. There’s a false dichotomy in operation. The truth is, content decisions are driven by market demand. Google shouldn’t act like it’s all shocked that companies are creating content to go after this demand.

The future of search content, in my opinion, is a tighter relationship between content producers, search engines, and end users. That’s the only way to go because it cuts out a lot of junk results as well as increases value for all parties involved.

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