Demand Media Downplays Changes to Google’s Search Algorithm

When Google announced a tweak to its search algorithm in February, the company presented the change as a move to help improve search results. The official announcement said it wanted to make sure search unearthed “high quality sites,” and while it never specified what the “low quality sites” might be, many interpreted Google’s move as an attack on content farms.

Considering that the company arguably most synonymous with content farms, Demand Media, had just filed an IPO the month prior, industry onlookers were eager to see the impact of the new algorithm.

The company issued a statement yesterday, downplaying the effect of the change on its pageviews and search ranking. But the stock market this morning seemed less than convinced as the company’s shares took a hit.

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When Google made its first round of changes back in February, Demand Media seemed to escape relatively unscathed. Most notably, ehow.com wasn’t on the list of the biggest losers. But Google has continued to fine-tune this algorithm, and according to the Web analytics company Sistrix, ehow.com wasn’t so lucky in the latest series of changes. Sistrix contends the site has seen a 66% decline in traffic.

Demand Media disputes those figures, or rather, says they are “are so significantly overstated that we decided to comment.” According to Demand Media, “Organic growth in visits from non-search sources to eHow continue to grow rapidly and Cracked.com is now the most visited humor site on the Internet with the majority of its page views coming from direct visits. Improvements have been registered from eHow’s recent redesign and the introduction of new video series leading to significant growth in Facebook likes. Our brand advertisers have also reported encouraging results with their intent-targeted campaigns.”

These anecdotes may aim to soothe the fears of investors, but it’s not clear that they’ll do so. Demand Media is clearly beholden to Google’s algorithm here, something that it did mention in its SEC filing prior to its IPO. Under “risk factors,” Demand Media admitted that, “the possibility that our relationship with Google from which a significant portion of our revenue is generated may be terminated or renewed on less favorable terms.” These same documents also pointed to the importance of ehow.com as part of the company’s overall welfare.

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