Is there a demand for Demand Media....

....or is it just driven by accidental landings from spammy search results?

The second session today at the Financial Times Digital Media & Broadcasting conference in London had Shawn Colo of Demand Media up. He was pressed subtly by the FT's Richard Waters on the basics of the Demand Media business model, here are my notes:

Demand Media's official line is that they "Publish what the world wants to know and share". They do this by publishing "Data Driven, Crowd Sourced, High Quality content".

Data Driven in that they access proprietary and public data - Search results give a high indication of intent in real time, Social Media signals Interest - not quite as real time

Crowd Sourced in that they have a network of c 15,000 professional freelancers

The business has c 60 Editiors, c 120 Technologists for a total staff of c 600, so they are more a technology company - Colo reckons succesful media companies of the future will have big technology (aka user intention discernment and SEO optimisation) divisions.

Actually, I think Newspapers and TV companies had similar scribe to tech ratios in their formative years.....

When pressed on being "dependent on the Search Ecosystem" I think we started to see the "why we are not a Content farm" argument laid out:

- DM are only called a content farm by jealous journalists, its a new thing so current players tend to rubbish it

- They aim their content at their consumer base - 75-80% of hits are returns the site - thus they are merely giving the People what they want, and X million people cannot be wrong!

- Because this is what the majority of ordinary people want, Google should not block them (just because a few more sophisticated people are complaining)

When pressed on importance of Google searches for sending people on those re-visits, he said that it was "meaningful" but that the current Google algorithm change hasn't hurt them (and its only a small cabal of tech journalists complaining about spammy search anyway). I must say I am wondering about that too, especially as Mahalo was reportedly hurt so its not that it can't be done - is it that they are so big that Google doesn't want to take them on re above argument (or lose the revenue stream?). I can't help but think that its only when users can get Akismet style self-select site blocking that we are really going to see results from saerch spam

As to future revenues, he conceded Ad rates are falling, but that as they get better and better user data they will be able to serve people with better and better relevance, so CPM should keep steady.

I don't buy the idea that those 75% returns are delighted customers, I would bet that many are being sent via Google searches and getting out again asap, but of course the Ads count as being viewed - be interesting to see what the dwell time on the site is. My take is that these guys were very smart/lucky/both to IPO when they did, you can't help thinking that the rope is tightening on their business model.

He felt that mobile was not a big part of his plans, as there was too much proliferation of devices and standards and no real business models. On this thing, I can agree with them.