Algorithmic content publisher Demand Media this morning reported a healthy gain in second-quarter revenues, but acknowledged that changes in the way major search engines -- especially Google -- are fine-tuning their algorithms to reduce search traffic to such publishers is beginning to have deleterious effects.
“Despite reduced search engine referral traffic to our Web sites, throughout [the second quarter], we posted double-digit year-over-year growth from our owned & operated sites, underscoring the strength of our content and media platform,” Demand Media CFO Mel Tang said in the publicly traded company’s second-quarter earnings statement.
Demand’s overall revenues grew 9% to $101.1 million in the second quarter, and sales from its content and media operations also grew 9% to $60.4 million during the quarter. Demand attributed its overall content and media sales growth largely to a 15% uptick in sales for its owned-and-operated properties, though it acknowledged that is a significant slowdown “due primarily to traffic declines from lower search engine referrals.”
Demand’s corresponding growth during the first quarter, before some of the impact of the search engine fine-tuning was felt, was a year-over-year growth rate of 26%.
Demand also attributed the slowdown to lower revenue from Google’s YouTube Channels.
In its boilerplate disclosure to investors, Demand’s earnings statement cited: “[The} change in the methodologies of Internet search engines, including ongoing algorithmic changes made by Google as well as possible future changes, and the impact such changes may have on page view growth and driving search related traffic to our owned and operated websites and the websites of our network customers,” and said the results has created “inherent challenges of estimating the overall impact on page views and search driven traffic to our owned and operated websites."