Commentary

Google Algorithm Failures?

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In an ongoing debate that began in February when Google tweaked its search algorithm to demote "low-quality" content," Demand Media posted a blog Monday explaining that its first-quarter results remain on track and second-quarter page-view growth will come in equally strong as year-ago results. Analysis from Sistrix suggests that Demand Media's eHow site lost visibility in both the United Kingdom and in the United States -- about 66%. An update on the site points to a statement by eHow's parent company. Sistrix states: "I'd like to emphasize that although our data usually correlates quite well with actual traffic numbers, it is a view from the outside and Demand Media's own data is of course correct."

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Demand Media acknowledges that the recent search engine algorithm changes have negatively impacted traffic to some of its Web sites, including eHow.com, but advertisers report "encouraging results with their intent-targeted campaigns." Larry Fitzgibbon, Demand Media's EVP of media and operations, points to Facebook "Likes" as contributing to positive growth, and writes that the company continues to make investments in quality content. Site visits from organic non-search sources continue to pick up.

When Demand Media announces earnings in early May, the company expects to report year-over-year page-view growth across its owned-and-operated content, and media properties will be comparable to -- or greater than -- the year-over-year page-view growth achieved in the second quarter of 2010. In a press release issued Monday, Demand Media defends the company's position, pointing to "certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company's owned and operated Web sites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company's directly measured internal data."

Reuters notes that Demand Media reiterates its full-year 2011 outlook, projecting revenue of between $310 and $325 million in February, when it reported fourth-quarter results. Analysts, on average, expect revenue of $311.5 million, according to Thomson Reuters I/B/E/S.

eHow.com is the only site taking a hit. Others include greatschools. org, brighthub.com, markosweb.com, and superpages.com. The biggest winners include wiktionary.org, yelp.com, and dailymotion.com, according to analysis from Sistrix.

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