Google Panda Update Costs Demand Media $6.4 Million In 4th Quarter?

Demand Media posts $6.4-million loss in fourth quarter from the Los Angeles Times reports that Google’s Panda algorithm is mostly to blame for Demand Media’s $6.4 million loss in the fourth quarter of 2011.

Demand Media released their earnings report last night, showing revenues up 15% year over year, but profits down from a positive $1 million in the 4th quarter of 2010 to a loss of $6.4 million in the 4th quarter of 2011. Overall, Demand Media lost $18.5 million over the 2011 fiscal year.

Our very own Greg Sterling told the LA Times, “When you generate articles based on keywords, you open yourself to the criticism that your content lacks sincerity,” he said. “Google felt that these content farms diluted the quality of its search results. So they tried to address that.”

In the Demand Media future looking statement, they mention Google twice:

Potential risks and uncertainties include, among others: changes in the methodologies of Internet search engines, including ongoing algorithmic changes made by Google to its search results 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; changes in our content creation and distribution platform, including the possible repurposing of content to alternate distribution channels, or the sale or removal of content, as well as our ability to successfully launch and produce new content formats; the inherent challenges of estimating the overall impact on page views and search driven traffic to our owned and operated websites based on the data available to us as Google continues to make adjustments to its search algorithms; our ability to compete with new or existing competitors; our ability to maintain or increase our advertising revenue; our ability to continue to drive and grow traffic to our owned and operated websites and the websites of our network customers; our ability to effectively monetize our portfolio of content; our dependence on material agreements with a specific business partner for a significant portion of our revenue; future internal rates of return on content investment and our decision to invest in different types of content in the future, including video and other formats of text content; our ability to attract and retain freelance creative professio…

After the Google Panda update hit just about a year ago, Demand Media said the impact people claimed it had on their web site was significantly overstated. In fact, Demand Media said right away there was no material impact on their site from the update. However, several months later, Demand Media reduced the number of assignments handed out to writers.

We knew when Demand Media IPO’d, the success of the company was closely tied to Google. Many would argue that Panda proved that claim.

Related Stories:

• Google Forecloses On Content Farms With “Panda” Algorithm Update
• Demand: Google Changes Have Produced “No Material Impact” Yet
• Demand Media: Panda’s Impact On eHow.com “Significantly Overstated”
• Hitwise Data Pegs Panda Impact On Demand Media Sites At 40%
• Demand Media: “We Will Have Fewer eHow.com Assignments For The Foreseeable Future”
• Panda Update: Google Lowers The Boom On eHow.com
• Demand Media & Being “The Best Click” On Google
• The New York Times, Demand Media Edition
• Demand Media’s IPO: The Google & SEO Aspects

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