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Memo on "Demand Media"

In: Business and Management

Submitted By stellaul
Words 317
Pages 2
As Demand Media is operating in highly-changing digital landscape the very existence of the company depends on its ability to adapt quickly to modern realities. It means that even if Demand Media applied its current business model successfully over last five years it would bring positive results in future. Since consumer attention fragments due to growing popularity of social networks and mobile apps the company now faces both challenges and opportunities for growth. Although more and more people using social networks interact they usually turn to search engines to find specific information they currently need. More advanced users consult directly with specialized sites. Thus, current business practice of Demand Media is still essential to users. Nevertheless, current business model seems to be a little shaky and highly dependent on key search engines policy especially Google. Basically it can change its current search algorithms; and Demand Media will have to react and adapt its own mechanisms. And it does because of the pressure exerted by plenty of internet users complaining about low-content sites being best ranked. Therefore we suppose that Demand Media should focus its resources on creation of high-quality content. We observe excellent example of that in health and beauty sections (with celebrities creating additional attention) but the company has not invested much in high-quality content in other areas (eg. technology) that could provide additional advertising revenues. As the company has not been profitable yet and we do not posses any information about its cash flows we still think that Demand Media still can afford creating apps for its most popular content-generated sites. Creation of the app can have pretty high upfront costs but ongoing costs are usually low. However, it offers more convenient tool to use the site for growing users of mobile internet. The possible version of the app is free with advertising or paid on download without advertising.…...

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