Demand Media’s expected IPO next week has run into a not so-unexpected problem — Google.
The Internet search engine is working on weeding out what it calls webspam — the junk that appears in search results, often courtesy of highly operational content farms like Demand Media.
Google is apparently concerned about a perception that the quality of its search results is worsening. The company’s problem with spam is also getting exploited by a small rival, Blekko, which promises better returns through user curation.
Google acknowledges that websites are trying to cheat their way up to higher position and that “people are asking for even stronger action on content farms and sites that consist primarily of spammy or low-quality content.”
This spells trouble for Demand Media in its move toward an IPO. But none of this should be too surprising for investors. The company, in its preliminary prospectus, warned:
“Google may from time to time change its existing, or establish new, methodologies and metrics for valuing the quality of Internet traffic and delivering cost-per-click advertisements. Any changes in these methodologies, metrics and advertising technology platforms could decrease the amount of revenue that we generate from online advertisements.”
Content farms like AOL’s Seed and Yahoo’s Associated Content need to take a closer look at the business. It’s risky and it’s quickly evolving. Keep an eye on Quora. Why should anyone go to eHow when they can get better curated answers to their questions by a community that has a healthy dose of credibility?