Demand Media, the company that writes about everything and depends on search engines for most of its traffic, found itself loosing over $6.4 Million last quarter because of the Google Panda algorithm. The site, which actually profitable in 2010, lost almost $20M in 2011.
As the LA Times, put it, Demand Media went from one of the most profitable, most prestigious “internet darling” firms to a dud overnight, only because of the Panada algorithm.
The simple reason for being so severely slapped by Panda is the lack of quality of articles. Since its model was basically making as many articles about as many subjects as possible, Google saw the website simply as an article factory, spamming the internet with as much information as possible, regardless of its quality or accuracy.
The Panda algorithm, and the subsequent follow-ups on the other hand rewarded sites that were more topic specific, allowing their articles to have higher rankings in Google. Additionally, sites with updated information were also given preference, thus making Demand Media articles stale with age.
Despite this news, Demand Media stock soared, as the owners released their hope that they could overcome these issues with time. From the Associated Press
Investors had been bracing for the possibility of a much weaker performance, given Demand Media’s struggles since Google dramatically changed the way it ranks websites last February. The revisions were designed to weed out low-quality content — a description that Google decided applied to some of the rudimentary articles written by thousands of Demand Media freelancers. The content appears on Demand Media’s own websites, including eHow.com and Livestrong.com, as well as a long list of other publishers.