Demand Media

Posted: 28 Feb 2012

See all articles by John Deighton

John Deighton

Harvard Business School - Marketing Unit

Leora Kornfeld

Harvard Business School

Date Written: March 23, 2011

Abstract

Google search had helped Demand Media grow to be a $1.9 billion online publisher. Then, social media and smartphone apps began to change the way people navigated the Internet. How should Demand Media respond? The business ran on a radically new model in which a stable of 10,000 freelance contributors supplied content, the Internet's search engines brought it 75 million readers each month, and advertising generated revenue. It took the guesswork out of content production, with algorithms that indicated which topics were being searched and created content accordingly. Demand treated its 5,000 online articles published per day as an investment, not a cost, a reversal of the traditional media model. In addition to being able to infer consumers' interests with its algorithm, the company had a formula for estimating the lifetime value of each piece of content. As the business models of print and broadcast media declined, Demand had figured out how to leverage digital and social media tools to bring down the costs of creating content and to find an audience. In spring 2011, executives at the five-year-old company were pleased with the company's billion dollar IPO, the biggest Internet IPO since Google's, but changes in consumer behavior on the Internet were obliging a review of the model.

Learning Objective: To examine the new forms and models of content creation and distribution in the digital publishing environment.

Suggested Citation

Deighton, John and Kornfeld, Leora, Demand Media (March 23, 2011). Harvard Business School Marketing Unit Case No. 511-043. Available at SSRN: https://ssrn.com/abstract=2012787

John Deighton (Contact Author)

Harvard Business School - Marketing Unit ( email )

Soldiers Field
Boston, MA 02163
United States

Leora Kornfeld

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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