14 DAY TRIAL // Now, with the current state of the global economy, and with the US doing no better, it’s been rather quiet on the IPO (initial public offering) front lately. That’s about to change as Demand Media has filed for an IPO with the US SEC (Securities and Exchange Commission). It’s just the first step, but the registration reveals some interesting tidbits about the ‘content farm’ business.
Demand Media is hoping to raise about $125 million, though the filing doesn’t say how much of the company is actually up for sale. Based on its revenue figures, it’s probably a small stake. In fact, the revenue figures are probably the most interesting part of the filing. It turns out that, while content farms may be big business, they’re not that profitable, at least not for Demand Media.
The company has generated about $114 million in revenue for the first half of the year, quite a bit more than in the previous year. But it did that at a loss, the company is down $22.2 million for the same period of time. The company brought in $198 million in revenue last year and is on track to $216 million for 2010. It lost $52.8 million in 2009.
What’s also interesting is that much of that revenue comes from its domain registration business and not the content generation one that it’s most famous for. 2009 was the first year that Content and Media generated more revenue than domain registrations. eNom, the registrar, brought in $47.7 million in 2010, while media made $66.2 million.
Demand Media is very dependant on Google, as the filing shows. In terms of revenue, Google ads were the source of 18 percent of it in 2009 and 26 percent in 2010. In terms of traffic, 40 percent of the traffic on the Demand Media’s sites came from search engines in the last quarter. While it doesn’t say how much of that is Google, the filing claims that the majority of it comes from the dominating search engine.