Demand Media's IPO

Demand Media's IPO Who Is Demand Media 11 Demand Media EHOW LIVESTRONG.COM CRACKED.COM 69 million 6.8 million 5.1 million unique users worldwide monthly unique users monthly unique users 53% Female 59% Female 35% Female 47% Male 41% Male 65% Male • Core Age: 18-34 years old • 53% earn over $60K annually • 98% shopped online (researched or bought) • Our users are active and engaged, online trend setters, and regular contributors to the site • Core Age: 25-49 years old • 18th largest individual • Core Age: 25-34 years old • Over 2.8 million registered website in the U.S. members · Over 1.3 million newsletter • More than 96% shopped online (researched and/or bought) More than 86% made a subscribers • Over 350 million food & fitness items tracked purchase online in the past 6 months TRAILS.COM GOLFLINK ANSWERBAG 3.1 million monthly unique users 2.6 million 10.8 million monthly unique users monthly unique users 48% Female 38% Female 49% Female 52% Male 62% Male 51% Male • Core Age: 25-54 years old • 57% earn over $60K annually • Over 2 million current • Core age: 25-54 years old · About half (48%) spend over $300 per year on golf gear • More than 74% play or practice golf weekly and over 62% maintain a handicap • Core Age: 18-34 years old • 96% shopped online in the last 6 months members Demand Media's Numbers 10,000 86 Demand Media million unique visits per month freelance pays writers content creators 5,700 550 $15 per article content pieces per day million page views per month 2010 Numbers 60% of this traffic $114 million revenue first 6 months comes from Google Revenue from eHow in 2010 21% > Total revenue from Google in 2010 26% 73% > eNom domain renewal rate in 2010 37% > Domain registrations in 2010 $6,049,000 ) Net loss for 2010 YTD (August) Growth As of their S-1 filing, they thousand pageviews) for Meanwhile, they have generated "5,700 text articles and videos," per their content business 2.2mm pieces of content (videos and articles). If over the last few years. In day. Compare that to "the 2008, that number that number is growing averaged $10.56; for the first six months of 2010, it growing at approximately was $11.81. Compared to 4,000 videos and articles at 5,800 per day, it's that Demand Media publishe[d] every day" as 24% per quarter of last October. Later in the first half of 2009, total their report, they reveal the "RPM" (revenue per page views are up 23% (to 3.9 billion). How Demand Media's algorithm might work (calculating margin per article) $15 Хзуеars $11.81 Average article cost Estimated miniumum Average revenue per 1,000 pageviews article lifetime G 46% O 500 230 Estimated average CTR Estimated lowest Estimated clicks per acceptable monthly 1st organic position on Google month at lowest exact match search acceptable monthly volume search volume Months till break even on 1 piece of content: 5.52 = (($15 x 1,000) / $11.81)) / 230 Min lifetime article revenue: $97.79 = (8280 clicks x $11.81) / 1,000 Lifetime margin per article: 84.66% Conclusion Demand Based on some tricky estimates, vague comparisons, and wild guesses: Media has a • The registrar is worth $366 million de facto • The current content business is worth $650 million monopoly • The small chance of a hugely successful content business is worth $782 million on a 30 billion • And they have cash on hand of $33 million dollar At those prices, the total value of the company is $1.83 billion market AuthorityLabs from: blog.authoritylabs.com @byrneseyeview http://www.byrnehobart.com/blog/demand-medias-ipo-everything-you-need-to-know/ http://www.wired.com/magazine/2010/02/ff_google_algorithm/all /1 http://www.google.com/search?q=sec+demand+media+s-1 http://www.wired.com/magazine/2009/10/ff_demandmedia/