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	<title>WebProNews &#187; Panda</title>
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		<title>For Better Or Worse, A Lot Of Change Is Coming To Google SEO</title>
		<link>http://www.webpronews.com/matt-cutts-talks-about-penguin-panda-and-a-bunch-of-changes-google-has-in-the-works-2013-05</link>
		<comments>http://www.webpronews.com/matt-cutts-talks-about-penguin-panda-and-a-bunch-of-changes-google-has-in-the-works-2013-05#comments</comments>
		<pubDate>Wed, 15 May 2013 10:00:07 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[Advertorials]]></category>
		<category><![CDATA[algorithm changes]]></category>
		<category><![CDATA[Matt Cutts]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[Penguin]]></category>
		<category><![CDATA[Videos]]></category>
		<category><![CDATA[Webmaster Help Videos]]></category>
		<category><![CDATA[webspam]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=229634</guid>
		<description><![CDATA[Google has a lot of stuff in the works that will have a direct impact on webmasters and the search engine optimization community. In a seven-minute &#8220;Webmaster Help&#8221; video, Google&#8217;s Matt Cutts (sporting a Mozilla Firefox shirt), ran down much &#8230;]]></description>
			<content:encoded><![CDATA[<p>Google has a lot of stuff in the works that will have a direct impact on webmasters and the search engine optimization community. In a seven-minute &#8220;Webmaster Help&#8221; video, Google&#8217;s Matt Cutts (sporting a Mozilla Firefox shirt), ran down much of what Google&#8217;s webspam team has planned for the coming months, and what it all means for webmasters. It involves the Penguin update, the Panda update, advertorials, hacked sites, link spam, and a lot more. </p>
<p><strong>Are you paying close attention to Google&#8217;s algorithm updates these days? Are you looking forward to the updates, or are you afraid of what they will bring? <u><a href="http://www.webpronews.com/matt-cutts-talks-about-penguin-panda-and-a-bunch-of-changes-google-has-in-the-works-2013-05#respond">Let us know in the comments</a></u>. </strong></p>
<p><center><iframe width="616" height="347" src="http://www.youtube.com/embed/xQmQeKU25zg" frameborder="0" allowfullscreen></iframe></center></p>
<p>Cutts is careful to note that any of this information is subject to change, and should be taken with a grain of salt, but this pretty much the kind of stuff they have planned at the moment. </p>
<h3>Penguin</h3>
<p>We already knew the Penguin update was on the way, and he touches on that. </p>
<p>&#8220;We&#8217;re relatively close to deploying the next generation of Penguin,&#8221; says Cutts. &#8220;Internally we call it &#8216;Penguin 2.0,&#8217; and again, Penguin is a webspam change that&#8217;s dedicated to try to find black hat webspam, and try to target and address that. So this one is a little more comprehensive than Penguin 1.0, and we expect it to go a little bit deeper in have a little bit more of an impact than the original version of Penguin.&#8221;</p>
<p>Before the video came out, <a href="http://www.webpronews.com/google-penguin-update-gets-ready-to-bite-webmasters-noses-penguin-2-0-2013-05">Cutts was already talking about this update on Twitter</a>, saying that it would be &#8220;larger&#8221; and roll out in the &#8220;next few weeks&#8221;.</p>
<h3>Updates To Panda</h3>
<p>Google recently changed its updating strategy for Panda. Webmasters use to anxiously await coming Panda updates, but Google has turned it into a rolling update, meaning that it will continue to update often and regularly, to the point where anticipating any one big update is not really possible any longer. On top of that, Google stopped announcing them, as it just doesn&#8217;t make sense for them to do so anymore. </p>
<p>That doesn&#8217;t mean there isn&#8217;t Panda news, as Cutts has proven. It turns out that the Panda that has haunted so many webmasters over the last couple years may start easing up a little bit, and become (dare I say?) a bit friendlier. </p>
<p>Cutts says, &#8220;We&#8217;ve also been looking at Panda, and seeing if we can find some additional signals (and we think we&#8217;ve got some) to help refine things for the sites that are kind of in the border zone &#8211; in the gray area a little bit. And so if we can soften the effect a little bit for those sites that we believe have some additional signals of quality, then that will help sites that have previously been affected (to some degree) by Panda.&#8221;</p>
<h3>Sites And Their Authority</h3>
<p>If you&#8217;re an authority on any topic, and you write about it a lot, this should be good news (in a perfect world, at least). </p>
<p>&#8220;We have also been working on a lot of ways to help regular webmasters,&#8221; says Cutts. &#8220;We&#8217;re doing a better job of detecting when someone is more of an authority on a specific space. You know, it could be medical. It could be travel. Whatever. And try to make sure that those rank a little more highly if you&#8217;re some sort of authority or a site, according to the algorithms, we think might be a little more appropriate for users.&#8221;</p>
<h3>Advertorials</h3>
<p>Also on the Google menu is a bigger crackdown on advertorials. </p>
<p>&#8220;We&#8217;ve also been looking at advertorials,&#8221; says Cutts .&#8221;That is sort of native advertising &#8211; and those sorts of things that violate our quality guidelines. So, again, if someone pays for coverage, or pays for an ad or something like that, those ads should not flow PageRank. We&#8217;ve seen a few sites in the U.S. and around the world that take money and do link to websites, and pass PageRank, so we&#8217;ll be looking at some efforts to be a little bit stronger on our enforcement as advertorials that violate our quality guidelines.&#8221;</p>
<p>&#8220;There&#8217;s nothing wrong inherently with advertorials or native advertising, but they should not flow PageRank, and there should be clear and conspicuous disclosure, so that users realize that something is paid &#8211; not organic or editorial,&#8221; he adds. </p>
<h3>Queries With High Spam Rates</h3>
<p>Google will also be working harder on certain types of queries that tend to draw a lot of spam. </p>
<p>Cutts says, &#8220;We get a lot of great feedback from outside of Google, so, for example, there were some people complaining about searches like &#8216;payday loans&#8217; on Google.co.uk. So we have two different changes that try to tackle those kinds of queries in a couple different ways. We can&#8217;t get into too much detail about exactly how they work, but I&#8217;m kind of excited that we&#8217;re going from having just general queries be a little more clean to going to some of these areas that have traditionally been a little more spammy, including for example, some more pornographic queries, and some of these changes might have a little bit more of an impact on those kinds of areas that are a little more contested by various spammers and that sort of thing.&#8221;</p>
<p><a name="more"></a><br />
<h3>Denying Value To Link Spam</h3>
<p>Google will continue to be  vigilant when it comes to all types of link spam, and has some new tricks up its sleeve, apparently. </p>
<p>Cutts says, &#8220;We&#8217;re also looking at some ways to go upstream to deny the value to link spammers &#8211; some people who spam links in various ways. We&#8217;ve got some nice ideas on ways that that becomes less effective, and so we expect that that will roll out over the next few months as well.&#8221;</p>
<p>&#8220;In fact, we&#8217;re working on a completely different system that does more sophisticated link analysis,&#8221; he adds. &#8220;We&#8217;re still in the early days for that, but it&#8217;s pretty exciting. We&#8217;ve got some data now that we&#8217;re ready to start munching, and see how good it looks. We&#8217;ll see whether that bears fruit or not.&#8221;</p>
<p>Hopefully this won&#8217;t lead to a whole lot of new &#8220;fear of linking&#8221; from webmasters, as <a href="http://www.webpronews.com/links-are-the-webs-building-blocks-and-fear-of-google-has-them-crumbling-2012-08">we&#8217;ve seen</a> since Penguin first rolled out, but that&#8217;s probably wishful thinking. </p>
<h3>Hacked Sites</h3>
<p>Google intends to get better on the hacked sites front. </p>
<p>&#8220;We also continue to work on hacked sites in a couple different ways,&#8221; says Cutts. &#8220;Number one: trying to detect them better. We hope in the next few months to roll out a next-generation site detection that is even more comprehensive, and also trying to communicate better to webmasters, because sometimes they see confusion between hacked sites and sites that serve up malware, and ideally, you&#8217;d have a one-stop shop where once someone realizes that they&#8217;ve been hacked, they can go to Webmaster Tools, and have some single spot where they could go and have a lot more info to sort of point them in the right way to hopefully clean up those hacked sites.&#8221;</p>
<h3>Clusters Of Results From The Same Site</h3>
<p>There have been complaints about domain clustering in Google&#8217;s results, and Google showing too many results from the same domain on some queries. </p>
<p>Cutts says, &#8220;We&#8217;ve also heard a lot of feedback from people about &#8211; if I go down three pages deep, I&#8217;ll see a cluster of several results all from one domain, and we&#8217;ve actually made things better in terms of &#8211; you would be less likely to see that on the first page, but more likely to see that on the following pages.  And we&#8217;re looking a change, which might deploy, which would basically say that once you&#8217;ve seen a cluster of results from one site, then you&#8217;d be less likely to see more results from that site as you go deeper into the next pages of Google search results.&#8221;</p>
<p>&#8220;We&#8217;re going to keep trying to figure out how we can give more information to webmasters&#8230;we&#8217;re also going to be looking for ways that we can provide more concrete details, [and] more example URLs that webmasters can use to figure out where to go to diagnose their site.&#8221; </p>
<p>So Google has a lot of stuff in the works that SEOs and webmasters are going to want to keep a close eye on. It&#8217;s going to be interesting to see the impact it all has. Given that Google makes algorithm changes every day, this has to be far from everything they have in the works, but I guess the video makes up for the <a href="http://www.webpronews.com/google-penguin-update-hasnt-been-refreshed-since-october-report-2013-02">lack of &#8220;Search Quality HIghlights&#8221;</a> from Google in recent months. Still wondering if those are ever coming back. They were, after all, released to keep Google more transparent. </p>
<p><strong>What do you think of the changes Matt Cutts talked about. Looking forward to any of them? Dreading any? <u><a href="http://www.webpronews.com/matt-cutts-talks-about-penguin-panda-and-a-bunch-of-changes-google-has-in-the-works-2013-05#respond">Let us know in the comments</a></u>. </strong></p>
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		<title>Are You More Or Less Worried About Google&#8217;s Panda Update Now?</title>
		<link>http://www.webpronews.com/google-panda-update-is-rolling-out-report-2013-03</link>
		<comments>http://www.webpronews.com/google-panda-update-is-rolling-out-report-2013-03#comments</comments>
		<pubDate>Tue, 19 Mar 2013 10:22:45 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[algorithm changes]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[SEO]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=220956</guid>
		<description><![CDATA[As previously reported, Google&#8217;s Matt Cutts revealed at SMX this week that Google would be pushing a refresh to its famous (or perhaps infamous) Panda update on either Friday or Monday. As of Friday, it appears that the refresh has &#8230;]]></description>
			<content:encoded><![CDATA[<p>As previously <a href="http://www.webpronews.com/matt-cutts-panda-update-coming-friday-big-penguin-update-later-this-year-2013-03">reported</a>, Google&#8217;s Matt Cutts revealed at SMX this week that Google would be pushing a refresh to its famous (or perhaps infamous) Panda update on either Friday or Monday. As of Friday, it appears that the refresh has arrived. </p>
<p><strong>Have you felt the effects of the latest Panda update? Noticed any improvements in Google&#8217;s search results? <u><a href="http://www.webpronews.com/google-panda-update-is-rolling-out-report-2013-03#comments">Let us know in the comments</a></u>.</strong></p>
<p>Barry Schwartz is <a href="http://www.seroundtable.com/google-panda-25-16506.html">pointing to some forum chatter</a> about webmasters already seeing the effects of the refresh, indicating that it has likely begun to roll out. As others have pointed out, it&#8217;s not uncommon for Google to do this on a Friday. Schwartz says signs point to the roll out starting on Thursday afternoon and into Friday. </p>
<p>This isn&#8217;t just your typical run of the mill Panda refresh, however. This could very well be the last time Google manually pushes one, as Panda is becoming more of a &#8220;rolling&#8221; update. Schwartz <a href="http://www.seroundtable.com/google-panda-update-rolling-16495.html">quotes Cutts</a> from SMX: </p>
<blockquote><p>Rather than having some huge change that happens on a given day. You are more likely in the future to see Panda deployed gradually as we rebuild the index. So you are less likely to see these large scale sorts of changes.</p></blockquote>
<p>As of the time of this writing, Google has not made a formal announcement about this latest Panda refreshed, and it&#8217;s entirely possible that they won&#8217;t. Given the nature of Pand deployment going forward, it&#8217;s unlikely that Google will do so from here on out. We have to just accept Panda as an ongoing thing. No more anticipation of the next big Pand update. You can just count on it happening on a regular, ongoing basis. Actually, Google has <a href="http://searchengineland.com/google-were-unlikely-to-confirm-current-or-future-panda-updates-151728">come out and said</a> that it&#8217;s unlikely to confirm Panda updates from now on. </p>
<p>It remains to be seen just what kind of an impact this will truly have on sites, but it&#8217;s not likely to make things much easier. </p>
<p>Don&#8217;t worry though, you can still anticipate the next big Penguin update, which Cutts also discussed at SMX. He said they&#8217;re working on the &#8220;next generation of Penguin,&#8221; which he is implying is going to be a big one. Google is also talking about cracking down on &#8220;bad online merchants&#8221;. It will be interesting to see how this affects ecommerce sites, and what Google really considers &#8220;bad&#8221;. </p>
<p>“We have a potential launch later this year, maybe a little bit sooner, looking at the quality of merchants and whether we can do a better job on that, because we don’t want low quality experience merchants to be ranking in the search results,” Cutts said about that. </p>
<p>We have been <a href="http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01">waiting for the next Panda/Penguin</a>. Maybe that&#8217;s the one we&#8217;re looking at. You have to wonder how many sites it will impact. I can easily envision a firestorm of merchant freak-out. </p>
<p>Cutts also <a href="http://searchengineland.com/googles-matt-cutts-on-upcoming-penguin-panda-link-networks-updates-151273">reportedly</a> said Google will be targeting more link networks this year. </p>
<p>We&#8217;re also still waiting on Google to put out what used to be its monthly lists of algorithm changes (or &#8220;search quality highlights&#8221; if you will)  for the past several months, dating back to October. This is the longest Google has gone without releasing the lists since they started doing it, which they were doing in the name of &#8220;transparency&#8221;. </p>
<p>Panda recently <a href="http://www.webpronews.com/googles-panda-update-has-turned-two-2013-02">turned two years old</a>, and opinions of Google&#8217;s search results since its implementation vary. With the latest refresh, Google has gone through 25 iterations of Panda. </p>
<p><strong>Now that Google has a new approach to how it deploys Panda, are you more or less worried about its impact? <a href="http://www.webpronews.com/google-panda-update-is-rolling-out-report-2013-03#comments">Let us know in the comments</a>. </strong></p>
<p><em>Image: Tekken 5 (<a href="http://www.youtube.com/watch?v=hSNb9eAwv0g">via YouTube</a>)</em></p>
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		<title>Matt Cutts: Panda Update Coming Friday, &#8216;Big&#8217; Penguin Update Later This Year</title>
		<link>http://www.webpronews.com/matt-cutts-panda-update-coming-friday-big-penguin-update-later-this-year-2013-03</link>
		<comments>http://www.webpronews.com/matt-cutts-panda-update-coming-friday-big-penguin-update-later-this-year-2013-03#comments</comments>
		<pubDate>Tue, 12 Mar 2013 20:27:33 +0000</pubDate>
		<dc:creator>Josh Wolford</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Matt Cutts]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[Penguin]]></category>
		<category><![CDATA[webspam]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=220649</guid>
		<description><![CDATA[According to Google webspam head Matt Cutts, we can expect the next Panda refresh to occur within the next few days. Speaking at the SMX conference, Cutts said that the next Panda update will take place this Friday, March 15th &#8230;]]></description>
			<content:encoded><![CDATA[<p>According to Google webspam head Matt Cutts, we can expect the next Panda refresh to occur within the next few days. </p>
<p>Speaking at the SMX conference, Cutts said that the next Panda update will take place this Friday, March 15th or by Monday, March 18th at the latest. </p>
<p>The <a href="http://www.webpronews.com/google-panda-update-data-refresh-rolling-out-now-2013-01">last Panda update</a> rolled out on January 22nd, and Google said that it affected 1.2% of queries. Even if a Panda update launches this Friday, it will have been the longest time between updates in recent memory. Google previously released a Panda update a few days before Christmas, and <a href="http://www.webpronews.com/google-panda-update-one-reportedly-happened-on-monday-2012-11">two back in November</a>. </p>
<p>Although the Panda refresh is coming sooner, a Penguin update is also on the horizon &#8211; and Cutts said that <a href="http://www.seroundtable.com/smx-search-police-matt-cutts-duane-forrester-16480.html">it&#8217;ll be a big one</a>. Cutts said that it will be one of the most talked-about updates of the year. </p>
<p>They are &#8220;working on the next generation of Penguin,&#8221; said Cutts.</p>
<p>More algorithm changes were discussed at SXSW last week. There, Cutts announced a <a href="http://searchengineland.com/bad-merchant-google-may-drop-your-rankings-151028">possible crackdown on bad online merchants</a>. </p>
<p>“We have a potential launch later this year, maybe a little bit sooner, looking at the quality of merchants and whether we can do a better job on that, because we don’t want low quality experience merchants to be ranking in the search results,&#8221; he said. </p>
<p>Check <a href="http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01">here</a> for more on the future of Panda and Penguin in 2013</p>
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		<title>Have Google&#8217;s Results Improved After Two Years Of Panda?</title>
		<link>http://www.webpronews.com/googles-panda-update-has-turned-two-2013-02</link>
		<comments>http://www.webpronews.com/googles-panda-update-has-turned-two-2013-02#comments</comments>
		<pubDate>Fri, 01 Mar 2013 04:58:58 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[algorithm changes]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[Panda Update]]></category>
		<category><![CDATA[SEO]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=218572</guid>
		<description><![CDATA[It&#8217;s been two years since Google unleashed the Panda update. How the time flies. Do you think Google&#8217;s search results have improved significantly in that time? Let us know in the comments. As you probably know, the update was designed &#8230;]]></description>
			<content:encoded><![CDATA[<p><img src="http://cdn.ientry.com/sites/webpronews/pictures/panda-2nd-birthday.jpg" alt="Google Panda Update " style="margin: 0px 0px 10px 10px;" align="right" />It&#8217;s been two years since Google unleashed the Panda update. How the time flies. </p>
<p><strong>Do you think Google&#8217;s search results have improved significantly in that time? <u><a href="http://www.webpronews.com/googles-panda-update-has-turned-two-2013-02#comments">Let us know in the comments</a></u>.</strong></p>
<p>As you probably know, the update was designed to promote higher quality content from sites in Google&#8217;s search results. Shortly after launching Panda, <a href="http://www.webpronews.com/google-panda-update-advice-2011-05">Google laid out some unofficial guidelines</a> for what it means by &#8220;quality&#8221;. Victims of the update strived to recover from the huge drop in search visibility suffered as a result of it, by following these guidelines as best as possible. Few have been successful. </p>
<p>Let&#8217;s revisit these guidelines, and see if Google is living up to its part of the bargain. </p>
<p><strong>Would you trust the information presented in this article?</strong></p>
<p>How often do you find search results with information that appears untrustworthy? This was a big issue when Panda was launched. So called &#8220;content farms&#8221; were cluttering up the results, and often getting top rankings with articles written by people with no real trustworthy credentials. Google continues to try and tackle this issue with authorship, but that&#8217;s completely separate from Panda. How do you think it&#8217;s done on the Panda front? </p>
<p><strong>Is this article written by an expert or enthusiast who knows the topic well, or is it more shallow in nature?</strong></p>
<p>In my opinion, this is kind of a trick question. This gives the impression that a result needs to be a long, in-depth piece on any given subject, yet when it comes down to it, a more &#8220;shallow&#8221; post (or even a tweet) from the right &#8220;expert&#8221; can carry a lot more weight in credibility. You can just browse Techmeme on any given day and get that impression (though that site certainly has its share of other issues). </p>
<p><strong>Would you be comfortable giving your credit card information to this site?</strong></p>
<p>Is Google doing well at delivering trustworthy ecommerce results? Is it burying legitimate ecommerce sites because it doesn&#8217;t think they look trustworthy enough? </p>
<p><strong>Does this article have spelling, stylistic, or factual errors?</strong></p>
<p>Let&#8217;s be honest, these things happen to even the most highly-read publications on the web from time to time. The fast-paced culture of web content often breeds a &#8220;get it out, and update later&#8221; nature, and I&#8217;m not sure Panda has done anything to change that.</p>
<p><strong>Are the topics driven by genuine interests of readers of the site, or does the site generate content by attempting to guess what might rank well in search engines?</strong></p>
<p>As Rafat Ali, the founder of media industry follower PaidContent recently said: </p>
<p><center><br />
<blockquote class="twitter-tweet">
<p>Anyone who says they&#8217;re not &#8220;chasing pageviews&#8221; isn&#8217;t being honest. They&#8217;re chasing &#8220;being read&#8221;, right?</p>
<p>&mdash; Rafat Ali (@rafat) <a href="https://twitter.com/rafat/status/304242606374801408">February 20, 2013</a></p></blockquote>
<p><script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></center></p>
<p>That said, isn&#8217;t it Google&#8217;s job to provide content that&#8217;s useful to its own users (searchers) as opposed to what&#8217;s useful to any given site&#8217;s audience? Sites typically want to expand their audiences anyway. </p>
<p><strong>Does the article provide original content or information, original reporting, original research, or original analysis?</strong></p>
<p>It&#8217;s a good question, but how often is this kind of content truly rewarded by the Panda update? </p>
<p><strong>Does the page provide substantial value when compared to other pages in search results?</strong></p>
<p>Ditto from last question. </p>
<p><strong>How much quality control is done on content?</strong></p>
<p>Ditto from question about spelling, stylistic, or factual errors.</p>
<p><strong>Does the article describe both sides of a story?</strong></p>
<p>I&#8217;m curious to know how Google might algorithmically approach this one. I&#8217;m also curious to know how much Google is really holding content accountable to this. What do you think? </p>
<p><strong>Is the site a recognized authority on its topic?</strong></p>
<p>Nothing wrong with showing users content from recognized authorities, but this also begs the question: How does one gain recognition without visibility? </p>
<p><strong>Is the content mass-produced by or outsourced to a large number of creators, or spread across a large network of sites, so that individual pages or sites don’t get as much attention or care?</strong></p>
<p>If a piece of content is relevant for a query, isn&#8217;t that more important to the user experience than what content on some other page looks like? Sure, it&#8217;s good practice to maintain quality control, but should good, relevant content suffer because of lesser content on other parts of a site? </p>
<p><strong>Was the article edited well, or does it appear sloppy or hastily produced?</strong></p>
<p>Once again, this goes along with the other questions about quality control and errors. </p>
<p><strong>For a health related query, would you trust information from this site?</strong></p>
<p>I think we pretty much covered this with the &#8220;trust&#8221; question, though for medical queries, the stakes can go up. In fact, this was one of the big concerns before Panda launched. Has Google gotten better at providing trustworthy medical-related results? It has launched its own <a href="http://www.webpronews.com/google-is-now-giving-you-medical-info-in-the-knowledge-graph-2012-11">Knowledge Graph results for some of this stuff</a>. But again, that&#8217;s not really Panda-related. </p>
<p><strong>Would you recognize this site as an authoritative source when mentioned by name?</strong></p>
<p>Sites who are more authoritative on certain subjects often cover a much broader range of topics. This should really be more about the author of the article (along with other factors), should it not? Again, Google is really into this authorship thing, and probably with good reason, but I&#8217;m not sure Panda has all the answers on this one. </p>
<p><strong>Does this article provide a complete or comprehensive description of the topic?</strong></p>
<p>Frankly, this is not always needed in every article. That&#8217;s why the web is based around links. It&#8217;s probably also why Google loves Wikipedia so much. </p>
<p><strong>Does this article contain insightful analysis or interesting information that is beyond obvious?</strong></p>
<p>Can this be determined algorithmically? </p>
<p><strong>Is this the sort of page you’d want to bookmark, share with a friend, or recommend?</strong></p>
<p>Wouldn&#8217;t it be helpful if Google tapped into Facebook for the social relevance of content? </p>
<p><strong>Does this article have an excessive amount of ads that distract from or interfere with the main content?</strong></p>
<p>I think this is covered by <a href="http://www.webpronews.com/google-page-layout-algorithm-update-should-be-easier-to-recover-from-2012-10">the page layout update</a>.</p>
<p><strong>Would you expect to see this article in a printed magazine, encyclopedia or book?. </strong></p>
<p>Isn&#8217;t print dying? </p>
<p><strong>Are the articles short, unsubstantial, or otherwise lacking in helpful specifics?</strong></p>
<p>Does the right answer always have to be long? </p>
<p><strong>Are the pages produced with great care and attention to detail vs. less attention to detail?</strong></p>
<p>Didn&#8217;t we already cover this? </p>
<p><strong>Would users complain when they see pages from this site?</strong></p>
<p>Not the most specific of guidelines. </p>
<p>Some companies had to rethink their entire business models because of Panda. Smart content providers found ways to diversify their web traffic better as to not have to rely as much on Google. Demand Media&#8217;s site eHow has been the prime example of this. While it did go through a massive quality clean-up initiative to get back in Google&#8217;s good graces, it has also largely expanded its social media strategies, and increased partnerships, and the site is in as good of shape as ever, based on recent earnings calls from the company (which is now <a href="http://www.webpronews.com/demand-media-to-split-into-two-public-companies-earnings-released-2013-02">separating its content business from its registrar business</a>). </p>
<p>Demand Media ranked as a top 20 U.S. web property throughout last year, and was ranked at number 13 in January, according to comScore. The company reached over 125 million unique visitors worldwide in January, and eHow itself was ranked number 12 in the U.S. with 62 million unique visitors in January.</p>
<p>Not everyone has been as successful as Demand Media. Matt McGee at Search Engine Land has <a href="http://searchengineland.com/author/matt-mcgee">put together some articles</a> (apparently the first two in an ongoing series) looking at Panda victims two years later. He finds, citing Searchmetrics data (which <a href="http://www.webpronews.com/google-penguin-update-gets-fresh-losers-list-from-searchmetrics-2012-04">has been questionable at times</a> in the past, for the record), that none of 22 victims from the original Panda update, as listed by Searchmetrics, has returned to pre-Panda visibility, and that only two have improved compared to their post-Panda visibility.  </p>
<p>MotorTrend.com, which was hit by the original update for some reason, has managed to bounce back, and McGee calls it the &#8220;true Panda recovery&#8221; in terms of search visibility. Today, he says (again, citing Searchmetrics data), it appears to have better visibility than it had pre-Panda. </p>
<p>For sites like EzineArticles, HubPages, and the like, no such luck. He says that even eHow&#8217;s visibility is down 63% from pre-Panda levels. </p>
<p>But again, the Demand Media strategy is not as reliant on Google as it was pre-Panda. And that&#8217;s probably the best thing to take away from the whole thing. ChaCha, another Panda victim, has adopted <a href="http://www.webpronews.com/freshly-funded-chacha-thinks-it-has-qa-right-this-time-2013-02">a similar approach</a>, as CEO Scott Jones recently described to us. </p>
<p>Last year was all about Penguin, though Google continued to push Panda refreshes on a regular basis. Panda was kind of in the background as the Internet was already accustomed to it. Still, it&#8217;s <a href="http://www.webpronews.com/google-penguin-update-hasnt-been-refreshed-since-october-report-2013-02">Panda that tends to rear its head more often than Penguin</a>. </p>
<p>Google has been pushing out a major update early in each of the past couple years. We&#8217;re still <a href="http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01">wondering if they have a 2013 counterpart</a> to Panda and Penguin in store. We&#8217;re also still <a href="http://www.webpronews.com/its-been-over-4-months-since-google-posted-its-monthly-list-of-algorithm-changes-2013-02">waiting for Google to release months worth of its &#8220;search quality highlights&#8221;</a>. </p>
<p>Google announced the launch of its latest known Panda refresh <a href="http://www.webpronews.com/google-panda-update-data-refresh-rolling-out-now-2013-01">in late January</a>. The company said it affected 1.2% of English queries. </p>
<p><strong>Have Google&#8217;s results gotten better since it first launched Panda? Has quality gone up? <a href="http://www.webpronews.com/googles-panda-update-has-turned-two-2013-02#comments">Let us know what you think</a>. </strong></p>
<p><em>Photo: Ken Bohn, San Diego Zoo (<a href="http://newswatch.nationalgeographic.com/2009/08/04/san_diego_panda_birthday_picture/">via National Geographic</a>)</em></p>
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		<title>Google: Panda Update Data Refresh Rolling Out Now</title>
		<link>http://www.webpronews.com/google-panda-update-data-refresh-rolling-out-now-2013-01</link>
		<comments>http://www.webpronews.com/google-panda-update-data-refresh-rolling-out-now-2013-01#comments</comments>
		<pubDate>Tue, 22 Jan 2013 18:54:43 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[SEO]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=212587</guid>
		<description><![CDATA[Google tweeted today that a new data refresh for the Panda update is currently rolling out in English, and that it affects 1.2% of queries. Follow @google A Googler @google New Panda data refresh rolling out today: 1.2% of English &#8230;<br /><a href="http://aj.600z.com/aj/136480/0/cc?z=1"><img src="http://aj.600z.com/aj/136480/0/vc?z=1&dim=105992&kw=&click=" width="615" height="80" border="0"></a>]]></description>
			<content:encoded><![CDATA[<p>Google tweeted today that a new data refresh for the Panda update is currently rolling out in English, and that it affects 1.2% of queries. </p>
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<p><span class="tweet"> New Panda data refresh rolling out today: 1.2% of English queries affected. Background: <a href="http://t.co/EMBEJqGZ" rel="nofollow">http://t.co/EMBEJqGZ</a></span><br/>
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<p>Lately, Google seems to be launching these Panda refreshes at least once a month. There was one in December, a few days before Christmas, and <a href="http://www.webpronews.com/there-was-a-google-panda-update-data-refresh-nine-days-ago-2012-11">two</a> <a href="http://www.webpronews.com/google-panda-update-one-reportedly-happened-on-monday-2012-11">in November</a>.  </p>
<p>Google launched Panda in early 2011, then Penguin in the first quarter of 2012. We&#8217;re still <a href="http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01">waiting to see</a> what (if any) major algorithm update the search engine will implement in 2013. </p>
<p><strong><a href="http://www.webpronews.com/tag/panda">More Panda coverage here</a>. </strong></p>
<p><em>Image: <a href="http://www.pandaexpress.com/">Panda Express</a></em></p>
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		<title>What Will Be Google&#8217;s Panda/Penguin For 2013?</title>
		<link>http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01</link>
		<comments>http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01#comments</comments>
		<pubDate>Thu, 17 Jan 2013 11:00:19 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[algorithm changes]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[Penguin]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=210558</guid>
		<description><![CDATA[Well, here we are ten days into 2013, and Google has been rather quiet in the New Year, at least in terms of new changes to algorithms. Rest assured, however, Google will not slow down behind the scenes in working &#8230;]]></description>
			<content:encoded><![CDATA[<p>Well, here we are ten days into 2013, and Google has been rather quiet in the New Year, at least in terms of new changes to algorithms. Rest assured, however, Google will not slow down behind the scenes in working to improve its algorithms and make its search results better. </p>
<p><strong>What do you want to see Google get better at in 2013? <u><a href="http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01#respond">Let us know in the comments</a></u>. </strong></p>
<p>Of course, Google Search has been in the news early this year, with the Federal Trade Commission having <a href="http://www.webpronews.com/ftc-google-antitrust-investigation-officially-closed-2013-01">settled with the company</a> with only a couple voluntary concessions made by Google with regard to search. Meanwhile, Google still has Europe to deal with on the antitrust front, but regardless of what happens with that, Google is not going to stop tweaking its algorithms and striving for better search results.</p>
<p>The last two years each saw major Google algorithm changes that had sweeping effects on sites all over the web, and they just happened to be named after cute little animals. For those who lost a substantial amount of search visibility (and ultimately web traffic and revenue), there was nothing cute about them. I&#8217;m, of course referring to Panda and Penguin, though there were plenty of other algorithmic changes that didn&#8217;t get nearly the same amount of attention. </p>
<p>In 2011, Google unleashed the <a href="http://www.webpronews.com/tag/panda">Panda update</a>, which continues to get refreshed periodically. I&#8217;m sure you know the story. Content farms were cluttering up the search results  with low quality content, leaving the better stuff buried, and pretty much invisible. Panda was designed to reverse that, or at least establish some guidelines (in addition to Google&#8217;s official webmaster and quality guidelines) on what kind of content Google wants to rank well in its search results. </p>
<p>The Panda update was controversial, and a lot of sites felt they were unfairly hit by it. Either way, Google sent a message loud and clear: Don&#8217;t create poor quality content and expect to rank in search results. Create useful, trustworthy content that users will be happy they found. It&#8217;s not perfect (no algorithm is, as Google will tell you), but it has arguably made a pretty big difference. There are still plenty of issues with Google&#8217;s results, but with regards to quality in depth content vs. thin, non-helpful content, I believe Panda has made a difference. I believe Google believes it has. </p>
<p>As the webmasters and marketers came to grips with Panda, 2011 eventually gave way to 2012, and not foo far into the year (in April, actually), Google launched another huge update with <a href="http://www.webpronews.com/tag/penguin">Penguin</a>. Like Panda, it too was designed to improve the quality of Google&#8217;s search results, but this one wasn&#8217;t as much about content as it was about ways people were beating the system by violating Google&#8217;s Quality Guidelines. </p>
<p>Basically, Penguin was designed to do algorithmically, what Google had been doing manually for years. The penguin had a bloodlust for suspicious link activity, and a low tolerance for any kind of link schemes. </p>
<p>Once again, a lot of webmasters felt that their sites were being penalized unfairly, and even those that accepted their fate worked rigorously at escaping the Penguin&#8217;s clutches, possibly even going overboard in trying to clean up their link profiles, requesting that sites remove links that they would otherwise have liked to have out there, regardless of whether or not they were helping in Google. </p>
<p>Google&#8217;s grip on webmasters was never as abundantly clear as it was in 2012. Not all webmasters (plenty had already found other ways to diversify their web traffic), but for those who have historically relied on Google for traffic, they didn&#8217;t want any links out there that Google may not approve of. The problem was that they were <a href="http://www.webpronews.com/links-are-the-webs-building-blocks-and-fear-of-google-has-them-crumbling-2012-08">getting rid of more</a> than what Google probably <em>did</em> have a problem with.</p>
<p>Eventually, Google launched the <a href="http://www.webpronews.com/will-googles-link-disavow-tool-come-back-to-haunt-webmasters-2012-10">Link Disavow tool</a>, which lets webmasters tell Google specific links to ignore, but some feel this tool is really more of a burden than a blessing, and it&#8217;s still a hoop webmasters have to jump through to make sure they&#8217;re in Google&#8217;s good graces. Of course, Google says most sites shouldn&#8217;t even use the tool. </p>
<p>2012 also saw the transitions of Google Places to Google+ Local and from Google Product Search to the paid Google Shopping model, both of which have had their share of controversy among businesses. </p>
<p>What will Google tackle in 2013? Will we see another huge animal-named algorithm change that affects a large number of webmasters? Regardless of the name, will there be a new update that webmasters have to sweat on a month to month basis. Will mores strategies that have helped for years start working against webmasters? </p>
<p>Google makes over 500 changes to its algorithms every year, and makes changes every day. It&#8217;s been a while since there has been a really big one, and it seems like the big ones usually come in the first quarter of the year or so. We haven&#8217;t even seen Google&#8217;s lists of search quality highlights for the last three months of 2012 yet. </p>
<p>What&#8217;s on the horizon? What do you see in Google&#8217;s search results that need to be improved? What things do you see working that shouldn&#8217;t be? How can Google improve its search results in 2013? <strong><u><a href="http://www.webpronews.com/what-will-be-googles-pandapenguin-for-2013-2013-01#respond">Share your thoughts in the comments</a></u></strong>. </p>
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		<title>There Was A Google Panda Update Data Refresh Nine Days Ago</title>
		<link>http://www.webpronews.com/there-was-a-google-panda-update-data-refresh-nine-days-ago-2012-11</link>
		<comments>http://www.webpronews.com/there-was-a-google-panda-update-data-refresh-nine-days-ago-2012-11#comments</comments>
		<pubDate>Fri, 30 Nov 2012 15:34:55 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[Algorithm Change]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[SEO]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=204861</guid>
		<description><![CDATA[Remember about a week and a half ago when there was supposed to be a Panda refresh coming within the following week or so? It turns out that it happened the next day, so if you&#8217;re still waiting for it, &#8230;]]></description>
			<content:encoded><![CDATA[<p>Remember about a week and a half ago when there was <a href="http://www.webpronews.com/google-panda-update-refresh-coming-in-a-week-or-so-report-2012-11">supposed to be a Panda refresh</a> coming within the following week or so? It turns out that it happened the next day, so if you&#8217;re still waiting for it, you probably got by unscathed. </p>
<p>Search Engine Land is <a href="http://searchengineland.com/confirmed-google-panda-refresh-22-happened-on-november-21st-141098">reporting</a> that it has confirmed with Google that the refresh occurred on November 21, and affected 0.8% of English queries &#8220;to a degree that a regular user might notice&#8221;. </p>
<p>That would be the second known data refresh of the Panda update in November, with one having taken place around November 5. </p>
<p>We&#8217;re now at the end of November, heading into December, which means there are now two full months for which Google hasn&#8217;t released its lists of &#8220;search quality highlights&#8221; and algorithm changes. Lately, they&#8217;ve been doing them two months at a time, so we may be able to expect the latest lists very soon. Then, we can look at the other types of changes Google has been focused on. </p>
<p>More on Panda <a href="http://www.webpronews.com/tag/panda">here</a>. </p>
<p><em>Image: <a href="http://www.sandiegozoo.org/pandacam/">Panda Cam (San Diego Zoo)</a></em></p>
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		<title>Do Your Blog Comments Have Search Ranking Value?</title>
		<link>http://www.webpronews.com/googler-makes-case-for-value-of-blog-comments-to-search-results-2012-11</link>
		<comments>http://www.webpronews.com/googler-makes-case-for-value-of-blog-comments-to-search-results-2012-11#comments</comments>
		<pubDate>Wed, 28 Nov 2012 11:00:29 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[comments]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[John Mueller]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[SEO]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=204017</guid>
		<description><![CDATA[When Google unleashed the Panda update, it waged war on &#8220;thin&#8221; content in its search results. Google wants to provide pages that offer information valuable to searchers, as opposed to content that was hastily thrown together. It&#8217;s easy to hear &#8230;]]></description>
			<content:encoded><![CDATA[<p>When Google unleashed the Panda update, it waged war on &#8220;thin&#8221; content in its search results. Google wants to provide pages that offer information valuable to searchers, as opposed to content that was hastily thrown together. </p>
<p>It&#8217;s easy to hear &#8220;thin&#8221; content, and associate that with content in which there is not a lot of actual content. In other words, you might take this to mean that Google does not like short articles, and would favor a longer article in a case where these two pieces of content are competing for rankings. </p>
<p><strong>Have you seen search ranking success with short content? <u><a href="http://www.webpronews.com/googler-makes-case-for-value-of-blog-comments-to-search-results-2012-11#comments">Let us know in the comments</a></u>. </strong></p>
<p>The fact is, Google may very well favor the longer, more in depth piece, but that does not mean Google will not value a short article. </p>
<p>In <a href="https://productforums.google.com/forum/#!topic/webmasters/pBwxvKPf2gM/discussion">a Google forum thread</a>, a webmaster asked the question: Is short content = thin content?&#8221; As Barry Schwartz at Search Engine Roundtable <a href="http://www.seroundtable.com/google-short-content-15995.html">points out</a>, Google Webmaster Trends Analyst John Mueller, weighed in on the discussion. Here&#8217;s what he said: </p>
<p><em>&#8220;Rest assured, Googlebot doesn&#8217;t just count words on a page or in an article, even short articles can be very useful &#038; compelling to users. For example, we also crawl and index tweets, which are at most 140 characters long. That said, if you have users who love your site and engage with it regularly<strong>, allowing them to share comments on your articles is also a great way to bring additional information onto the page. Sometimes a short article can trigger a longer discussion &#8212; and sometimes users are looking for discussions like that in search. </strong>That said, one recommendation that I&#8217;d like to add is to make sure that your content is really unique (not just rewritten, autogenerated, etc) and of high-quality.&#8221;</em> Emphasis added.</p>
<p>Last year, <a href="http://www.webpronews.com/google-panda-update-advice-2011-05">Google shared a set of questions</a> that one could ask himself when assessing the quality of a page or an article. One of these was: &#8220;Is this article written by an expert or enthusiast who knows the topic well, or is it more shallow in nature?&#8221;</p>
<p>Shallow does not mean short. The beginning part of that, which talks about experts and enthusiasts, is likely to have a stronger bearing on how Google views the content. Who you are matters to Google. That&#8217;s why they&#8217;re looking to <a href="http://www.webpronews.com/the-google-1-button-has-no-direct-effect-on-rankings-2012-10">push authorship as a stronger signal in the future</a>. Length of a specific piece of content is not necessarily as much of a factor. </p>
<p>Still, that doesn&#8217;t mean it&#8217;s <em>not</em> a factor. If one piece of content is simply more informative, which it may very well be if it is longer, it might still be the better result, regardless of who you are. There&#8217;s still something to be said for a well researched, insightful article. Google is not looking to ignore this kind of content, by any means. </p>
<p>Another of Google&#8217;s questions is: &#8220;Does the article describe both sides of a story?&#8221; Sometimes, it may take more text to answer that with a yes. </p>
<p>One thing about Mueller&#8217;s comments that stikes me as interesting is the part about comments. In <a href="http://www.webpronews.com/seo-user-experience-2011-10">an article</a> a while back, we looked at the SEO value of comments. Blogger Michael Gray, who turned off his comments several years ago, told us, “It was one of the best decisions I made, and regret not doing it sooner.&#8221; </p>
<p>“Does Google take a look at factors like time on site and bounce rate?&#8221; he said at the time. &#8220;IMHO yes, but you should be looking to increase those with good information, and solid actionable content, not comments. The biggest effect comments have is giving Google a date to show in the SERP’s. This is a huge factor who’s importance can’t be unstated. If I’m looking for how to fix the mouse on my computer, or what dress Angelina Jolie wore to an awards show, having the date show up in the SERP has a lot of value for the user. If I’m looking to learn how to structure a website, the date plays almost no role. The author’s expertise and understanding of information architecture trumps the date.”</p>
<p>It should be noted that Google&#8217;s Matt Cutts has <a href="https://twitter.com/dannysullivan/status/210114826473717760">reportedly</a> said since then that Google doesn&#8217;t use bounce rate. </p>
<p>Interestingly, according to Shoemoney blogger Jeremy Schoemaker, who we also spoke with for that particular article, a Google engineer said at the time that, if anything, comments were diluting the quality score of a page, by possibly diluting overall keyword density. There is also the possibility that the few comments that go through that are clearly spam, could send poor quality signals to Google. </p>
<p>“So he said he did not see a positive to leaving indexable comments on my site,” Schoemaker told us at the time. </p>
<p>But now, here we have Mueller talking up the value of comments. </p>
<p>Of course, it&#8217;s not as if this is the first time that <a href="http://www.webpronews.com/seo-dos-and-donts-according-to-google-mixed-signals-2012-03">Google has sent mixed signals</a> to webmasters and content creators. But on the other hand, you can&#8217;t really hold every person at Google, speaking candidly, accountable for knowledge about every aspect of how Google works, especially when it comes to the search algorithm &#8211; Google&#8217;s secret recipe. </p>
<p>It stands to reason that Google would look at comments in similar fashion to how it views the rest of the content on the page. Some comments are obviously of higher quality than others, even if the spammy ones have been cut out. But if quality is there, Google may just see how such comments could be valuable to users. </p>
<p>Perhaps webmasters should be more stingy with the comments they allow, but then you&#8217;re talking about censorship, which is not necessarily a path you want to travel. </p>
<p><strong>Do you think comments on your blog have helped or hurt you in search? Do you believe they&#8217;ve had any effect at all? Should Google take them into consideration? <u><a href="http://www.webpronews.com/googler-makes-case-for-value-of-blog-comments-to-search-results-2012-11#respond">Tell us what you think</a></u>. </strong></p>
]]></content:encoded>
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		<item>
		<title>Google Panda Update Refresh Coming In A Week Or So [Report]</title>
		<link>http://www.webpronews.com/google-panda-update-refresh-coming-in-a-week-or-so-report-2012-11</link>
		<comments>http://www.webpronews.com/google-panda-update-refresh-coming-in-a-week-or-so-report-2012-11#comments</comments>
		<pubDate>Tue, 20 Nov 2012 14:21:24 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[algorithm changes]]></category>
		<category><![CDATA[Data Refresh]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[SEO]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=203474</guid>
		<description><![CDATA[Earlier this month, Google announced that it rolled out a data refresh for the Panda update. It sounds like they&#8217;re getting ready to launch another one in about a week (or maybe a bit longer). Barry Schwartz at Search Engine &#8230;]]></description>
			<content:encoded><![CDATA[<p>Earlier this month, Google announced that it <a href="http://www.webpronews.com/google-panda-update-one-reportedly-happened-on-monday-2012-11">rolled out a data refresh for the Panda update</a>. It sounds like they&#8217;re getting ready to launch another one in about a week (or maybe a bit longer). </p>
<p>Barry Schwartz at Search Engine Roundtable was talking about a Panda refresh possibly having occurred over the weekend. That didn&#8217;t happen, but Google did reportedly <a href="http://www.seroundtable.com/google-update-brew-15976.html">tell him</a> that they&#8217;re planning on launching one in seven to ten days, &#8220;if all goes on according to plan.&#8221;</p>
<p>It&#8217;s not very often that we hear about Panda updates or data refreshes before Google actually launches them (maybe they should start pre-announcing them more often). Webmasters can at least brace themselves and/or get prepared for a new one. </p>
<p>Of course, at this point, you&#8217;ve had plenty of time to prepare. You know what Panda does, and what its purpose is. If you&#8217;re putting out the kind of content that Google has discussed repeatedly (with regards to how it views low quality), and you&#8217;ve managed to escape thus far, it&#8217;s probably only a matter of time before the Panda update gets you. You should be taking quality seriously if you want to continue to perform well in Google search results. </p>
<p>Frankly, you&#8217;ve got enough other battles to deal with in that war, even if you do produce high quality content. If your&#8217;e not producing Panda-friendly content to begin with, the odds are not stacked in your favor. </p>
<p>For more on all things Panda, peruse our coverage <a href="http://www.webpronews.com/tag/panda">here</a>. </p>
]]></content:encoded>
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		<title>This Google Panda &#8220;Victim&#8221; Just Posted Record Revenue And Profitability</title>
		<link>http://www.webpronews.com/demand-media-posts-record-revenue-and-profitability-2012-11</link>
		<comments>http://www.webpronews.com/demand-media-posts-record-revenue-and-profitability-2012-11#comments</comments>
		<pubDate>Wed, 07 Nov 2012 11:00:28 +0000</pubDate>
		<dc:creator>Chris Crum</dc:creator>
				<category><![CDATA[Search]]></category>
		<category><![CDATA[Demand Media]]></category>
		<category><![CDATA[Earnings]]></category>
		<category><![CDATA[ehow]]></category>
		<category><![CDATA[Financial]]></category>
		<category><![CDATA[Panda]]></category>
		<category><![CDATA[Richard Rosenblatt]]></category>
		<category><![CDATA[SEO]]></category>

		<guid isPermaLink="false">http://www.webpronews.com/?p=201106</guid>
		<description><![CDATA[The Google Panda update, originally unleashed in early 2011, continues to take its toll on the Internet, for better or for worse (most would probably say better). While there are frequently rumors about new updates or refreshes to Panda, the &#8230;]]></description>
			<content:encoded><![CDATA[<p>The <a href="http://www.webpronews.com/tag/panda">Google Panda update</a>, originally unleashed in early 2011, continues to take its toll on the Internet, for better or for worse (most would probably say better). While there are frequently rumors about new updates or refreshes to Panda, the last one that we&#8217;ve had official confirmation on was only last month (Update: Speak of the devil. <a href="http://www.webpronews.com/google-panda-update-one-reportedly-happened-on-monday-2012-11">Google just confirmed one is rolling out</a>). Panda will continue to patrol Google&#8217;s search results for the foreseeable future, so webmasters who want to attract visibility in them should pay attention to the <a href="http://www.webpronews.com/google-panda-update-advice-2011-05">kinds of things Panda likes (or doesn&#8217;t like)</a>. </p>
<p><strong>Have you been hit by the Panda update at any time since it was first launched? Were you able to recover? <u><a href="http://www.webpronews.com/demand-media-posts-record-revenue-and-profitability-2012-11#comments">Share your story</a></u>. </strong></p>
<p>Demand Media paid attention when its major content property eHow fell victim to the update last year. Now, the company has released its quarterly earnings report to record revenue and popularity. If that&#8217;s not a Panda recovery story, I don&#8217;t know what is. It appears to be safe to say that Demand Media has conquered Panda, and is flourishing. </p>
<p>Revenue was up 20% year-over-year at $98.1 million, with $3.2 million profit (compared to a $4.1 million loss for the same quarter last year). </p>
<p>CEO Richard Rosenblatt said, &#8220;Demand Media&#8217;s audience surpassed 125 million monthly unique visitors during the third quarter, as we delivered record revenue and profitability. For the first time in over a year, we increased our content investments for two consecutive quarters as we expanded the distribution of our content platform. We remain focused on our long-term growth initiatives, which include continuing to increase our investment in core content as well as in opportunities across mobile, video, international, and new generic Top Level Domains.&#8221;</p>
<p>Now, to be clear, Demand Media has revenue sources that have little to do with Panda. For one, the company runs a major registrar business. However, the content side of things, and even eHow itself, continue to improve in performance. Make no mistake. Demand Media has come back from the Panda update. </p>
<p>The company&#8217;s owned and operated page views increased 33% year-over-year, driven primarily by strong traffic growth on eHow.com and LiveStrong.com, the company says. </p>
<p>eHow has historically been the poster child of the Panda update, you might say. Some believe Demand Media was one of the major drivers in Google even creating the update. If you can remember back before the update was first unleashed, there was a lot of discussion in the media and Blogosphere about content farms. eHow was often cited (if not the <em>most</em> often cited) as falling into this category. In fact, many were shocked when Google finally pushed the update, and eHow appeared to escape unscathed. </p>
<p>That did not last, however. As Google continued to push out more updates for Panda, Demand Media eventually felt the effects, and by then it was a public company, and had to answer to investors. It deleted tons of articles. At first <a href="http://www.webpronews.com/panda-ehow-2011-08">the number it gave was 300,000</a>. In May, Demand Media revealed that it had <a href="http://www.webpronews.com/demand-media-everything-looking-good-for-ehow-after-deleting-600k-articles-2012-05">deleted as many as 600,000 articles</a>. It&#8217;s unclear whether they&#8217;ve deleted more since then. They didn&#8217;t just delete articles they found to be of low quality though. They also sent numerous articles through a more rigorous editing process, and added a feedback tool to all content so users could indicate any problems they come across. They also <a href="http://www.webpronews.com/demand-media-writers-2011-10">got rid of a lot of non-professional writers</a>, and added more &#8220;expert&#8221; and celebrity curators. Essentially, eHow got a big boost in the quality control department. </p>
<p>Since the clean-up initiative, the company has hardly looked back. eHow has increased its audience steadily. Now, eHow is ranked as the #13 site in the U.S. according to comScore. That&#8217;s up even from the previous quarter, when it was ranked #16. ehow had over 100 million unique monthly visitors worldwide for the 11th consecutive quarter, according to Rosenblatt, who cited internal numbers. </p>
<p>Demand Media&#8217;s properties are seeing a billion worldwide monthly uniques, which is a record for the company. Demand has been so pleased with the progress it has made in the content area, the company <a href="http://www.webpronews.com/demand-media-has-a-new-president-reports-q2-earnings-2012-08">promoted Michael Blend</a>, who had been leading its content and media services, to President and COO earlier this year. </p>
<p>Rosenblatt discussed the progress during the company&#8217;s earnings conference call, attributing the success largely to articles, videos and mobile apps with quality content and engaged communities. “All in all we really raised our game,&#8221; he said, noting that they have expanded the diversity of articles and added assignment curators. </p>
<p>He also noted that almost half of the company&#8217;s articles are being published to its network of content partners.</p>
<p>One important thing to note about all of this, with regards to the Panda update and search referrals, is that this whole quality control initiative has greatly helped the company to gain traffic from social media (especially Facebook). I think it&#8217;s safe to say that a decreased dependence on Google is really the cornerstone for a true Panda recovery. That way, if you do get hit by Panda at a later time, it doesn&#8217;t kill your traffic entirely. Of course, if you&#8217;re producing the kind of content that people want to share on social networks, it&#8217;s highly unlikely that you&#8217;re doing things that Panda wouldn&#8217;t like.</p>
<p>If you still haven&#8217;t taken the time to <a href="http://www.webpronews.com/google-panda-update-advice-2011-05">assess the quality of your site&#8217;s content</a>. You may want to do so. The next Panda refresh is likely just around the corner. </p>
<p><a name="more"></a><strong>What do you think of Demand Media&#8217;s efforts in bouncing back from Panda? <u><a href="http://www.webpronews.com/demand-media-posts-record-revenue-and-profitability-2012-11#comments">Let us know in the comments</a></u>. </strong></p>
<p><strong>Here&#8217;s Demand Media&#8217;s earnings release in its entirety: </strong></p>
<p><em>SANTA MONICA, Calif.&#8211;(BUSINESS WIRE)&#8211;Nov. 5, 2012&#8211; Demand Media, Inc. (NYSE: DMD), a leading digital media company, today reported financial results for the quarter ended September 30, 2012.</p>
<p>&#8220;Demand Media&#8217;s audience surpassed 125 million monthly unique visitors during the third quarter, as we delivered record revenue and profitability,” said Richard Rosenblatt, Chairman and CEO ofDemand Media. “For the first time in over a year, we increased our content investments for two consecutive quarters as we expanded the distribution of our content platform. We remain focused on our long-term growth initiatives, which include continuing to increase our investment in core content as well as in opportunities across mobile, video, international, and new generic Top Level Domains.&#8221;</p>
<table cellspacing="0">
<tbody>
<tr>
<td colspan="19"><strong>Financial Summary</strong></td>
<td></td>
</tr>
<tr>
<td colspan="19"><strong>In millions, except per share amounts</strong></td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="15"><strong>Three months ended September 30,</strong></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"><strong>Change</strong></td>
</tr>
<tr>
<td>Total Revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>81.5</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>98.1</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>20</td>
<td>%</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>Content &amp; Media Revenue ex-TAC<sup>(1)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>47.4</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>58.8</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>24</td>
<td>%</td>
</tr>
<tr>
<td>Registrar Revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">30.7</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">34.0</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>11</td>
<td>%</td>
</tr>
<tr>
<td>Total Revenue ex-TAC<sup>(1)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>78.1</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>92.8</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>19</td>
<td>%</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>Income (loss) from Operations</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(3.3</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>4.5</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>NA</td>
<td></td>
</tr>
<tr>
<td>Adjusted EBITDA<sup>(1)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>21.7</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>27.6</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>28</td>
<td>%</td>
</tr>
<tr>
<td>Net income (loss)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(4.1</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3.2</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>NA</td>
<td></td>
</tr>
<tr>
<td>Adjusted net income<sup>(1)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>5.0</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>9.8</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>97</td>
<td>%</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>EPS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(0.05</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.04</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>NA</td>
<td></td>
</tr>
<tr>
<td>Adjusted EPS<sup>(1)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.06</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.11</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>83</td>
<td>%</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>Cash Flow from Operations</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>22.1</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>24.6</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>12</td>
<td>%</td>
</tr>
<tr>
<td>Free Cash Flow<sup>(1)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>6.0</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>16.6</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>177</td>
<td>%</td>
</tr>
</tbody>
</table>
<table cellspacing="0">
<tbody>
<tr>
<td><sup>(1)</sup></td>
<td></td>
<td>These non-GAAP financial measures are described below and reconciled to their comparable GAAP measures in the accompanying tables. Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. Reconciliations for both measures are available on the investor relations section of the Company&#8217;s website.</td>
</tr>
</tbody>
</table>
<p><strong>Q3 2012 Financial Summary:</strong></p>
<ul>
<li>Content &amp; Media Revenue ex-TAC grew 24% year-over-year, due primarily to strong page view growth on the Company&#8217;s owned &amp; operated properties, as well as 50% growth in network RPMs, reflecting higher revenue from our growing network of content partners. Sequentially, Content &amp; Media Revenue ex-TAC increased 6% compared to the second quarter of 2012, driven primarily by network RPM growth.</li>
<li>Registrar revenue grew 11% year-over-year and increased 2% compared to the second quarter of 2012. Revenue growth was driven by an increase in number of domains on our platform, due primarily to growth from new partners.</li>
<li>Free Cash Flow was $16.6 million compared to $6.0 million a year ago, reflecting growth in cash flow from operations and a year-over-year reduction in intangible asset content spend, primarily on eHow. Sequentially, investment in intangible assets increased 36% compared to the second quarter of 2012.</li>
</ul>
<p>“We continued our 2012 financial momentum in Q3 with record adjusted EBITDA and strong free cash flow growth, while increasing our investment in content sequentially,” said CFO Mel Tang. &#8220;We are raising our 2012 financial guidance and remain focused on driving Demand Media&#8217;s long-term growth through continued disciplined investments.&#8221;</p>
<p><strong>Q3 2012 Business Highlights</strong><sup>(1)</sup><strong>:</strong></p>
<ul>
<li>On a consolidated basis, Demand Media ranked as a top 20 US web property throughout the first nine months of 2012, ranking as #13 in September 2012,<sup> </sup>up from #17 in January 2012. Demand Media&#8217;s web properties reached over 125 million unique users worldwide in September 2012.</li>
<li>On a standalone basis, <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.ehow.com%2F&amp;esheet=50465098&amp;lan=en-US&amp;anchor=eHow.com&amp;index=1&amp;md5=c8aa3c9d94bbd3b422cf523ee758f5a4">eHow.com</a> ranked as the #13 website in the US in September 2012.</li>
<li><a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.livestrong.com%2F&amp;esheet=50465098&amp;lan=en-US&amp;anchor=LIVESTRONG.COM%2FeHow+Health&amp;index=2&amp;md5=2619f38603a0293addef9de2da79106a">LIVE</a> ranked as the #3 Health property in the US in September 2012.</li>
<li><a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.cracked.com%2F&amp;esheet=50465098&amp;lan=en-US&amp;anchor=Cracked.com&amp;index=3&amp;md5=d98efb77fa2fb7a8b9974bdf2dea64fc">Cracked.com</a> maintained its ranking as the most visited humor site in the US throughout the first half of 2012, with more time spent on the site than any other humor website. The Cracked Network, which includes IndieClick, ranked as the #1 Humor property in the US in September 2012.</li>
</ul>
<p><sup>(1)</sup> Source: comScore.</p>
<p><strong>Operating Metrics:</strong></p>
<table cellspacing="0">
<tbody>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="15"><strong>Three months ended</strong><br />
<strong>September 30,</strong></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"><strong>%</strong><br />
<strong>Change</strong></td>
</tr>
<tr>
<td><strong>Content &amp; Media Metrics:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr>
<td><em>Owned and operated</em></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr>
<td>Page views<sup>(1)</sup> (in millions)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,527</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">3,363</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>33</td>
<td>%</td>
</tr>
<tr>
<td>RPM<sup>(2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>15.16</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>13.49</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>(11</td>
<td>)%</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr>
<td><em>Network of customer websites</em></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr>
<td>Page views<sup>(1)</sup> (in millions)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">5,046</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4,965</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>(2</td>
<td>)%</td>
</tr>
<tr>
<td>RPM<sup>(2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>2.47</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3.78</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>53</td>
<td>%</td>
</tr>
<tr>
<td>RPM ex-TAC<sup>(3)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1.80</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>2.70</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>50</td>
<td>%</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr>
<td><strong>Registrar Metrics:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr>
<td>End of Period # of Domains<sup>(4)</sup> (in millions)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">12.2</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">13.7</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>12</td>
<td>%</td>
</tr>
<tr>
<td>Average Revenue per Domain<sup>(5)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>10.20</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>9.99</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>(2</td>
<td>)%</td>
</tr>
</tbody>
</table>
<p>____________________</p>
<table cellspacing="0">
<tbody>
<tr>
<td>(1)</td>
<td></td>
<td>Page views represent the total number of web pages viewed across (a) our owned and operated websites and/or (b) our network of customer websites, to the extent that the viewed web pages of our customers host the Company&#8217;s content, social media and/or monetization services.</td>
</tr>
<tr>
<td>(2)</td>
<td></td>
<td>RPM is defined as Content &amp; Media revenue per one thousand page views.</td>
</tr>
<tr>
<td>(3)</td>
<td></td>
<td>RPM ex-TAC is defined as Content &amp; Media Revenue ex-TAC per one thousand page views.</td>
</tr>
<tr>
<td>(4)</td>
<td></td>
<td>Domain is defined as an individual domain name paid for by a third-party customer where the domain name is managed through our Registrar service offering.</td>
</tr>
<tr>
<td>(5)</td>
<td></td>
<td>Average revenue per domain is calculated by dividing Registrar revenue for a period by the average number of domains registered in that period. Average revenue per domain for partial year periods is annualized.</td>
</tr>
<tr>
<td colspan="3">Beginning July 1, 2011, the number of net new domains has been adjusted to include only new registered domains added to our platform for which we have recognized revenue. Excluding the impact of this change, average revenue per domain during the three months ended September 30, 2012 would have increased 1% compared to the corresponding prior-year periods.</td>
</tr>
</tbody>
</table>
<p><strong>Q3 2012 Operating Metrics:</strong></p>
<ul>
<li>Owned &amp; Operated page views increased 33% year-over-year, driven primarily by strong traffic growth on eHow.com and LIVE<strong>STRONG</strong>.COM. Owned &amp; Operated RPMs decreased 11% year-over-year, due primarily to page view growth from lower RPM properties and traffic sources, including growth in mobile traffic.</li>
<li>Network page views decreased 2% year-over-year to 5.0 billion, due primarily to lower traffic from our social media partners. Network RPM ex-TAC increased 50% year-over-year, reflecting higher revenue from our growing network of content partners, primarily YouTube.</li>
<li>End of period domains increased 12% year-over-year to 13.7 million, driven primarily by the addition of higher volume customers and continued growth from existing resellers, with average revenue per domain decreasing by 2%, due to a mix shift to higher volume resellers.</li>
</ul>
<p><strong>Business Outlook</strong></p>
<p><em>The following forward-looking information includes certain projections made by management as of the date of this press release. The Company does not intend to revise or update this information, except as required by law, and may not provide this type of information in the future. Due to a variety of factors, actual results may differ significantly from those projected.</em> <em>The factors that may affect results include, without limitation, the factors referenced later in this announcement under the caption “Cautionary Information Regarding Forward-Looking Statements.” These and other factors are discussed in more detail in the Company&#8217;s filings with the Securities and Exchange Commission.</em></p>
<p>Excluding up to $3 million of 2012 expenses that the Company expects to incur related to the formation of its generic Top Level Domain (&#8220;gTLD&#8221;) initiative, the Company&#8217;s guidance for the fourth quarter and fiscal year ending December 31, 2012 is as follows:</p>
<p><strong>Fourth Quarter 2012</strong></p>
<ul>
<li>Revenue in the range of $101.5 &#8211; $103.5 million</li>
<li>Revenue ex-TAC in the range of $95.5 &#8211; $97.5 million</li>
<li>Adjusted EBITDA in the range of $27.5 &#8211; $28.5 million</li>
<li>Adjusted EPS in the range of $0.10 &#8211; $0.11 per share</li>
<li>Weighted average diluted shares of 89.5 &#8211; 90.5 million</li>
</ul>
<p><strong>Full Year 2012</strong></p>
<ul>
<li>Revenue in the range of $378.9 &#8211; $380.9 million</li>
<li>Revenue ex-TAC in the range of $359.8 &#8211; $361.8 million</li>
<li>Adjusted EBITDA in the range of $101.6 &#8211; $102.6 million</li>
<li>Adjusted EPS in the range of $0.37 &#8211; $0.38 per share</li>
<li>Weighted average diluted shares of 86.5 &#8211; 87.5 million</li>
</ul>
<p><strong>Conference Call and Webcast Information</strong></p>
<p>Demand Media will host a corresponding conference call and live webcast at 5:00 p.m. Eastern timetoday. To access the conference call, dial 877.565.1268<strong> </strong>(for domestic participants) or 937.999.3108<strong> </strong>(for international participants). The conference ID is 48753341. In order to participate on the live call, it is recommended that analysts should dial-in at least 10-minutes prior to the commencement of the call. A live webcast also will be available on the Investor Relations section of the Company’s corporate website at <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fir.demandmedia.com&amp;esheet=50465098&amp;lan=en-US&amp;anchor=http%3A%2F%2Fir.demandmedia.com&amp;index=4&amp;md5=d11dfdb7b07480b15cf47b139de82b88">http://ir.demandmedia.com</a> and via replay beginning approximately two hours after the completion of the call.</p>
<p><strong>About Non-GAAP Financial Measures</strong></p>
<p>To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use certain non-GAAP financial measures described below. The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation of Non-GAAP Measures to Unaudited Consolidated Statements of Operations” included in this release.</p>
<p>Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. While the dollar value of each measure is the same, a comparison of the historical reconciliation of both measures is provided in our supplemental financial schedules posted on the investor relations section of our corporate website at <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fir.demandmedia.com&amp;esheet=50465098&amp;lan=en-US&amp;anchor=http%3A%2F%2Fir.demandmedia.com&amp;index=5&amp;md5=830beddab1cd8b004c43576f02841dbc">http://ir.demandmedia.com</a>. The non-GAAP financial measures presented in this release are the primary measures used by the Company&#8217;s management and board of directors to understand and evaluate its financial performance and operating trends, including period to period comparisons, to prepare and approve its annual budget and to develop short and long term operational plans. Additionally, Adjusted EBITDA is the primary measure used by the compensation committee of the Company&#8217;s board of directors to establish the funding targets for and fund its annual bonus pool for the Company&#8217;s employees and executives. We believe our presented non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) management frequently uses them in its discussions with investors, commercial bankers, securities analysts and other users of its financial statements.</p>
<p><strong>Revenue ex-TAC</strong> is defined by the Company as GAAP revenue less traffic acquisition costs (“TAC”). TAC comprises the portion of Content &amp; Media GAAP revenue shared with the Company&#8217;s network customers. Management believes that Revenue ex-TAC is a meaningful measure of operating performance because it is frequently used for internal managerial purposes and helps facilitate a more complete period-to-period understanding of factors and trends affecting the Company&#8217;s underlying revenue performance of its Content &amp; Media service offering.</p>
<p><strong>Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”)</strong> is defined by the Company as net income (loss) before income tax expense, other income (expense), interest expense (income), depreciation, amortization, stock-based compensation, as well as the financial impact of acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, and any gains or losses on certain asset sales or dispositions. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these expenses to be indicative of the Company&#8217;s ongoing operating results or future outlook.</p>
<p>Management believes that these non-GAAP financial measures reflect the Company&#8217;s business in a manner that allows for meaningful period to period comparisons and analysis of trends. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period to period comparisons of the Company&#8217;s underlying recurring revenue and operating costs, which is focused more closely on the current costs necessary to utilize previously acquired long-lived assets. In addition, management believes that it can be useful to exclude certain non-cash charges because the amount of such expenses is the result of long-term investment decisions in previous periods rather than day-to-day operating decisions. For example, due to the long-lived nature of a majority of its media content, the revenue generated by the Company&#8217;s media content assets in a given period bears little relationship to the amount of its investment in media content in that same period. Accordingly, management believes that content acquisition costs represent a discretionary long-term capital investment decision undertaken at a point in time. This investment decision is clearly distinguishable from other ongoing business activities, and its discretionary nature and long-term impact differentiate it from specific period transactions, decisions regarding day-to-day operations, and activities that would have an immediate impact on operating or financial performance if materially changed, deferred or terminated.</p>
<p><strong>Adjusted Earnings Per Share </strong>is defined by the Company as Adjusted Net Income divided by the weighted average number of shares outstanding. <strong>Adjusted Net Income</strong> is defined by the Company as net income (loss) before the effect of stock-based compensation, amortization of intangible assets acquired via business combinations, accelerated amortization of intangible assets removed from service, acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, and any gains or losses on certain asset sales or dispositions, and is calculated using the application of a normalized effective tax rate. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these expenses to be indicative of the Company&#8217;s ongoing operating results or future outlook.</p>
<p>Management believes that Adjusted Net Income and Adjusted Earnings Per Share provide investors with additional useful information to measure the Company&#8217;s underlying financial performance, particularly from period to period, because these measures are exclusive of certain non-cash expenses not directly related to the operation of its ongoing business (such as amortization of intangible assets acquired via business combinations, as well as certain other non-cash expenses such as purchase accounting adjustments and stock-based compensation) and include a normalized effective tax rate based on the Company&#8217;s statutory tax rate.</p>
<p><strong>Discretionary Free Cash Flow</strong> is defined by the Company as net cash provided by operating activities excluding cash outflows from acquisition and realignment activities, and the formation expenses directly related to its gTLD initiative, less capital expenditures to acquire property and equipment. <strong>Free Cash Flow</strong> is defined by the Company as <strong>Discretionary Free Cash Flow</strong> less investments in intangible assets and is not impacted by gTLD application payments, which were$18.1 million in Q2 2012. Management believes that Discretionary Free Cash Flow and Free Cash Flow provide investors with additional useful information to measure operating liquidity because they reflect the Company&#8217;s underlying cash flows from recurring operating activities after investing in capital assets and intangible assets. These measures are used by management, and may also be useful for investors, to assess the Company&#8217;s ability to generate cash flow for a variety of strategic opportunities, including reinvestment in the business, pursuing new business opportunities, potential acquisitions, payment of dividends and share repurchases.</p>
<p>The use of these non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense, or cash flows that affect the Company&#8217;s operations. An additional limitation of these non-GAAP financial measures is that they do not have standardized meanings, and therefore other companies may use the same or similarly named measures but exclude different items or use different computations. Management compensates for these limitations by reconciling these non-GAAP financial measures to their most comparable GAAP financial measures within its financial press releases. Non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore comparability may be limited. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The accompanying tables have more details on the GAAP financial measures and the related reconciliations.</p>
<p><strong>About Demand Media</strong></p>
<p>Demand Media, Inc. (NYSE: DMD) is a leading digital media company that informs and entertains one of the internet&#8217;s largest audiences, helps advertisers find innovative ways to engage with their customers and enables publishers to expand their online presence. Headquartered in Santa Monica, CA, Demand Media has offices in North America, South America and Europe. For more information about Demand Media, please visit <a href="http://www.demandmedia.com/">www.demandmedia.com</a></p>
<p><strong>Cautionary Information Regarding Forward-Looking Statements</strong></p>
<p><em>This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended.</em> <em>These forward-looking statements involve risks and uncertainties regarding the Company&#8217;s future financial performance, and are based on current expectations, estimates and projections about our industry, financial condition, operating performance and results of operations, including certain assumptions related thereto.</em> <em>Statements containing words such as “guidance,” “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” and “estimate” or similar expressions constitute forward-looking statements.</em> <em>Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance. Potential risks and uncertainties include, among others: changes in the methodologies of internet search engines, including ongoing algorithmic changes made by Google to its search results as well as possible future changes, and the impact such changes may have on page view growth and driving search related traffic to our owned and operated websites and the websites of our network customers; changes in our content creation and distribution platform, including the possible repurposing of content to alternate distribution channels, reduced investments in intangible assets or the sale or removal of content; our ability to successfully launch, produce and monetize new content formats; the inherent challenges of estimating the overall impact on page views and search driven traffic to our owned and operated websites based on the data available to us as internet search engines continue to make adjustments to their search algorithms; our ability to compete with new or existing competitors; our ability to maintain or increase our advertising revenue; our ability to continue to drive and grow traffic to our owned and operated websites and the websites of our network customers; our ability to effectively monetize our portfolio of content; our dependence on material agreements with a specific business partner for a significant portion of our revenue; future internal rates of return on content investment and our decision to invest in different types of content in the future, including premium video and other formats of text content; our ability to attract and retain freelance creative professionals; changes in our level of investment in media content intangibles; the effects of changes or shifts in internet marketing expenditures, including from text to video content as well as from desktop to mobile content; the effects of shifting consumption of media content from desktop to mobile; the effects of seasonality on traffic to our owned and operated websites and the websites of our network customers; our ability to continue to add partners to our registrar platform on competitive terms; our ability to successfully pursue and implement our gTLD initiative; changes in stock-based compensation; changes in amortization or depreciation expense due to a variety of factors; potential write downs, reserves against or impairment of assets including receivables, goodwill, intangibles (including media content) or other assets; changes in tax laws, our business or other factors that would impact anticipated tax benefits or expenses; our ability to successfully identify, consummate and integrate acquisitions; our ability to retain key customers and key personnel; risks associated with litigation; the impact of governmental regulation; and the effects of discontinuing or discontinued business operations.</em> <em>From time to time, we may consider acquisitions or divestitures that, if consummated, could be material.</em> <em>Any forward-looking statements regarding financial metrics are based upon the assumption that no such acquisition or divestiture is consummated during the relevant periods.</em> <em>If an acquisition or divestiture were consummated, actual results could differ materially from any forward-looking statements.</em> <em>More information about potential risk factors that could affect our operating and financial results are contained in our annual report on Form 10-K for the fiscal year ending December 31, 2011 filed with the Securities and Exchange Commission(</em><em><a href="http://www.sec.gov/">http://www.sec.gov</a></em><em>) on February 24, 2012, and as such risk factors may be updated in our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, including, without limitation, information under the captions “Risk Factors” and “Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations.”</em></p>
<p><em>Furthermore, as discussed above, the Company does not intend to revise or update the information set forth in this press release, except as required by law, and may not provide this type of information in the future.</em></p>
<table cellspacing="0">
<tbody>
<tr>
<td colspan="29"><strong>Demand Media, Inc. and Subsidiaries</strong></p>
<p>Unaudited Condensed Consolidated Statements of Operations</p>
<p>(In thousands, except per share amounts)</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"><strong>Three months ended September 30,</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"><strong>Nine months ended September 30,</strong></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
</tr>
<tr>
<td>Revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>81,473</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>98,147</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>240,451</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>277,436</td>
<td></td>
</tr>
<tr>
<td>Operating expenses</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Service costs (exclusive of amortization of intangible assets shown separately below) <sup>(1) (2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">40,109</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">46,524</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">115,632</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">132,153</td>
<td></td>
</tr>
<tr>
<td>Sales and marketing <sup>(1) (2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">9,200</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">11,625</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">28,069</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">33,678</td>
<td></td>
</tr>
<tr>
<td>Product development <sup>(1) (2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">9,791</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">10,278</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">28,684</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">30,989</td>
<td></td>
</tr>
<tr>
<td>General and administrative <sup>(1) (2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">14,837</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">15,705</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">45,648</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">46,854</td>
<td></td>
</tr>
<tr>
<td>Amortization of intangible assets</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">10,828</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">9,501</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">30,781</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">31,216</td>
<td></td>
</tr>
<tr>
<td>Total operating expenses</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">84,765</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">93,633</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">248,814</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">274,890</td>
<td></td>
</tr>
<tr>
<td>Income (loss) from operations</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,292</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4,514</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(8,363</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,546</td>
<td></td>
</tr>
<tr>
<td>Other income (expense)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Interest income</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">5</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">9</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">52</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">34</td>
<td></td>
</tr>
<tr>
<td>Interest expense</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(385</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(155</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(710</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(465</td>
<td>)</td>
</tr>
<tr>
<td>Other income (expense), net</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(79</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(13</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(338</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(77</td>
<td>)</td>
</tr>
<tr>
<td>Total other expense</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(459</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(159</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(996</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(508</td>
<td>)</td>
</tr>
<tr>
<td>Income (loss) before income taxes</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,751</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4,355</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(9,359</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,038</td>
<td></td>
</tr>
<tr>
<td>Income tax (expense) benefit</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(394</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(1,180</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(2,739</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(611</td>
<td>)</td>
</tr>
<tr>
<td>Net income (loss)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(4,145</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3,175</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(12,098</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,427</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><sup>(1)</sup> Stock-based compensation expense included in the line items above:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Service costs</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>757</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>672</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,341</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>2,141</td>
<td></td>
</tr>
<tr>
<td>Sales and marketing</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,405</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,400</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">3,441</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4,521</td>
<td></td>
</tr>
<tr>
<td>Product development</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,403</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,396</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">3,649</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">5,169</td>
<td></td>
</tr>
<tr>
<td>General and administrative</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4,190</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4,578</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">13,671</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">12,155</td>
<td></td>
</tr>
<tr>
<td>Total stock-based compensation expense</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>7,755</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>8,046</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>22,102</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>23,986</td>
<td></td>
</tr>
<tr>
<td><sup>(2)</sup> Depreciation included in the line items above:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Service costs</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>4,112</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3,587</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>12,305</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>10,789</td>
<td></td>
</tr>
<tr>
<td>Sales and marketing</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">109</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">105</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">296</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">345</td>
<td></td>
</tr>
<tr>
<td>Product development</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">399</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">234</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,158</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">787</td>
<td></td>
</tr>
<tr>
<td>General and administrative</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">683</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">906</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,133</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,703</td>
<td></td>
</tr>
<tr>
<td>Total depreciation</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>5,303</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>4,832</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>15,892</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>14,624</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><strong>Income (loss) per common share:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Net income (loss)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(4,145</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3,175</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(12,098</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,427</td>
<td></td>
</tr>
<tr>
<td>Cumulative preferred stock dividends <sup>(3)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(2,477</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
</tr>
<tr>
<td>Net income (loss) attributable to common stockholders</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(4,145</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3,175</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(14,575</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,427</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Net income (loss) per share &#8211; basic</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(0.05</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.04</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(0.19</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.02</td>
<td></td>
</tr>
<tr>
<td>Net income (loss) per share &#8211; diluted</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(0.05</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.04</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(0.19</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.02</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Weighted average number of shares &#8211; basic</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">83,934</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">85,182</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">77,001</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">84,020</td>
<td></td>
</tr>
<tr>
<td>Weighted average number of shares &#8211; diluted</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">83,934</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">88,751</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">77,001</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">86,895</td>
<td></td>
</tr>
</tbody>
</table>
<table cellspacing="0">
<tbody>
<tr>
<td><sup>(3)</sup></td>
<td></td>
<td>As a result of the Company’s initial public offering which was completed on January 31, 2011, all shares of the Company’s preferred stock were converted to common stock.</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
<table cellspacing="0">
<tbody>
<tr>
<td colspan="15"><strong>Demand Media, Inc. and Subsidiaries</strong></p>
<p>Unaudited Condensed Consolidated Balance Sheets</p>
<p>(In thousands)</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>December 31,</strong><br />
<strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>September 30,</strong><br />
<strong>2012</strong></td>
</tr>
<tr>
<td><strong>Current assets</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Cash and cash equivalents</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>86,035</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>112,916</td>
<td></td>
</tr>
<tr>
<td>Accounts receivable, net</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">32,665</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">41,118</td>
<td></td>
</tr>
<tr>
<td>Prepaid expenses and other current assets</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">8,656</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">8,501</td>
<td></td>
</tr>
<tr>
<td>Deferred registration costs</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">50,636</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">57,437</td>
<td></td>
</tr>
<tr>
<td>Total current assets</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">177,992</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">219,972</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Property and equipment, net</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">32,626</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">33,740</td>
<td></td>
</tr>
<tr>
<td>Intangible assets, net</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">111,304</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">88,577</td>
<td></td>
</tr>
<tr>
<td>Goodwill</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">256,060</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">256,037</td>
<td></td>
</tr>
<tr>
<td>Deferred registration costs</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">9,555</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">11,108</td>
<td></td>
</tr>
<tr>
<td>Other long-term assets</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,566</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">21,607</td>
<td></td>
</tr>
<tr>
<td>Total assets</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>590,103</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>631,041</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><strong>Liabilities, Convertible Preferred Stock and Stockholders’ Equity</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Current liabilities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Accounts payable</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>10,046</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>11,340</td>
<td></td>
</tr>
<tr>
<td>Accrued expenses and other current liabilities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">33,932</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">33,623</td>
<td></td>
</tr>
<tr>
<td>Deferred tax liabilities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">18,288</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">19,586</td>
<td></td>
</tr>
<tr>
<td>Deferred revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">71,109</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">78,805</td>
<td></td>
</tr>
<tr>
<td>Total current liabilities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">133,375</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">143,354</td>
<td></td>
</tr>
<tr>
<td>Deferred revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">14,802</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">15,966</td>
<td></td>
</tr>
<tr>
<td>Other liabilities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,660</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,361</td>
<td></td>
</tr>
<tr>
<td>Total liabilities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">149,837</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">161,681</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Stockholders’ equity</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Common stock and additional paid-in capital</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">528,042</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">559,689</td>
<td></td>
</tr>
<tr>
<td>Treasury stock</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(17,064</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(21,020</td>
<td>)</td>
</tr>
<tr>
<td>Accumulated other comprehensive income</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">59</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">35</td>
<td></td>
</tr>
<tr>
<td>Accumulated deficit</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(70,771</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(69,344</td>
<td>)</td>
</tr>
<tr>
<td>Total stockholders’ equity</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">440,266</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">469,360</td>
<td></td>
</tr>
<tr>
<td>Total liabilities, convertible preferred stock and stockholders’ equity</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>590,103</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>631,041</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
<table cellspacing="0">
<tbody>
<tr>
<td colspan="29"><strong>Demand Media, Inc. and Subsidiaries</strong></p>
<p>Unaudited Condensed Consolidated Statements of Cash Flows</p>
<p>(In thousands)</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"><strong>Three months ended September 30,</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"><strong>Nine months ended September 30,</strong></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
</tr>
<tr>
<td><strong>Cash flows from operating activities:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Net income (loss)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(4,145</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3,175</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(12,098</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,427</td>
<td></td>
</tr>
<tr>
<td>Adjustments to reconcile net income (loss) to net cash provided by operating activities:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Depreciation and amortization</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">16,131</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">14,332</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">46,673</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">45,839</td>
<td></td>
</tr>
<tr>
<td>Stock-based compensation</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">7,727</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">8,046</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">21,989</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">23,986</td>
<td></td>
</tr>
<tr>
<td>Other</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">294</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">967</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,363</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">584</td>
<td></td>
</tr>
<tr>
<td>Net change in operating assets and liabilities, net of effect of acquisitions</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,050</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(1,925</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(802</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(6,890</td>
<td>)</td>
</tr>
<tr>
<td>Net cash provided by operating activities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">22,057</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">24,595</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">58,125</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">64,946</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><strong>Cash flows from investing activities:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Purchases of property and equipment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,194</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(4,982</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(14,024</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(12,425</td>
<td>)</td>
</tr>
<tr>
<td>Purchases of intangibles</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(13,927</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,468</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(43,989</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(8,590</td>
<td>)</td>
</tr>
<tr>
<td>Payments for gTLD applications</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(18,202</td>
<td>)</td>
</tr>
<tr>
<td>Cash paid for acquisitions</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(27,133</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(1,011</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(30,972</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(1,280</td>
<td>)</td>
</tr>
<tr>
<td>Other</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(855</td>
<td>)</td>
</tr>
<tr>
<td>Net cash used in investing activities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(44,254</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(9,461</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(88,985</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(41,352</td>
<td>)</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><strong>Cash flows from financing activities:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Proceeds from issuance of common stock, net</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">78,625</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
</tr>
<tr>
<td>Repurchases of common stock</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,728</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,728</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,956</td>
<td>)</td>
</tr>
<tr>
<td>Proceeds from exercises of stock options and contributions to ESPP</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,832</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">5,160</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4,357</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">11,016</td>
<td></td>
</tr>
<tr>
<td>Other</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(1,332</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(1,568</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(1,547</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,755</td>
<td>)</td>
</tr>
<tr>
<td>Net cash provided by (used in) financing activities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(2,228</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">3,592</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">77,707</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">3,305</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Effect of foreign currency on cash and cash equivalents</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(23</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">3</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(31</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(18</td>
<td>)</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Change in cash and cash equivalents</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(24,448</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">18,729</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">46,816</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">26,881</td>
<td></td>
</tr>
<tr>
<td>Cash and cash equivalents, beginning of period</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">103,602</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">94,187</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">32,338</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">86,035</td>
<td></td>
</tr>
<tr>
<td>Cash and cash equivalents, end of period</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>79,154</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>112,916</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>79,154</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>112,916</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
<table cellspacing="0">
<tbody>
<tr>
<td colspan="29"><strong>Demand Media, Inc. and Subsidiaries</strong></p>
<p>Reconciliations of Non-GAAP Measures to Unaudited Consolidated Statements of Operations</p>
<p>(In thousands, except per share amounts)</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"><strong>Three months ended September 30,</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="10"><strong>Nine months ended September 30,</strong></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
</tr>
<tr>
<td><strong>Revenue ex-TAC:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Content &amp; Media revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>50,744</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>64,136</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>152,418</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>177,766</td>
<td></td>
</tr>
<tr>
<td>Less: traffic acquisition costs (TAC)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,381</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(5,350</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(9,384</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(13,109</td>
<td>)</td>
</tr>
<tr>
<td>Content &amp; Media Revenue ex-TAC</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">47,363</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">58,786</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">143,034</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">164,657</td>
<td></td>
</tr>
<tr>
<td>Registrar revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">30,729</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">34,011</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">88,033</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">99,670</td>
<td></td>
</tr>
<tr>
<td>Total Revenue ex-TAC</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>78,092</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>92,797</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>231,067</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>264,327</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><strong>Adjusted EBITDA</strong><sup><strong>(1)</strong></sup><strong>:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Net income (loss)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(4,145</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3,175</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(12,098</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,427</td>
<td></td>
</tr>
<tr>
<td>Income tax expense/(benefit)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">394</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,180</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,739</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">611</td>
<td></td>
</tr>
<tr>
<td>Interest and other expense, net</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">459</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">159</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">996</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">508</td>
<td></td>
</tr>
<tr>
<td>Depreciation and amortization<sup>(2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">16,131</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">14,333</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">46,673</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">45,840</td>
<td></td>
</tr>
<tr>
<td>Stock-based compensation</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">7,755</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">8,046</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">22,102</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">23,986</td>
<td></td>
</tr>
<tr>
<td>Acquisition and realignment costs<sup>(3)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,058</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">20</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,828</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">132</td>
<td></td>
</tr>
<tr>
<td>gTLD expense<sup>(4)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">707</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,589</td>
<td></td>
</tr>
<tr>
<td>Adjusted EBITDA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>21,652</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>27,620</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>62,240</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>74,093</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><strong>Discretionary and Total Free Cash Flow:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Net cash provided by operating activities</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>22,057</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>24,595</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>58,125</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>64,946</td>
<td></td>
</tr>
<tr>
<td>Purchases of property and equipment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,194</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(4,982</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(14,024</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(12,425</td>
<td>)</td>
</tr>
<tr>
<td>Acquisition and realignment cash flows</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,068</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,068</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
</tr>
<tr>
<td>gTLD expense cash flows<sup>(4)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">488</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,224</td>
<td></td>
</tr>
<tr>
<td>Discretionary Free Cash Flow</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">19,931</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">20,101</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">45,169</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">53,745</td>
<td></td>
</tr>
<tr>
<td>Purchases of intangible assets</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(13,927</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(3,468</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(43,989</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(8,590</td>
<td>)</td>
</tr>
<tr>
<td>Free Cash Flow<sup>(4)(5)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>6,004</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>16,633</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,180</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>45,155</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td><strong>Adjusted Net Income:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>GAAP net income (loss)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(4,145</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>3,175</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>(12,098</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>1,427</td>
<td></td>
</tr>
<tr>
<td>(a) Stock-based compensation</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">7,755</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">8,046</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">22,102</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">23,986</td>
<td></td>
</tr>
<tr>
<td>(b) Amortization of intangible assets – M&amp;A</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,969</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2,666</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">9,799</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">8,332</td>
<td></td>
</tr>
<tr>
<td>(c) Content intangible assets removed from service<sup>(2)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,818</td>
<td></td>
</tr>
<tr>
<td>(d) Acquisition and realignment costs<sup>(3)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,058</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">20</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,828</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">133</td>
<td></td>
</tr>
<tr>
<td>(e) gTLD expense<sup>(4)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">707</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">—</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,589</td>
<td></td>
</tr>
<tr>
<td>(f) Income tax effect of items (a) &#8211; (e) &amp; application of 38% statutory tax rate to pre-tax income</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(2,658</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(4,822</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(6,521</td>
<td>)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">(13,789</td>
<td>)</td>
</tr>
<tr>
<td>Adjusted Net Income</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>4,979</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>9,792</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>15,110</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>23,496</td>
<td></td>
</tr>
<tr>
<td>Non-GAAP Adjusted Net Income per share &#8211; diluted</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.06</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.11</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.17</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>0.27</td>
<td></td>
</tr>
<tr>
<td>Shares used to calculate non-GAAP Adjusted Net Income per share – diluted<sup>(6)</sup></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">87,973</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">88,754</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">89,098</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">87,003</td>
<td></td>
</tr>
</tbody>
</table>
<table cellspacing="0">
<tbody>
<tr>
<td>(1)</td>
<td></td>
<td>Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. While the dollar value of each measure does not differ, a comparison of the historical reconciliation of both measures is provided in our supplemental financial schedules available on the investor relations section of our corporate website.</td>
</tr>
<tr>
<td>(2)</td>
<td></td>
<td>In conjunction with its previously announced plans to improve its content creation and distribution platform, the Company elected to remove certain content assets from service, resulting in $1.8 million of accelerated amortization expense in the first quarter of 2012.</td>
</tr>
<tr>
<td>(3)</td>
<td></td>
<td>Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these costs to be indicative of the Company’s core operating results.</td>
</tr>
<tr>
<td>(4)</td>
<td></td>
<td>Comprises formation expenses directly related to the Company&#8217;s gTLD initiative that is not expected to generate associated revenue in 2012.</td>
</tr>
<tr>
<td>(5)</td>
<td></td>
<td>In April 2012, the Company invested $18.1 million in gTLD applications, which did not impact its recurring Free Cash Flow metric.</td>
</tr>
<tr>
<td>(6)</td>
<td></td>
<td>Shares used to calculate non-GAAP Adjusted Net Income per share &#8211; diluted include the weighted average common stock for the periods presented and all dilutive common stock equivalents at each period. Amounts have been adjusted in 2011 to reflect the revised capital structure following the Company’s initial public offering which was completed on January 31, 2011, whereby the Company issued 5,175 shares of common stock and converted certain warrants and all of its previously outstanding convertible preferred stock into 62,155 shares of common stock as if those transactions were consummated on January 1, 2011.</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
<table cellspacing="0">
<tbody>
<tr>
<td colspan="31"><strong>Demand Media, Inc. and Subsidiaries</strong></p>
<p>Unaudited GAAP Revenue, by Revenue Source</p>
<p>(In thousands)</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="11"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="11"></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="11"><strong>Three months ended September 30,</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="11"><strong>Nine months ended September 30,</strong></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
</tr>
<tr>
<td><strong>Content &amp; Media:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Owned and operated websites</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td colspan="2">38,298</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>45,377</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td colspan="2">117,917</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>129,715</td>
<td></td>
</tr>
<tr>
<td>Network of customer websites</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">12,446</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">18,759</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">34,501</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">48,051</td>
<td></td>
</tr>
<tr>
<td>Total revenue – Content &amp; Media</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">50,744</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">64,136</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">152,418</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">177,766</td>
<td></td>
</tr>
<tr>
<td>Registrar</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">30,729</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">34,011</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">88,033</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">99,670</td>
<td></td>
</tr>
<tr>
<td>Total revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td colspan="2">81,473</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>98,147</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td colspan="2">240,451</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>$</td>
<td>277,436</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="11"><strong>Three months ended September 30,</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="11"><strong>Nine months ended September 30,</strong></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"><strong>2011</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><strong>2012</strong></td>
</tr>
<tr>
<td><strong>Content &amp; Media:</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="4"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
</tr>
<tr>
<td>Owned and operated websites</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">47</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">46</td>
<td>%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">49</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">47</td>
<td>%</td>
</tr>
<tr>
<td>Network of customer websites</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">15</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">19</td>
<td>%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">14</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">17</td>
<td>%</td>
</tr>
<tr>
<td>Total revenue – Content &amp; Media</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">62</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">65</td>
<td>%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">63</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">64</td>
<td>%</td>
</tr>
<tr>
<td>Registrar</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">38</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">35</td>
<td>%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">37</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">36</td>
<td>%</td>
</tr>
<tr>
<td>Total revenue</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">100</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">100</td>
<td>%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">100</td>
<td colspan="2">%</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">100</td>
<td>%</td>
</tr>
</tbody>
</table>
<p>&nbsp;</p>
<p><img src="http://cts.businesswire.com/ct/CT?id=bwnews&amp;sty=20121105006627r1&amp;sid=acqr4&amp;distro=nx" alt="" /></p>
<p>Source: Demand Media, Inc.</em></p>
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