Microsoft Taps Demand Media to Promote Bing

Content Company Is Dependent on Google's Search Algorithms, but They'll Take Ads From Anyone

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NEW YORK (AdAge.com) -- Demand Media depends on Google's search algorithms, but now it's in business with Microsoft's Bing.

The low-cost, how-to content company -- which recently announced a public stock offering potentially worth $1.5 billion -- has integrated a new advertising unit at the bottom of its articles that features search results from Microsoft's Bing.

The new ad units already appear on the bottom of articles from Demand properties LiveStrong.com, Cracked.com, AnswerBag.com and eHow.com. A few select search results from Bing based on keywords from the particular article are pre-populated at the bottom, along with a Bing search box. A LiveStrong article on baby milk, for example, shows a few Bing results on baby milk, along with the search string "Comparison of Baby Milk" loaded into a Bing window.

More than a quarter of Demand's revenues are derived from Google search results, based on numbers available in the company's S-1 filings. The company creates articles and videos based on what users search for on Google, typically how-to content. For its part, Microsoft has been aggressively promoting Bing with a $100 million ad campaign, and it recently surpassed Yahoo's search engine with 13.9% share of the market, according to a report from Nielsen. Nonetheless, Bing still ranks a distant second to Google, which has a 65.1% stake in the market.

The Microsoft deal effectively puts Bing search results on Demand Media properties, albeit in an ad unit. Google powers the search bar on Demand properties. The deal comes after Google unveiled a significant change to its chief product earlier this month called Google Instant, which immediately shows results that change as users type their queries. Though it is too early to tell what impact that may have on content that specifically designed to take advantage of Google's algorithm, content companies such as Demand Media have been keeping a close watch.

"Google Instant will make it more important to have results that rank on the first pages of search results as users will become less inclined to paginate results," said Sanjay Raman, chief product officer for Howcast, a New York-based content company that also specializes in creating how-to video content. Mr. Raman said they're keeping a close eye on how Instant may be changing results for Howcast content, but for the moment, there hasn't been a major shift in results or traffic, and it may in fact boost traffic for how-to videos as users become accustomed to the change. "But it's too early to make tangible conclusions on this theory," he said.

Demand Media is in a SEC-mandated quiet period prior to its public offering and was not able to comment. Microsoft did not respond to calls and emails seeking comment.

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