Just how important has Facebook become to the online economy? Demand Media, which recently went on the public market at a current valuation of just less than $2 billion, is expanding its enterprise into social media -- sort of.
The purveyor of low-cost, question-and-answer content has entered into a limited partnership with New York-based Buddy Media, a startup that creates software for managing Facebook pages.
The Santa Monica, Calif.-based Demand will fold Buddy Media's technology into its Pluck software, a separate Demand business that creates sharing tools on a company's website, such as comments and people profiles, much like on Facebook. Despite Demand's well-known (and sometimes decried) content, it has a significant business servicing companies with custom media for their websites, and Pluck, which creates social functions, falls under that unit. The service is currently being used by a range of companies, from USA Today and Hearst to Kraft and Mattel.
Demand Media also operates websites such as Livestrong.com, Trails.com, Cracked.com and the recently launched TypeF.com with Tyra Banks.
The partnership leverages the client base of each company but is a potentially more significant move for Demand, which is not known for a social-services play. Buddy Media has become a sought-after Facebook developer and works with companies such as Coke, Target and Samsung to manage their presences on the social network. The software company has grown just as Facebook itself has become cardinally important to any company's digital strategy, whether that involves marketing, e-commerce or media.
"Our goal is to help marketers engage consumers beyond the initial 'like,'" said Steve Semelsberger, senior VP and general manager of social solutions for Demand Media, and Buddy Media CEO Mike Lazerow called it a "win" for both companies. "We're energized about this opportunity as it's a better and more enriched experience for both Facebook users and marketers," he said.
Demand Media booked $240 million in net revenue last year, a 28% increase over the previous year. Content and media accounts for almost two-thirds of its business, with the rest coming from its internet domain registration business.
