Amid Reports Of Possible IPO, Demand Media Adds Guber, James To Board

Most four-year-olds celebrate with cake and ice cream. Demand Media, which marked its fourth anniversary over the weekend, hired high-profile marketer Joanne Bradford as chief revenue officer, launched a content deal with USA Today and today, paidContent has learned, is adding two board members. Then there’s the unexpected “gift” — the recent report that investor Goldman Sachs is exploring an IPO for Demand, which has raised more than $355 million on a valuation of $1 billion.
New board members Peter Guber, chairman and CEO of Mandalay Entertainment Group, and Josh James, co-founder of *Omniture*, mark a departure for Demand; the current board consists of Richard Rosenblatt, founder, chairman and CEO, and six directors representing Goldman Sachs; Generation Partners; Spectrum Equity Investors; Oak Investment Partner; and Thomas James Capital, Inc.
Veteran producer Guber (who was to play tennis with Rosenblatt, Terry Semel and Peter Bart on Sunday) adds a high-end network and entertainment to the content-creation side; in addition to its vast output of text, Demand Studios is the top contributor to YouTube. James, SVP/GM of the *Omniture* Business Unit of Adobe, is an expert on the intersection of online data and marketing. Of particular value to a company that could wind up filing an IPO later this year, James was CEO when *Omniture* went public in 2006 and then sold it to Adobe (NSDQ: ADBE) for $1.8 billion.
CRO on board: With 55 million-plus uniques to its own sites in February, according to *comScore*, Demand already knows how to blend content and SEO to get traffic; comScore (NSDQ: SCOR) ranked eHow #18 in U.S. sites. Rosenblatt was fresh off the attention-grabbing $580 million sale of MySpace to News Corp (NYSE: NWS). when Demand was founded in 2006, In addition to its own brands, Demand Studios and online publishing tool company Pluck, Demand also owns top domain wholesaler eNom. Matching branded advertisers to that traffic and knowledge, and expanding the expertise to partnerships with major media is where ex-Microsoft (NSDQ: MSFT) and Yahoo exec Bradford comes in as the company’s first chief revenue officer.
The just-launched partnership with USA Today to produce an online travel section with Demand was already well underway when Bradford joined the company last month after 18 months at Yahoo (NSDQ: YHOO). For Bradford, about to start a road show to meet with key partners and marketers, it’s a little reminiscent of being at Microsoft in the days when MSN started to shift to ad supported from dial-up access. “I remember not being able to get anybody to take a call on a banner ad,” she said in a recent interview. She since has been at online ad start-up Spot Runner (“it spoke to my entrepreneurial spirit but it wasn’t the right fit”) and at Yahoo, where she was SVP of ad sales. At Demand, she has a mix of brands — eHow, Lance Armstrong’s LiveStrong, Cracked, and Mania — to sell and the resources to create content that can be packaged with partners. (Demand produces some 4,000 pieces a day from its nearly 7,000 freelancers.) “We’ll provide content. We’ll do revenue share.”
She also has some serious brand building to do for the parent company. “The Demand brand is very important to us and you’ll see us build that brand in a very responsible way. We won’t have a big budget media campaign.” Part of that goal is to move Demand from being referred to more often than not as a content farm or factory to a media company respected by the media and recognized by more advertisers and marketers as valuable. The comScore numbers show consumers have taken to Demand, she insists. “There’s a lot of consumer passion that I don’t think as yet has come out of the media community and marketing community. This USA Today channel is a big step in the right direction for us. I would put it up against any travel site.” USA Today was using Pluck’s social media tools when the company was acquired by Demand; other publishers using Pluck now include ESPN (NYSE: DIS) and the NFL. The Pluck publishers know Demand Media from that side, something Bradford and the others hope to parlay into relationships with Demand Studios — and a major revenue stream for a company that all too soon may have to make its finances public.
About that IPO: Demand Media execs still won’t confirm — or deny– hiring Goldman Sachs to explore an IPO for later this year but I have no reason to doubt the FT‘s report. Exploration doesn’t mean an IPO will happen but if the economy and ad market keep on the current trajectory, this could be Demand’s best opportunity for years to come. When we spoke last month, Rosenblatt denied being pressured by his investors to go public. But he does feel some pressure when it comes to valuation and what that might mean: among his weekend tweets was this in response to the news that Groupon has raised $135 million for a total of about $170 million and a valuation over $1 billion: “having a billion dollar valuation causes more stress than they will anticipate. good luck.” Just imagine the stress of aiming for a $1 billion-plus IPO.