Demand Media Net Losses Widen, As Revenue Jumps

Demand Media (NYSE: DMD) released a flurry of news — including two acquisitions and a new premium ad deal with Google (NSDQ: GOOG) — amid its mixed Q2 earnings report that shows progress on ad sales and not so much success on reaching profitability, eight months after its initial public offering. Still in all, it was enough to be investors’ forecasts, which is saying something given the gloom and doom that’s been hanging over the bankers these days.

The big challenge that Demand Media faces — one that is also something that portals like AOL (NYSE: AOL), Yahoo (NSDQ: YHOO) and MSN still have to struggle with — is being viewed as a provider of quality content and somehow being able to afford to pay for it. Naturally, advertising is key to that and the company has rounded out its eHow site with content partners like Tyra Banks and Rachael Ray. Today’s purchase of IndieClick, which works with sites that are as far from “content farms” as possible, like TheHairpin.

The company has been working to address the perception of quality throughout its Demand Studios freelance network. As startup news site Launch reported this week, Demand freelancers received an email on Aug. 2 informing them that writers with low grammar score would be placed in the Writer Evaluation Program (WEP).

Sources close to the company say there is little connection between earlier attempts to get rid of poor-performing writers and this new WEP initiative. Freelancers that were removed from Demand Studios were a part of a regular writer review and weeding out program.