Demand Media has named a former Ticketmaster chief Sean Moriarty as its new CEO. The move follows a rough second quarter, when it revealed last Thursday that its revenue excluding traffic acquisition costs (ex-TAC) declined 10% year-over-year to $87.1 million.
The company on Monday also acquired online art community Saatchi Online in a $17 million cash-and-stock deal. Moriarty served most recently as CEO of Saatchi Art. Demand Media Cofounder Shawn Colo took the reigns as interim CEO in October, when then chairman and CEO Richard Rosenblatt announced his departure. Colo is to serve as Demand's president upon the latest transition.
Demand Media, the owner of myriad media properties ranging from eHow to humor site Cracked.com, has experienced some pain points, as have other publishers, in their shift to programmatic pricing models. Ad revenue in the second quarter was $31 million, a 33% YoY drop, which Colo credited to "lower desktop traffic to our owned-and-operated properties and our strategic shift to programmatic ad solutions, which currently have a lower CPM than higher-touch direct ad sales."
Although Colo made note of some heavy-lifting involved in getting programmatic structure in place, "we have seen some real traction in terms of on boarding clients," he said during Q2 earnings. "We tripled the number of live deals during the quarter, [so] we've got a couple hundred brands and agencies who are looking at our inventory." Demand Media's management expressed confidence that as liquidity evens out on both the buy-and-sell side, CPMs will improve over time.
Demand Media has faced its fair share of growing pains as an organization and has publicly struggled to maintain a sustainable content model. When Google, which drove a majority of search traffic to Demand's "how-to" site eHow, changed its search algorithm, Demand's ad revenue took a direct hit. Demand also sunset IndieClick, an ad network it acquired for some $14 million in 2011, and spun off domain registration service Rightside last week.
But with Demand Media's latest CEO appointment, and its acquisition of Saatchi, the company appears to be trying its hand at a blend of content and commerce, and seeking avenues to diversify its revenue model. Demand last June acquired Society6, an Etsy-esque, member-based commerce marketplace for art and home decor.
On the Q2 call, Colo cited member growth of more than 9% YOY, to 550,000 on Society6. Commerce and "other" transaction-based, non-advertising revenue in the second quarter was $12 million, up 98% when incorporating Society6's $6.6 million in revenue. In addition to commerce, Demand Media is simultaneously exploring further audience and ad-revenue opportunities in video for humor O&O site, Cracked.com.
Edit: An earlier version of the story stated Demand Media runs CollegeHumor.com. Demand Media, in partnership with Electus Digital, struck a strategic advertising partnership to sell ads across CollegeHumor.com and Cracked.com. InterActiveCorp is the parent company of CollegeHumor.
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