Google and Demand Media Racing to Patent Automated Content [Update]

Last Updated Jun 17, 2010 12:00 PM EDT

Demand Media has made a big name for itself in cheap content by analyzing search queries and commissioning content that addresses the specific interests. According to a story in the Financial Times, Google (GOOG) recently received a patent that would "replicate one part of what has made Demand's approach to content so successful".

Reporter Kenneth Li got things wrong. [Update: I searched and found patent application number 20100138421, filed February 3, 2010. However, I received an email from Li who pointed to patent number 7,668,823, granted on February 23, 2010 and filed on April 3, 2007, that seems to cover the same ground. However, the newer application doesn't refer to the already-granted patent. So, paperwork madness and confusion aside, Google appears to have a patent on its process.]

The implications are that Google has major plans to publish its own content -- and to keep others from using search analysis to create super sites that would pull eyeballs, and ad dollars, away from Google's own Web properties. But it may have trouble if Demand Media's own patent applications go through, which could act as barriers to Demand's profit-maximizing methods.

A look at Google's 2009 10-K shows why it would want to enter the arena of automated content topic identification:

  • Google expects its revenue growth rate to decline, with downward pressure on operating margin.
  • Ads compose virtually all of the company's revenue (97 percent last year).
  • Ads run on partners' web sites -- the Google network -- are less profitable than those run on the company's own sites.
The more ads that Google can run on its own sites and pull away from partners, the more easily it can grow profits and (hopefully) keep investors happy as revenue growth slows. As it has seen from its own sites, such as Blogger and YouTube, people, and the ads that follow them, go to where the content is.

Demand has grown from a start-up to a reputedly $200 million annual revenue company with sites like eHow. The company is, by far, the single largest video contributor to YouTube. It's hard to miss the potential, which is one reason that Yahoo (YHOO) bought a Demand competitor, Associated Content. If Google can create Demand-type sites that generate massive amounts of content, it can steer a lot of traffic to itself and reap the higher margins.

Google works best when it deals with customers least. For example, AdSense is a largely automatic mechanism that receives bids on keywords and then assigns advertising slots accordingly. That's why the patent application makes perfect sense, as the abstract makes plain:

Systems and methods for identifying inadequate search content are provided. Inadequate search content, for example, can be identified based on statistics associated with the search queries related to the content.
Who would have better statistical information on search content than the mother of all search engines? However, Demand has undertaken its own series of patent applications in this area:
  • 2008008238 -- User Generated Content Publishing System: " The invention is directed to a User Publishing System (UPS) that enables both content publishing for users that share what they know in articles and enabling these users to get paid for providing the content through use of a User Compensation System (UCS). The invention enables users to create and edit content in multiple formats, from multiple sources, and in multiple languages. The system can be integrated for use with a plurality of different websites and adopt both the look and feel and the content format of each website, and/or other communication medium. Compensation may be provided to the user providing the content based on a variety of metrics."
  • 20080281676 -- Methods and Systems to Facilitate Keyword Bid Arbitrage with Multiple Advertisement Placement Providers: "A system and method are directed towards identifying advertisement keywords within a variety of content types, identifying similarity rankings of advertisements based on the keywords, and to the guiding of keyword purchases. In one embodiment, a search is performed based in part on defined selection criteria, and/or scheduling rules. Content that may include advertisements is processed to identify advertisement keywords. A similarity ranking of different advertisements based on keywords therein may be determined. The similarity rankings may be used, with keyword pricing data, to identify instances of keyword arbitrage, guide purchase of keywords, and to control traffic flow to and from advertisements to obtain a benefit from price differentials between what one keyword seller charges for a keyword and what a click buyer will, pay for traffic directed to advertisements with the same or related keyword. In one embodiment, a three-dimensional representation is provided indicating relationships between advertisements across websites."
  • 20100153391 -- Method and System for Ranking of Keywords for Profitability: " A physical computing device receives information regarding a total number of people who are searching on the search term. Information is received regarding an amount advertisers pay for the search term. Information is received regarding a click through rate of the search term. A traffic estimate of the search term is determined. Longevity of the search term is determined."
Demand wants to keep others from its profit machine: determining which topics are likely to pay best with keyword-driven advertising. Google could potentially use its patent as a way to cut Demand off from using search statistics to determine to general popular content topics that will drive traffic to a site.

If Google were to proceed in this direction, it might use its knowledge of online auctions to create a reverse auction process for content topics. Qualify writers and editors and then publish a list of topics and let the writers bid each other down to minimize the cost of populating sites. Another possibility is that Google would acquire Demand and use its existing mechanisms and the total body of patents to corner this market, knocking both Yahoo and AOL back on their corporate behinds.

Image: Flickr user Gastev, CC 2.0.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.