Demand Media's eHow Learns Hard Lessons

When Demand Media went public in early 2011, rising to an early valuation of over $2 billion, traffic to its "how-to" website eHow was soaring. Demand's business model of creating content to answer search queries posed by Web surfers seemed to have legs. But the strategy began to fall apart within months of the initial public offering as Google introduced changes to its search algorithms to weed out content its computers showed wasn't what searchers sought.

EHow, a major source of ad revenue, saw its traffic plunge from a high of 70.5 million unique US visitors in March 2011 to 46.3 million in September 2013, according to comScore. The challenges facing Demand were highlighted when Chairman and Chief Executive Richard Rosenblatt, a co-founder of the company, resigned abruptly. He'll be succeeded as CEO on an interim basis by Shawn Colo, another co-founder, as the company searches for a permanent successor.