Demand Media Adds E-Commerce with Society6 Acquisition
300,000-member marketplace for artists goes for $94 million in cash and stock.
Demand Media is getting into the e-commerce business through an acquisition of an online marketplace for artists and designers called Society6. The deal gives Demand a new revenue source and the company expects to bolster Society6's 300,000 member community with traffic from its own content network.
The sale is for $94 million in cash and stock. Society6 had revenues of $15 million in 2012.
Indeed, content goes a long way in supporting e-commerce transactions and Demand CEO and chairman Richard Rosenblatt acknowledges the deal gives Demand a brand-new revenue source, one that he thinks can be scaled with the company's 100 million monthly uniques.
"This acquisition will significantly accelerate the scale of our e-commerce business as we continue to expand into new revenue models," he said in a statement. "In addition, we plan to leverage our expertise inÂ managing content creation platforms, our experience in building creator communities, and our significant engineering and product resources to further drive Society6's scale and growth."
Concurrent with the deal announcement, Demand downgraded its second-quarter revenue outlook to the $100 million to $101 million range. It originally expected to make between $105 million and $107 million in the quarter. The adjustment is due to a drop in search engine referral traffic to its owned and operated sites, says the company.