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Demand media ir deck 09.21.16

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  • Company Overview

    Q3 2016

  • This document and any related oral presentation does not constitute an offer or invitation to subscribe for, purchase or otherwise acquire any debt or equity securities of Demand Media, Inc. (Demand Media or the Company) and nothing contained herein or in the related oral presentation shall form the basis of any contract or commitment.

    The distribution of this document and any related oral presentation in certain jurisdictions may be restricted by law and persons into whose possession this document or any related oral presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdiction.

    The information contained herein does not constitute investment, legal, accounting, regulatory, taxation or other advice and the information does not take into account your investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the information. You are solely responsible for seeking independent professional advice in relation to the information and any action taken on the basis of the information.

    This presentation contains certain forward-looking statements. All statements other than statements of historical facts contained in this presentation, including statements regarding the Companys future results of operations and financial position, business strategy, plans and objectives for future operations, are forward-looking statements. You should not rely upon forward-looking statements as guarantees of future performance. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those contained in any forward-looking statements, including those described under the heading Risk Factors in the Companys periodic reports filed from time to time with the Securities and Exchange Commission (the SEC), which are incorporated herein by reference. Moreover, the Company operates in a very competitive and rapidly changing environment and new risks emerge from time to time. In light of these risks, uncertainties and assumptions, the forward-looking statements included in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Except as required by law, the Company undertakes no obligation to update any forward-looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in the Companys expectations.

    The Company is publicly traded on the New York Stock Exchange under the ticker symbol DMD and is a registrant under the rules and regulations promulgated by the SEC. Before evaluating whether you should consider an investment in the Companys securities, you should read all of the disclosures set forth in the Companys annual, quarterly and periodic reports filed with the SEC, including the disclosures under the headings Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations. The Companys SEC filings can be found at www.sec.gov and ir.demandmedia.com.

    2

    Disclaimers

  • 3

    We build platforms for communities of creators to reach passionate audiences in large and growing lifestyle categories

    Our Mission

  • Our Portfolio

    4

    Marketplace Model 55% of total revenue (Q216) $17M GTV in Q2, +34% Y/Y Blended Take Rate ~40%

    Ad Supported Model 45% of total revenue (Q216)(1)

    51M Average Visitors per Month(2)

    Marketplaces Content & Media

    (1) Revenue is shown on a pro forma basis net of Cracked and certain other non-strategic properties that were disposed of over the last year (2) Average monthly unique visitors in the U.S. reached by Demand Media properties in Q216 across desktop and mobile (Source: April-June 2016 U.S. comScore)

  • Approximately 46M (1) Total Unique Monthly Visitors

    5

    Approximately $19M (3) Paid to Creators in 2015

    Approximately 240,000 (2) Creators Across Platforms

    $106M LTM(4) Diversified Revenue Mix Clean Balance Sheet Employees

    Key Statistics

    (1) Average monthly unique visitors in the U.S. reached by Demand Media properties in Q216 across desktop and mobile (Source: April-June 2016 U.S. comScore) (2) Total creators across platforms: number of active creators for Society6, Saatchi Art and StudioD in 2015; based on internal data (3) Total paid to creators: full year 2015 for Society6, Saatchi Art and StudioD; based on internal data (4) Revenue is shown on a pro forma basis net of Cracked and certain other non-strategic properties that were disposed of over the last year

    $0M

    $61M

    $10M

    $20M

    $30M

    $40M

    $50M

    $60M

    $70M

    Debt Cash

    446

    279

    100

    200

    300

    400

    500

    Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16

    As of 06/30/16

    Scaling the Operation

  • 6

    Transformation of Demand Media

    2014 2016

    Rebuilt the Executive and

    Senior Leadership Team

    Invested in an Art and Design

    Marketplace, now 55% of total

    company revenue

    Restored LIVESTRONG.COM

    to healthy & growing lifestyle

    brand

    Significantly improved content

    quality, product and user experience on

    eHow

    Rationalized the portfolio and focused the

    company on fewer bigger opportunities

    Reduced headcount and

    operating expense while investing in

    core businesses for growth

    Strengthened the balance sheet,

    while adding $35 million in cash in

    Q216 and maintaining zero

    debt

  • 7

    Content & Media

    studioD LIVESTRONG.COM

    eHow

  • 8

    Content & Media Ecosystem

    (1) Average monthly unique visitors in the U.S. reached by Demand Media properties in Q216 across desktop and mobile (Source: April-June 2016 U.S. comScore) (2) LTM as of 6/30/16. Revenue is shown on a pro forma basis net of Cracked and certain other non-strategic properties that were disposed of over the last year. (3) Source: comScore June 2016 for ad-supported sites.

    46m monthly unique visitors(1)

    $48m in LTM revenue(2) eHow: Top 6 site in comScore Home Category(3)

    LIVESTRONG.COM: Top 5 site in comScore Health Category(3)

    Monetization and Yield Management Team Creator Marketplace Technology Platform

    Owned & Operated Properties

    Brands (Sponsored Content)

    Content Channels

    Distribution & Reach Data Content Expertise

    Content Creation, Audience and Contributor Platform

  • 9

    eHow

    (1) Source: Across desktop and mobile (US comScore Apr.-Jun. 2016) (2) Source: YouTube & Facebook (Apr.-Jun. 2016)

    Multi-Year Transformation Commences in 2H2014 Removal of 2.4m low quality/duplicative titles between Q314

    and Q215 Removal of 3 ads per page in Q115; one additional ad unit

    removed Q215 New site team leadership (GM, product, content) Category rationalization

    Product New responsive homepage design and site wide header to

    optimize mobile web experience Public facing contributor and user profiles Growing social audience and distribution channels (Pinterest,

    Facebook) Key Metrics 18m average monthly unique users(1)

    ~39m monthly average video streams (2)

    Management estimates that proactive transformation efforts resulted in a revenue decline of ~$40m in FY15

  • 10

    LIVESTRONG.COM Transformation Facts

    300k articles removed since Q414 Reduced ad density: 3 Ads removed from every page

    (2014)

    Product

    Redesigned home page; new and improved legacy content more easily shareable

    New native mobile ad unit Header bidding live on desktop platform Key Metrics

    Nearly 26m average monthly unique users (1)

    Significant mobile audience growth +31% Y/Y (Q216) (2)

    5m total app downloads with over 300k monthly active users (3)

    Over 5m average monthly video streams in Q216 (4)

    (1) Source: Across desktop and mobile (US comScore Apr.-Jun. 2016) (2) Source: Demand Media Internal Data (3) Source: Demand Media Internal Data; App downloads over the life of the app; monthly active users in June 2016 (4) Source: YouTube & Facebook (Apr.-Jun. 2016)

  • 11

    LIVESTRONG.COM Site Redesign

    FEBRUARY 2016 Helping You Live STRONG

    New Nav Site Wide

    NOVEMBER 2016 Out With the Old!

    Lose Weight and Keep It Off

    JUNE 2016 Continuing to improve on Site

    Nav with trending articles

  • 12

    StudioD: Branded Content Production

    studioD

    Specialized team focused on telling branded stories for ownership or distribution across our audiences

    Leverages insights data, content formats and production process to build award winning content programs for brands and advertisers

    Content Channels

    31 live hosted channels with top brands and publishers fully managed by DMD

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