This is an excerpt from article I wrote for Poynter.org.

Demand Media has advertising-driven content down to a science. Instead of creating content for the Web and hoping that it generates revenue, the company works backwards by determining how much revenue each piece will generate before anything is produced.

The company uses a series of algorithms to pick through keywords that people are searching for on the Web and aims to create content unique enough to rank highly in those search results. It also determines how much advertisers would pay to be next to that content.

This is much different than simply using analytics to shift stories around on a home page or testing which headline will draw more readers. Demand is all about the dollars.

News organizations looking to create profitable content on the Web can see that Demand Media’s model does make money — although it forgoes editorial judgment and a journalism process. Yet news organizations could apply lessons from Demand’s approach to their own companies, not for standard news operations, but for niche sites that are focused on reader demand and generating revenue.

Demand Media is focused on “service journalism,” said Adam Weinroth, the company’s vice president of strategic marketing. “This is the kind of content that is evergreen, and includes formats like guides, how-to’s and tips.”

Besides the company’s method of choosing stories, the other part of Demand’s strategy is in how it gets its content. Rather than try sell ads to support content that costs a particular amount, the company has dropped the cost of production to make sure it can be supported by what advertisers are willing to pay.

Read the full post here.

By VADIM LAVRUSIK and SHANE SNOW

As I have mentioned in previous posts, Ken Lerer, co-founder of The Huffington Post, is teaching sessions to Columbia University Journalism Students on media entrepreneurship, often bringing in experts in the industry on various topics. Yesterday’s topic was on what journalists need to know about advertising online, and the guest was Jim Spanfeller, former CEO of Forbes.com. Also, if you’re interested, here is a post and live blog recap of last year’s talk on the same subject.

The discussion was enlightening, but we want to highlight three main points that were made by both Spanfeller and Lerer during the session: