Classmates.com 2007 Annual Report Download - page 13

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Advertising Revenues
We provide advertising solutions to marketers with both brand and direct response objectives through a full suite of display, search, email,
and text-link opportunities across our various properties. We also use targeting technologies, Web site sponsorships and Web site integrations in
order to provide effective solutions.
Our social networking services generate advertising revenues primarily from display advertisements and from post-transaction sales.
Advertising inventory on our social networking Web sites includes text and graphic placements on the user home page, profile page, class list
page, and most other pages on our Web sites. We are able to target the advertising delivered to most of our members based on a wide variety of
factors, including age, gender, demographic data, affiliations, profile data, and zip code. Post-transaction sales are generated when a Classmates
pay account is provided a third-party offer at the end of the pay account registration process. We also sell a portion of our advertising inventory
through third-party advertising resellers.
Our loyalty marketing service revenues are derived from advertising fees, consisting primarily of fees generated when emails are
transmitted to members, when members respond to emails and when members complete online transactions. We sell marketing solutions to
advertisers with both brand and direct response objectives through a full suite of display, email and other advertising opportunities. We also use
targeting technologies and Web site integrations in order to provide effective solutions for advertisers.
Our Communications services generate advertising revenues from our search agreement with Yahoo!, from display advertisements, from
referring members to third-party Web sites or services, and from online market research. Substantially all of our Communications advertising
revenues are generated from our Internet access services. We host and customize the initial Web site displayed to users of our Internet access
services. This Web site, or "start page," displays sponsored links to a variety of content, products and services, including Internet search. We also
display a toolbar on Internet access users' screens throughout their online access sessions that is generally visible regardless of the particular Web
site they visit. The toolbar contains Internet search functionality and a variety of buttons, icons and drop-down menus. A variety of advertising
opportunities also exist through our email platforms, including display advertising on the main pages and within emails.
Marketing and New Account Acquisition
Our marketing efforts are focused primarily on attracting free and pay accounts, building our brands and cross-selling existing and new
services to existing accounts. These marketing efforts include Internet, television, co-registration with third-parties, sponsorships, radio, and
print as well as a variety of distribution initiatives. We intend to continue to evaluate and engage in a variety of distribution and marketing
channels to enable us to make our services better known and available to a large population of potential users. We also devote a significant
portion of our own advertising inventory to up-sell our pay services. Our internal marketing resources consist of marketing management, media,
creative services, Web development, strategic alliance, product marketing and management, and business development personnel. We produce a
significant amount of our marketing materials in-house, using state-of-the-art design computers and graphics program techniques.
We view our free services as a key component of our pay account acquisition strategy, primarily for our social networking services and to a
lesser degree for our Internet access services. We seek to up-sell the free account bases of these services to pay versions of each service. Our
marketing efforts for social networking have been comprised almost entirely of Internet advertising designed to increase our free member base,
with most payments to the advertiser made on per-free member acquisition basis. Our marketing efforts to obtain members for our loyalty
marketing service are primarily based on co-registration with other third-
party services. We regularly vary our marketing resources and strategies
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