Classmates.com 2007 Annual Report Download - page 15

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individuals, including by finding individuals through their profiles on social networking Web sites, these services will increasingly compete with
our services. We believe that there are currently only a small number of competitive online social networking services that are focused
specifically on our niche of the market, which is to help people find and reconnect with enduring relationships from school, the workplace and
the military. As a result of the growth of the social networking market and minimal barriers to entry, a number of companies are attempting to
enter our market, either directly or indirectly, some of which may become significant competitors in the future. In addition, many existing social
networking services are broadening their service offerings to compete with our services. As we broaden our services and evolve into a service
also used for meeting new people with similar interests or affiliations, we may compete with the increasing number of social networking Web
sites for special niches and areas of interest.
Online Loyalty Marketing
The market for loyalty marketing services is highly competitive, and we expect competition to significantly increase in the future as loyalty
marketing programs grow in popularity. Our MyPoints loyalty marketing business faces competition for members from several other online
loyalty marketing programs, including Ebates, Upromise and FatWallet. We also face competition from offline loyalty marketing programs that
have a significant online presence, such as those operated by credit card, airline and hotel companies. We believe the primary competitive factors
in the online loyalty marketing industry are the number, type and popularity of the participating merchants, the attractiveness of the rewards
offered, the number of points awarded for various actions, the ease and speed of earning rewards, and the ability to offer members a robust, user-
friendly shopping experience. We believe that we compete favorably in each of these areas, although certain of our competitors have an
advantage over us in some or all of these areas, and that the time, effort and expenses required to successfully develop certain of these areas
serve as effective barriers to entry.
Internet Access Services
We compete with a broad range of companies for Internet access services including AOL, Comcast, AT&T/SBC, Road Runner, Verizon,
EarthLink, and EarthLink's PeoplePC subsidiary. We believe the primary competitive factors in the Internet access industry are price, speed,
features, coverage area, and quality of service. While we believe our dial-up Internet access services compete favorably based on these factors
when compared to many dial-up Internet access providers, we are at a competitive disadvantage relative to some or all of these factors with
respect to some of our competitors. Our dial-up Internet access services do not compete favorably with DSL Internet access providers with
respect to speed. The limitations on the coverage area of our broadband services and, potentially, price, may put us at a disadvantage with respect
to certain other broadband providers.
Online Advertising
We believe the primary competitive factors for Internet advertising include: size of user base; the amount of time users spend on a Web site;
the ability to target advertisements to users; demonstrated success of advertising campaigns; reputation; knowledge of the advertising market;
relationships with customers, agencies and partners; technological capabilities; and quality and breadth of service offerings. We believe we
compete favorably in some of these areas, although various competitors have advantages over us with respect to certain factors.
We compete for advertising revenues with portal companies, social networking Web sites, online direct marketing businesses, content
providers, large Web publishers, Web search engine companies, certain advertising networks, major Internet access service providers, and
various other companies that facilitate Internet advertising. We also compete with traditional offline advertising channels, such as radio,
television and print advertising, because most companies currently spend only a small portion of
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