Classmates.com 2007 Annual Report Download - page 16

their advertising budgets on Internet-based advertising. Internet advertising techniques are evolving, and if our technology and advertising
serving techniques do not keep up with the needs of advertisers, we will not be able to compete effectively. If we fail to persuade companies to
advertise on our Web sites, our advertising revenues will be adversely affected.
Seasonality and Cyclicality
Revenues from our loyalty marketing business have been higher in the December quarter when compared to other quarters, generally
resulting in higher advertising revenues in the December quarter when compared to other quarters. Our Internet access services have typically
experienced higher usage and a higher rate of new registrations during the March quarter when compared to other quarters. Seasonality does not
have a material impact on our social networking services. There can be no assurance that these seasonal trends will continue in the future.
In addition, expenditures by advertisers and others vary in cycles and tend to reflect overall economic conditions as well as budgeting and
purchasing patterns. Furthermore, user traffic on the Internet tends to decrease during the summer months which results in fewer advertisements
to sell. A decline in the general economy or in the economic prospects of advertisers and others could adversely affect our revenues.
Billing
The vast majority of our pay accounts pay us in advance with a credit card. Other payment options for some of our pay services include
ACH, personal check or money order, or via a customer's local telephone bill. Pay Internet access accounts that elect to pay with a personal
check or money order are not provisioned until their payment is received and they are required to subscribe for one of our prepaid multi-month
billing plans.
We utilize a combination of third-party and internally developed software applications for customer billing. Customer billing is a complex
process and our billing systems must efficiently interface with third-parties' systems, such as our credit card, ACH and telephone bill processors'
systems. Our ability to accurately and efficiently bill and collect payment from our accounts is dependent on the successful operation of our
billing systems and various third-party processors. In addition, our ability to offer new pay services or alternative payment plans is dependent on
our ability to customize our billing systems.
Customer Support and Retention
We believe reliable customer service and technical support are important to retaining our customers. Our customer relationship
management and support infrastructure includes employees at our facilities in Hyderabad, India; Woodland Hills, California; Fort Lee, New
Jersey; Renton, Washington; San Francisco, California; and Orem, Utah. However, we outsource substantially all of our telephone support and
some of our email support to a third-party.
We offer a variety of online and offline "self-help" tools for our services, designed to provide comprehensive tutorials, advice, tips, step-by-
step solutions, and answers to frequently asked questions. These self-help tools are also designed to assist our users in updating and verifying
billing information, downloading and operating our software and setting up their accounts. We also offer live telephone technical support for our
Internet access services billed on a per-minute basis and telephone billing support for free. We monitor the effectiveness of our user support
functions and measure performance metrics such as average hold time and first call resolution and abandonment rates.
In addition, we provide traditional email support for our services. Communications with our users are logged and categorized to enable us to
recognize and act on trends. An internal quality assurance
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