Classmates.com 2008 Annual Report Download - page 16

Table of Contents
Services Revenues
FTD
FTD services revenues consist of fees charged to florist members for access to the FTD and Interflora brands and the Mercury Man logo,
access to the florist network, credit card processing services, e-commerce Web sites, online advertising tools, and telephone answering and
order-taking services.
Classmates Media and Communications
Classmates Media services revenues consist of amounts charged to pay accounts for social networking services. Communications services
revenues consist of amounts charged to pay accounts for Internet access, Web hosting, email, Internet security, and other services, with
substantially all of such revenues associated with Internet access. Our Classmates Media and Communications services revenues are primarily
dependent on two factors: the average number of pay accounts for a period and the average monthly revenue per pay account ("ARPU"). The
average number of pay accounts is a simple average calculated based on the number of pay accounts at the beginning and end of a period.
In general, we charge our pay accounts in advance of providing a service, which results in the deferral of services revenue to the period in
which the services are provided. We have offered, and may offer in the future, a variety of price points, subscription periods, discounts, and
promotions, both in connection with offers extended to some of our existing accounts and through external marketing channels. Changes in our
offers can have a significant impact on ARPU, profitability, pay account acquisition metrics, conversion rates of free accounts to pay accounts,
and retention rates.
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.
FTD
Advertising revenues consist primarily of post-transaction sales that are generated when FTD and Interflora consumers are provided third-
party offers after completing a purchase on the www.ftd.com and www.Interflora.co.uk Web sites.
Classmates Media
Our social networking services generate advertising revenues primarily from post-transaction sales and display advertisements. 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 third-party offers 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, when members complete online transactions, and when members engage in a variety
of other activities including games, Internet searches and market surveys. We sell marketing solutions to advertisers with both brand and direct
response objectives through a full suite of display, email and other advertising
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