Classmates.com 2009 Annual Report Download - page 13

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Table of Contents
Online Loyalty Marketing
Our online loyalty marketing service, MyPoints, connects advertisers with its members by allowing members to earn rewards points for
engaging in online activities. MyPoints is a free service for consumers who need only provide their name, zip code, gender, date of birth, and an
email address to register. Members register to receive direct email marketing and other online loyalty promotions, and earn points for responding
to email offers, taking market research companies' surveys, shopping online at the MyPoints Web site which serves as a shopping portal,
searching the Internet through a MyPoints branded toolbar, playing MyPoints branded online games, and engaging in other online activities.
Rewards points are redeemable primarily in the form of third-party gift cards from over 75 merchants, including, among others, retailers,
theaters, restaurants, airlines, and hotels. Participating merchants include, among others, Amazon.com, iTunes, Marriott, Macy's, and Target.
MyPoints provides advertisers with an effective means to reach a large online audience. MyPoints uses a variety of criteria, including
personal interests, purchasing behavior and demographic profiles, to create targeted promotions for advertisers. These marketing campaigns are
tailored to meet the needs of the specific advertiser, which may include generating sales leads, soliciting information, registrations or the
purchase of an advertiser's products or services, or increasing customer traffic on an advertiser's Web site. In many cases, MyPoints sends
personalized email marketing messages, called Bonusmail, that are directed specifically to individual MyPoints members to showcase a single
advertiser or offer. Generally, MyPoints members receive points for clicking through the media links in Bonusmail as well as for purchases or
other actions taken within a limited time period.
All of our online loyalty marketing service revenues are classified as advertising revenues. Advertisers pay us primarily based on
performance measures that include when our MyPoints emails are transmitted to members, when members respond to emails and when members
complete online transactions.
Our strategy for our online loyalty marketing service includes the following key elements: enhance member experience and engagement by
broadening the range of available advertiser offers, including expanding offers for offline activities and for recurring purchases such as gasoline
and consumer packaged goods; reward our most active members by providing them additional opportunities to earn improved rewards; increase
our member base through increased acquisition spend and exploration of new marketing channels; increase the types of awards available to our
members; and increase automation of our service and offers to decrease costs and increase our ability to personalize offers to our members.
Communications
Our principal Communications pay service is dial-up Internet access, offered under the NetZero and Juno brands. We also offer broadband
services, email, Internet security services, and Web hosting services. In total, we had 1.4 million Communications pay accounts at December 31,
2009, of which 1.0 million were dial-up Internet access accounts. Most of our Communications revenues are derived from dial-
up Internet access
pay accounts. For additional information regarding our Communications segment, see Note 2—"Segment Information" of the Notes to the
Consolidated Financial Statements, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
Internet Access Services
Our dial-up Internet access services are provided on both a free and pay basis, with the free services subject to hourly and other limitations.
Basic pay dial-up Internet access services include Internet access and an email account, although we also offer an enhanced email service as a
stand-alone pay service. In addition, we offer accelerated dial-
up Internet access services which can significantly reduce the time for certain Web
pages to download when compared to our basic dial-up
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