Classmates.com 2010 Annual Report Download - page 55

Table of Contents
are primarily dependent on two factors: the average number of pay accounts for a period and the ARPU. 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.
Products Revenues
Products revenues consist of merchandise revenue and related shipping and service fees, less discounts and refunds, for FTD consumer
orders as well as revenues generated from sales of containers, software and hardware systems, cut flowers, packaging and promotional products,
and a wide variety of other floral-related supplies to floral network members. We do not generate products revenues from our Communications
segment and we do not currently generate products revenues from our Content & Media segment.
Advertising Revenues
We provide advertising opportunities 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 offer targeting technologies, website sponsorships and website
integrations.
FTD
FTD has historically generated advertising revenues primarily from post-transaction sales generated when FTD and Interflora consumers
were presented with third-party offers immediately after completing a purchase on the www.ftd.com and www.interflora.co.uk
websites. FTD has
not had a domestic post-transaction sales agreement since January 2010 and terminated its international post-transaction sales agreement in
January 2011.
Content & Media
Our online nostalgia services generate advertising revenues primarily from display advertisements. Advertising inventory on our online
nostalgia websites includes text and graphic placements on the user home page, profile page, class list page, and most other pages on our
websites. We also sell a portion of our advertising inventory through third-party advertising resellers.
Our online loyalty marketing service revenues are derived from advertising fees, consisting primarily of fees based on performance
measures, that are 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 online activities including, but not limited to, games, Internet searches and market
research surveys.
Communications
Our Communications services generate advertising revenues from search placements, display advertisements and online market research
associated with our Internet access and email services. Advertising revenues also include intercompany commissions from our Content & Media
segment which are included in reported segment results and are eliminated upon consolidation.
Cost of Revenues
FTD
FTD cost of revenues includes product costs; shipping and delivery costs; costs associated with taking orders; printing and postage costs;
costs related to FTD's product quality guarantee; systems installation, training and support costs; data center costs; depreciation of network
computers and equipment; license fees; costs related to providing customer support; costs related to customer billing
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