Classmates.com 2011 Annual Report Download - page 23

Table of Contents
or functionality will be accepted by consumers or commercially successful. If our development and implementation efforts are not successful, or
such new initiatives, products, services, features, or functionality are not accepted by consumers or commercially successful, our key metrics and
financial results could be materially and adversely impacted.
Our marketing efforts may not be successful, which could increase our costs and adversely impact our key metrics and financial results.
We spend significant resources marketing our brands, products and services. We rely on relationships with a wide variety of third parties,
including Internet search providers, Internet advertising networks, co-registration partners, retailers, distributors, and direct marketers, to
promote or distribute our products and services. In addition, in connection with the launch of new products or services, such as those related to
the planned NetZero 4G mobile broadband service, we may spend a significant amount on their marketing, including through television
advertising. If our marketing activities are inefficient or unsuccessful, or if important third-party relationships become more expensive or
unavailable, our key metrics and financial results could be materially and adversely impacted.
We may be unable to maintain or grow our advertising revenues. Reduced advertising revenues may reduce our profits.
Advertising revenues are a key component of revenues and profitability for our Content & Media and Communications segments. Factors
that have caused, or may cause in the future, our advertising revenues to fluctuate include, without limitation, changes in the number of visitors
to our websites, active accounts or consumers purchasing our products and services, the effect of, changes to, or terminations of key advertising
relationships, changes to our websites and advertising inventory, changes in applicable laws, regulations or business practices, including those
related to behavioral or targeted advertising, user privacy and taxation, changes in business models, changes in the online advertising market,
changes in the economy, advertisers' budgeting and buying patterns, competition, and changes in usage of our services. Decreases in our
advertising revenues are likely to adversely impact our profitability.
Advertising revenues generated by our Content & Media and Communications segments generally have been declining, when compared to
prior periods, and may continue to decline in the future as a result of various factors, including, without limitation, the risks and uncertainties
discussed above, in other risk factors, and elsewhere in this Annual Report on Form 10-
K. Any or all of the above factors have caused, and could
continue to cause, our advertising revenues and profits to significantly decline in the future.
Changes in foreign currency exchange rates could adversely affect comparisons of our operating results.
We transact business in different foreign currencies and may be exposed to financial market risk resulting from fluctuations in foreign
currency exchange rates, including the British Pound, the Euro, the Indian Rupee, the Swedish Krona, the Swiss Franc, and the Canadian Dollar.
Revenues and expenses in foreign currencies translate into higher or lower revenues and expenses in U.S. Dollars as the U.S. Dollar weakens or
strengthens against such other currencies. Substantially all of the revenues of our foreign subsidiaries are received, and substantially all expenses
are incurred, in currencies other than the U.S. Dollar, which increases or decreases the related U.S. Dollar-reported revenues and expenses
depending on the trend in foreign currency exchange rates. Certain of our key business metrics, such as the FTD segment's average order value
and the Content & Media segment's ARPU, are similarly affected by such foreign currency exchange rate fluctuations. Changes in global
economic conditions, market factors, and governmental actions, among other factors, can affect the value of these currencies in relation to the
U.S. Dollar. A strengthening of the U.S. Dollar compared to these
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