Enom 2015 Annual Report Download - page 15

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Certain changes to the business model for our Content & Media service offering and related expenditures could
negatively impact our operating margins in the near-term and may not lead to increased revenue in the long-term.
We have recently incurred significant expenses to improve the user experience and engagement on certain of our
Content & Media properties by redesigning our websites; removing duplicative or low-quality content; reducing the ad
unit density; changing the format of advertising units; improving the mobile experience and adding user engagement
tools. Such expenses do not directly generate related revenue and certain changes will likely negatively impact our
revenue and operating margins in the near-term. In particular, between 2013 and 2015, we removed a significant amount
of content from eHow and Livestrong.com and reduced the number of ad units on each page, which collectively resulted
in a large decrease in revenue and will continue to negatively impact revenue and operating margins due to the reduction
in content and ad units generating advertising revenue on these sites. We may also incur additional expenses in order to
further improve the product and user experience associated with our online properties. These recent changes and any
additional changes may not result in increased visits to, or increased revenue generated by, our Content & Media
properties in the near-term or long-term. We also plan to continue investing in building our studioD business, which
develops and executes content marketing strategies and creates custom content for third-party brands, advertisers and
publishers. If these customers do not perceive our content marketing and custom content services to be driving
performance for their business, we may not be able to expand our relationship with our current customers or identify and
attract new customers, and we may not generate sufficient revenue from this service offering to justify our planned
investment in this business.
If we are unable to attract new customers to our marketplaces and successfully grow our marketplaces business, our
business, financial condition and results of operations could be adversely affected.
We operate two leading art and design marketplaces and we recently launched a marketplace that carries boutique-
style products for pets, as well as animal-themed clothing and accessories. We have limited experience in marketing,
managing and growing these revenue streams.
The success of our marketplaces is dependent upon a number of factors, including:
x demand for these types of products and market acceptance of our products;
x our ability to attract new customers;
x increased brand awareness and the reputation of our marketplaces;
x our ability to maintain the artist communities on Society6 and Saatchi Art so that artists continue to contribute
and maintain their original artwork and designs on these marketplaces;
x our ability to cost-effectively introduce and market new products on Society6 on a timely basis to address
changing consumption trends and consumer preferences;
x the success and competitiveness of new entrants into this highly competitive industry;
x competitive pricing pressures, including potential discounts offered to attract customers and reduced or free
shipping;
x maintaining significant strategic relationships with our print-on-demand suppliers and ensuring the quality of
their products and the timeliness of our production cycle for our art and design marketplaces;
x disruptions in the supply-chain, production and fulfillment operations associated with the print-on-demand
products sold through our art and design marketplaces;
x our ability to source local vendors as we look to expand internationally;