Incredimail 2013 Annual Report Download - page 32

With the acquisition of ClientConnect, we assumed ClientConnect's search services agreements, including an agreement with each of
Microsoft and Google. Based on the reports received from Conduit, search generated revenues accounted for 85% of ClientConnect’
s revenues
in 2013. The agreement with Microsoft (the "Microsoft Agreement"), entered into in November 2010 and subsequently amended in May 2011,
runs through December 31, 2014, and accounted for 89%, 81% and 63% of ClientConnect's revenues in 2011, 2012 and 2013, respectively. The
fees payable by Microsoft under the Microsoft Agreement are payable based on either a fixed price, pay-per-
search basis that is tied to the
number of searches conducted by end users, or in certain instances on a share of the revenue generated as a result of searches conducted by end
users who utilize the search engine that appears on toolbars created by publishers through ClientConnect's platform. The fees payable by
Microsoft vary annually over the term of the agreement, decreasing significantly during the last two years (2013 and 2014) of the term of the
agreement compared to the first two years (2011 and 2012). To a lesser extent, we also syndicate Microsoft-
provided searches through
publishers' websites with which the business enters into syndication agreements. Under the agreement, Microsoft had exclusivity in 2011 and
2012 in providing search services and search monetization services through platform-
generated toolbars in the United States. Despite the
termination of the exclusivity period under the Microsoft Agreement, Microsoft Bing currently remains the effective main search provider of
ClientConnect for searches conducted through platform-generated toolbars in the United States and Canada.
ClientConnect's agreement with Google, entered into in 2011, and subsequently replaced by a substantially similar agreement entered
into on September 1, 2013 for a term of two years, has historically been the second largest source of revenue for ClientConnect, accounting for
9%, 15% and 22% of ClientConnect's revenues in 2011, 2012 and 2013, respectively. Google serves as the main provider of ClientConnect of
search services to end users of platform-
generated toolbars in all locations outside of the United States and Canada. Revenues are paid on the
basis of a revenue-
sharing arrangement with Google, entitling us to a percentage of the revenues generated by Google as a result of searches
conducted by end users through search engines integrated by search our syndication solutions.
Advertising and other revenues
As part of our CodeFuel solution, we offer publishers and developers monetization opportunities through DisplayFuel, our innovative
browser extension that offers recommendations, deals, coupons and relevant content to users as they browse online. Additionally, through our
InstallFuel platform, we offer developers the ability to easily incorporate ads into the download and installation process of their software, thereby
further increasing monetization opportunities. Through these tools, we receive a fee from our ad partners.
Developer Products and Solutions
Our LCM platform provides solutions for the challenges that exist at every stage of the application life cycle. Particularly, our solutions
tackle developers' three main challenges: distribution, monetization and optimization, each as described below.
Distribution
As the vast majority of apps remain largely undiscovered, developers are initially met with distribution challenges. Buying traffic is
necessary but extremely complicated, and developers often find themselves lost between different technologies and platforms.
InstallFuel is our powerful, self-
service installation platform that enhances the integrity of the installation process. With over 900,000
different download managers created to date, InstallFuel is HTML-
based and fully customizable. In addition, InstallFuel incorporates a unique
proprietary accelerator for faster downloads and higher conversion. The platform also includes built-
in A/B testing capabilities enabling
developers to adjust their install funnels and increase completion rates.
In addition to our InstallFuel installation platform, we offer our clients a wide range of competitive marketing services to further
increase the distribution of their offerings. We employ a highly skilled search engine marketing and partnership team to personalize and enhance
the distribution process. Additionally, we employ sophisticated business intelligence systems to monitor the loan-to-
value ("LTV") and return on
investment ("ROI") performance, allowing us to measure and analyze the success of various marketing tactics at any given time. Based on this
analysis, our marketing team creates and updates individual marketing plans to help optimize distribution.
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