NetZero 2011 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 register and provide certain identifying information to receive direct
email marketing and other online loyalty promotions. The MyPoints website (www.mypoints.com)
serves as a shopping portal for our advertising
clients and direct sales partners. Members earn points for responding to email offers, taking market research companies' surveys, shopping online
at the MyPoints website, searching the Internet through a MyPoints branded toolbar, playing MyPoints branded online games, and engaging in
other online activities. In addition to these online point earning opportunities, MyPoints also offers a member credit card with opportunities to
earn points through both online and offline shopping. Rewards points are redeemable primarily in the form of third-party gift cards currently
from approximately 85 merchants, including, among others, leading retailers, theaters, restaurants, airlines, and hotels.
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 goals of the specific advertiser, which are most commonly to generate incremental sales of an advertiser's products or
services but may also include objectives that do not involve purchase transactions such as generating sales leads or increased traffic on an
advertiser's website. 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. MyPoints members benefit not only from attractive discounts and other
benefits featured in BonusMail® offers but also generally receive points for purchases and for clicking through the media links in BonusMail®
to the advertiser's website as well as for other actions taken within a limited time period. We believe the limited-time nature of the BonusMail®
offers adds a sense of urgency to the promotion for the consumer.
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.
Communications
Our principal Communications pay service is dial-up Internet access, offered under the NetZero and Juno brands. We also offer broadband
Internet access, email, Internet security services, and web hosting services. In total, we had 0.8 million Communications pay accounts at
December 31, 2011, of which 0.5 million were Internet access accounts and 0.3 million were pay accounts subscribed to our other
Communications services, including email, Internet security and web hosting services. 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 Internet access services consist of dial-up and, to a much lesser extent, broadband 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. In addition, we offer accelerated dial-
up Internet access services which can significantly reduce the
time required for certain web pages to load during Internet browsing when compared to our basic dial-up Internet access services. Our
accelerated dial-up Internet access services
11