NetZero 2011 Annual Report Download - page 59

Table of Contents
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 customer billing and billing support for floral network members; fees associated with the
storage and processing of customer credit cards and associated bank fees; and domain name registration fees.
Content & Media
Content & Media cost of revenues includes costs of points earned by members of our online loyalty marketing service; data center costs;
personnel- and overhead-related costs associated with operating our networks and data centers; depreciation of network computers and
equipment; amortization of content purchases; license fees; costs related to providing customer support; costs related to customer billing and
billing support for our pay accounts; fees associated with the storage and processing of customer credit cards and associated bank fees; domain
name registration fees; and costs associated with the sale of yearbook copies and related shipping costs.
Communications
Communications cost of revenues includes telecommunications and data center costs; personnel- and overhead-
related costs associated with
operating our networks and data centers; depreciation of network computers and equipment; license fees; costs related to providing customer
support; costs related to customer billing and billing support for our pay accounts; fees associated with the storage and processing of customer
credit cards and associated bank fees; and domain name registration fees.
Sales and Marketing
Sales and marketing expenses include expenses associated with promoting our brands, products and services and with generating
advertising revenues. Expenses associated with promoting our brands, products and services include advertising and promotion expenses; fees
paid to distribution partners, third-party advertising networks and co-registration partners to acquire new pay and free accounts; personnel and
overhead-related expenses for marketing, merchandising, customer service, and sales personnel; and telemarketing costs incurred to acquire and
retain pay accounts and up-sell pay accounts to additional services. Expenses associated with generating advertising revenues include sales
commissions and personnel-related expenses. We have expended significant amounts on sales and marketing, including branding and customer
acquisition campaigns consisting of television, Internet, sponsorships, print, and outdoor advertising, and on retail and other performance-based
distribution relationships. Marketing and advertising costs to promote our products and services are expensed in the period incurred. Advertising
and promotion expenses include media, agency and promotion expenses. Media production costs are expensed the first time the advertisement is
run. Media and agency costs are expensed over the period the advertising runs.
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