ServiceMagic 2012 Annual Report Download - page 28

Table of Contents
expense at Match increased primarily due to Meetic, which was included for only part of the prior year, and an increase in offline marketing
spend.
For the year ended December 31, 2011 compared to the year ended December 31, 2010
Selling and marketing expense in 2011 increased from 2010 primarily due to increases of $66.8 million from Search & Applications and
$49.6 million from Match. The increase from Search & Applications is due to an increase of $66.2 million in advertising and promotional
expenditures due to increased online marketing related to Ask.com and new B2C downloadable applications. Selling and marketing expense at
Match increased primarily due to the acquisition of Meetic and increases in offline and online marketing spend associated with the OurTime.com
website and an advertising agreement entered into during the second quarter of 2010 with Yahoo! Inc. ("Yahoo").
General and administrative expense
General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based
compensation) for personnel engaged in executive management, finance, legal, tax and human resources, facilities costs and fees for professional
services.
For the year ended December 31, 2012 compared to the year ended December 31, 2011
General and administrative expense in 2012 increased from 2011 primarily due to increases of $30.0 million from Media, $15.1 million
from Local, $11.2 million from Match and $8.5 million from Search & Applications. As a percentage of revenue, general and administrative
expense in 2012 decreased from 2011 primarily due to operating expense leverage. The increase from Media resulted primarily from the
inclusion of News_Beast, consolidated beginning June 1, 2012, which includes $7.0 million in restructuring costs related to its transition to a
digital only publication, as well as an increase in operating expenses at Electus. The increase in general and administrative expense from Local is
primarily due to higher compensation and employee-related expenses at both HomeAdvisor and CityGrid Media, as well as an increase in bad
debt expense at HomeAdvisor. The increase in compensation and employee-related expenses at CityGrid Media is primarily due to employee
termination costs associated with a reduction in workforce and the acquisition of Felix. The increase from Match is primarily due to Meetic,
which was included for only part of the prior year, partially offset by a decrease in professional fees due, in part, to the inclusion in the prior year
of $4.0 million in transaction fees associated with the Meetic acquisition. General and administrative expense from Search & Applications
increased primarily due to the acquisition of The About Group, and increases in compensation and other employee-
related costs and professional
fees.
For the year ended December 31, 2011 compared to the year ended December 31, 2010
General and administrative expense in 2011 increased from 2010 primarily due to increases of $18.0 million from Match, partially offset
by a decrease of $10.9 million from Search & Applications. As a percentage of revenue, general and administrative expense in 2011 decreased
from 2010 primarily due to operating expense leverage. The increase from Match resulted primarily from the acquisition of Meetic, as well as an
increase in professional fees due, in part, to $4.0 million in transaction fees associated with the Meetic acquisition, and operating expenses from
OkCupid, which was not in the prior year. General and administrative expense from Search & Applications decreased primarily due to a
decrease in compensation and other employee-related costs, lower professional fees, including a decrease in litigation related expenses, and the
inclusion in 2010 of lease termination costs associated with the Ask.com restructuring.
Product development expense
25
Years Ended December 31,
2012
$ Change % Change 2011 $ Change % Change 2010
(Dollars in thousands)
General and administrative
expense $396,013
$67,285 20% $328,728 $12,228 4% $316,500
As a percentage of revenue 14%
16% 19%
Years Ended December 31,
2012
$ Change % Change 2011 $ Change % Change 2010
(Dollars in thousands)
Product development expense $101,869 $23,109 29% $78,760 $13,663 21% $65,097
As a percentage of revenue 4% 4% 4%