ServiceMagic 2012 Annual Report Download - page 8

Table of Contents
Revenue
Substantially all of the revenue from our Search & Applications segment is derived from online advertising, primarily from the display of
paid listings, as well as from the display of other advertising in connection with the provision of search, content and other services. The
substantial majority of the paid listings we display are supplied to us by Google pursuant to a services agreement with Google that expires on
March 31, 2016.
Pursuant to this agreement, we transmit search queries to Google, which in turn transmits a set of relevant and responsive paid listings back
to us for display in search results. This ad-serving process occurs independently of, but concurrently with, the generation of algorithmic search
results for the same search queries. Google paid listings are displayed separately from algorithmic search results and are identified as sponsored
listings on search results pages. When a user submits a search query through our Search & Applications properties and services and clicks on a
Google paid listing displayed in response to the query, Google bills the advertiser that purchased the paid listing directly and shares a portion of
its related paid listing fee with us, which we in turn either retain in its entirety or share with third parties. To a lesser extent, we also syndicate
Google paid listings through third parties with whom we enter into syndication agreements. See “Item 1A-Risk Factors-We depend upon
arrangements with Google and any adverse change in this relationship could adversely affect our business, financial condition and results of
operations.”
Revenue is also derived from the sale of display, content1based and other advertising pursuant to a variety of advertising models and the
syndication of search results generated by Ask-branded destination search websites.
Competition
We compete with a wide variety of parties in connection with our efforts to: (i) attract users to our various Search & Applications properties
and services generally; (ii) develop, market and distribute our B2C and B2B applications; (iii) attract third parties to distribute our Applications
and related technology; and (iv) attract advertisers. In the case of our search services generally, our competitors include Google, Yahoo!, Bing
and other destination search websites and search1centric portals (some of which provide a broad range of content and services and/or link to
various desktop applications), third party toolbar, convenience search and applications providers, other search technology and convenience
service providers (including internet access providers, social media platforms, online advertising networks, traditional media companies and
companies that provide online content). When we market our search and content services, our competitors include destination websites that
primarily acquire traffic through paid and algorithmic search results.
Moreover, some of our current and potential competitors have longer operating histories, greater brand recognition, larger customer bases
and/or significantly greater financial, technical and marketing resources than we do. As a result, they have the ability to devote comparatively
greater resources to the development and promotion of their products and services, which could result in greater market acceptance of their
products and services relative to those offered by us.
In the case of our Websites, we believe that our ability to compete successfully will depend primarily upon the relevance and authority of
our search results, answers and other content, the functionality of our various Websites and the quality of related content and features and the
attractiveness of the services provided by our Websites generally to consumers relative to those of our competitors. We believe that we
differentiate Ask.com from its competitors through question and answer services that provide accurate, authoritative and direct answers to
natural1language questions (in the form of algorithmic search results and/or responses from other Ask.com users). Our ability to continue to
differentiate Ask.com from its competitors in this manner depends primarily upon our ability to deliver authoritative and trustworthy content to
users, as well as our ability to attract advertisers to this initiative.
In the case of our Applications, we believe that our ability to compete successfully will depend primarily upon our continued ability to
create toolbars and other applications that resonate with consumers (which requires that we continue to bundle attractive features, content and
services, some of which may be owned by third parties, with quality search services), differentiate our toolbars and other applications from those
of our competitors (primarily through providing customized toolbars and access to multiple search and other services through our toolbars),
secure cost-effective distribution arrangements with third parties and market and distribute our toolbars and other applications directly to
consumers in a cost-effective manner.
Match
Overview
Through the brands and businesses within our Match segment, we are a leading provider of subscription1based and ad1supported online
personals services in North America, Europe, Latin America, Australia and Asia. We provide these
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