ServiceMagic 2014 Annual Report Download - page 24

Table of Contents
Even if we succeed in driving traffic to our properties, we may not be able to convert this traffic or otherwise retain users and customers
unless we continue to provide quality products and services. For example, in the case of About.com, we rely on independent, freelance subject
matter experts to generate quality content for our users. If we fail to recruit and retain such experts generally and/or the experts ultimately retained
cannot provide us with quality content in a cost-effective manner, the experience of our users would be adversely affected, which could adversely
affect our business, financial condition and results of operations. In addition, we may not be able to adapt quickly and/or in a cost-effective manner
to frequent changes in user and customer preferences, which can be difficult to predict, or appropriately time the introduction of enhancements
and/or new products or services to the market. Our inability to provide quality products and services would adversely affect user and customer
experiences, which would result in decreases in users, customers and revenues and could adversely affect our business, financial condition and
results of operations.
As discussed below, our traffic building and conversion initiatives also involve the expenditure of considerable sums for marketing, as well as
for the development and introduction of new products, services and enhancements, infrastructure and other related efforts.
Marketing efforts designed to drive traffic to our various websites may not be successful or cost
-effective.
Traffic building and conversion initiatives involve considerable expenditures for online and offline advertising and marketing. We have made,
and expect to continue to make, significant expenditures for search engine marketing (primarily in the form of the purchase of keywords, which we
purchase primarily through Google), online display advertising and traditional offline advertising in connection with these initiatives, which may
not be successful or cost-effective. In the case of our search engine marketing efforts, our failure to respond successfully to rapid and frequent
changes in the pricing and operating dynamics of search engines, as well as changing policies and guidelines applicable to keyword advertising
(which may be unilaterally updated by Google without advance notice), could adversely affect the placement of paid listings that appear in response
to keywords we purchase and the related user experience, as well as adversely affect the pricing of online advertising we purchase generally, which
would increase our costs and adversely impact the effectiveness of our advertising efforts overall. In the case of paid advertising generally, the
policies of sellers and publishers of advertising (including Google) may limit our ability to purchase certain types of advertising or advertise some
of our products and services, which could affect our ability to compete effectively and, in turn, adversely affect our business, financial condition
and results of operations.
One of the most cost-effective efforts we employ to attract and acquire new (and retain existing) users and customers is commonly referred to
as search engine optimization, or SEO. SEO involves developing websites to rank well within search engine results. Search engines frequently
update and change the logic that determines the placement and display of search results. The failure to successfully manage SEO efforts across our
businesses, including the timely modification of SEO efforts from time to time in response to periodic changes in search engine algorithms, search
query trends and related actions by providers of search services designed to ensure the display of unique offerings in search results (which actions
by search service providers may result in algorithmic listings being displayed less prominently within search engine results), could result in a
substantial decrease in traffic to our various websites, as well as increased costs if we were to replace free traffic with paid traffic, which would
adversely affect our business, financial condition and results of operations.
In addition, search engines continue to expand their offerings into other, non-search related categories, and in certain instances display their
own integrated or related product and service offerings in a more prominent manner than those of third parties within their search results. Continued
expansion and competition from search engines could result in a substantial decrease in traffic to our various websites, as well as increased costs if
we were to replace free traffic with paid traffic, which would adversely affect our business, financial condition and results of operations.
Lastly, as discussed above, we also enter into various arrangements with third parties in an effort to increase traffic, which arrangements are
generally more cost-effective than traditional marketing efforts. If we are unable to renew existing (and enter into new) arrangements of this nature,
sales and marketing costs as a percentage of revenue would increase over the long-term.
Any failure to attract and acquire new (and retain existing) traffic, users and customers in a cost-effective manner could adversely affect our
business, financial condition and results of operations.
Our success depends, in part, on our ability to build, maintain and/or enhance our various brands.
Through our various businesses, we own and operate a number of highly-recognizable brands with strong brand appeal within their respective
industries, as well as a number of fledgling brands that we are in the process of building. We believe that our success depends, in part, upon our
continuing ability to maintain and enhance our established brands, as well as build awareness of (and loyalty to) our fledgling brands. Our brands
and brand-building efforts could be negatively impacted by a
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