Enom 2010 Annual Report Download - page 22

Table of Contents
the occurrence of extraordinary events, such as natural disasters, international or domestic terrorist attacks or armed conflict.
If we are unable to generate advertising revenue due to factors outside of our control, then our business, revenue, financial condition and results of operation
would be adversely affected.
Since the success of our Content & Media service offering has been closely tied to the success of eHow, if eHow's performance falters it could have a
material adverse effect on our business, financial condition, and operations.
For the years ended December 31, 2009 and 2010, Demand Media generated approximately 13% and 25%, respectively, of our revenue from eHow. No
other individual site was responsible for more than 10% of our revenue in these periods. In addition, most of the content that we published during these
periods was published to eHow.
eHow depends on various Internet search engines to direct traffic to the site. For the quarter ended December 31, 2010, approximately 65% of eHow's
page view traffic came from Google searches. Any changes in search engine methodologies or our failure to properly manage SEO efforts for eHow may
adversely impact the traffic directed to eHow and in turn the performance of the content created for and distributed on eHow. Furthermore, as the amount of
content housed on eHow grows, its increased size may slow future growth. For example, we have found that users' ability to find content on eHow through
popular search engines is impaired if the increased volume of content on the site is not matched by an improved site architecture. Additionally, we have
already produced a significant amount of content that is housed on eHow and it may become difficult for us to continue to identify topics and produce content
with the same level of broad consumer appeal as the content we have produced up to this point. A material adverse effect on eHow could result in a material
adverse effect to Demand Media and its business, financial condition, and operations.
Poor perception of our brand, business or industry could harm our reputation and adversely affect our business, financial condition and results of
operations.
Our business is dependent on attracting a large number of visitors to our owned and operated websites and our network of customer websites and
providing leads and clicks to our advertisers and customers, which depends in part on our reputation within the industry and with our customers. Because our
business is transforming traditional content creation models and is therefore not easily understood by casual observers, our brand, business and reputation is
vulnerable to poor perception. For example, perception that the quality of our content may not be the same or better than that of other published Internet
content, even though baseless, can damage our reputation. We are frequently the subject of unflattering reports in the media about our business and our model.
While disruptive businesses are often criticized early on in their life cycles, we believe we are more frequently targeted than most because of the nature of the
business we are disrupting—namely the traditional print and publication media as well as popular Internet publishing methods such as blogging. Any damage
to our reputation could harm our ability to attract and retain advertisers, customers and freelance content creators, which would materially adversely affect our
results of operations, financial condition and business. Furthermore, certain of our owned and operated websites, such as LIVESTRONG.com, are associated
with high-profile experts to enhance the websites' brand recognition and credibility. In addition, any adverse news reports, negative publicity or other
alienation of all or a segment of our consumer base relating to these high-profile experts would reflect poorly on our brands and could have an adverse effect
on our business.
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