Enom 2010 Annual Report Download - page 24

Table of Contents
If we are unable to attract new customers for our social media applications products or to retain our existing customers, our revenue could be lower than
expected and our operating results may suffer.
Our enterprise-class social media tools allow websites to add feature-rich applications, such as user profiles, comments, forums, reviews, blogs, photo
and video sharing, media galleries, groups and messaging offered through our social media application product suite. In addition to adding new customers for
our social media products, to increase our revenue, we must sell additional social media products to existing customers and encourage existing customers to
maintain or increase their usage levels. If our existing and prospective customers do not perceive our social media products to be of sufficiently high quality,
we may not be able to retain our current customers or attract new customers. We sell our social media products pursuant to service agreements that are
generally one to two years in length. Our customers have no obligation to renew their contracts for our products after the expiration of their initial
commitment period, and these agreements may not be renewed at the same or higher level of service, if at all. In addition, these agreements generally require
us to keep our product suite operational with minimal service interruptions and to provide limited credits to media customers in the event that we are unable to
maintain these service levels. To date, service level credits have not been significant. Moreover, under some circumstances, some of our customers have the
right to cancel their service agreements prior to the expiration of the terms of their agreements, including the right to cancel if our social media product suite
suffers repeated service interruptions. If we are unable to attract new customers for our social media products, our existing customers do not renew or
terminate their agreements for our social media products or we are required to provide service level credits in the future as a result of the operational failure of
our social media products, then our operating results could be harmed.
Our success depends upon the continued commercial use of the Internet, and acceptance of online advertising as an alternative to offline advertising.
The percentage of the advertising market allocated to online advertising lags the percentage of time spent by people consuming media online by a
significant percentage. Growth in our business largely depends on this distinction between online and offline advertising narrowing or being eliminated. This
may not happen in a way or to the extent that we currently expect. Many advertisers still have limited experience with online advertising and may continue to
devote significant portions of their advertising budgets to traditional, offline advertising media. Accordingly, we continue to compete for advertising dollars
with traditional media, including print publications, in addition to websites with higher levels of traffic. We believe that the continued growth and acceptance
of online advertising generally will depend on its perceived effectiveness and the acceptance of related advertising models, and the continued growth in
commercial use of the Internet, among other factors. Any lack of growth in the market for various online advertising models could have an adverse effect on
our business, financial condition and results of operations.
Wireless devices and mobile phones are increasingly being used to access the Internet, and our online marketing services may not be as effective when
accessed through these devices, which could cause harm to our business.
The number of people who access the Internet through devices other than personal computers has increased substantially in the last few years. In general
our Content & Media services were designed for persons accessing the Internet on a desktop or laptop computer. The smaller screens, lower resolution
graphics and less convenient typing capabilities of these devices may make it more difficult for visitors to respond to our offerings. In addition, the cost of
mobile advertising is relatively high and may not be cost-effective for our services. We must also ensure that our licensing arrangements with third-party
content providers allow us to make this content available on these devices. If we cannot effectively make our content, products and services available on these
devices, fewer consumers may access and
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