Enom 2011 Annual Report Download - page 19

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.
We rely primarily on creative professionals for a majority of our online content. We may not be able to attract or retain sufficient creative professionals to
generate content on a scale or of a quality sufficient to grow our business. As we do not control those persons or the source of content, we are at risk of
being unable to generate interesting and attractive features and other material content.
We rely primarily on freelance creative professionals for the content that we distribute through our owned and operated websites and our network
of customer websites. We may not be able to attract or retain sufficient qualified and experienced creative professionals to generate content on a scale or of a
quality sufficient to grow our business. For example, our premium video initiatives may require the engagement of producers, contributors, talent, editors and
filmmakers with a specialized skill set, and there is no assurance that we will be able to engage such specialists in a cost-effective manner or at all.
Furthermore, as we develop new content formats to meet changing consumer demand, we may not offer the volume of traditional content assignments that our
creative professionals have grown accustomed to, and some of our creative professionals may seek assignments elsewhere or otherwise stop producing
content for us. In addition, our competitors may attempt to attract members of our freelance creative professional community by offering compensation that
we are unable to match. We believe that over the past four years our ability to attract and retain creative professionals has benefited from the weak overall
labor market and from the difficulties and resulting layoffs occurring in traditional media, particularly newspapers. We are uncertain whether this combination
of circumstances is likely to continue and any change to the economy or the media jobs market may make it more difficult for us to attract and retain freelance
creative professionals. While each of our freelance creative professionals are screened through our pre-qualification process, we cannot guarantee that the
content created by our creative professionals will be of sufficient quality to attract users to our owned and operated websites and to our network of customer
websites. In addition, in the vast majority of cases we have no written agreements with these persons which obligate them to create articles or videos beyond
the one article or video that they elect to create at any particular time and have no ability to control their future performance. As a result, we cannot guarantee
that our freelance creative professionals will continue to contribute content to us for further distribution through our owned and operated websites and our
network of customer websites or that the content that is created and distributed will be sufficient to sustain our current growth rates. In the event that these
creative professionals decrease their contributions of such content, we are unable to attract or retain qualified creative professionals or if the quality of such
contributions is not sufficiently attractive to our advertisers or to drive traffic to our owned and operated websites and to our network of customer websites,
we may incur substantial costs in procuring suitable replacement content, which could have a negative impact on our business, revenue and financial
condition.
We may not be successful in developing premium video content and other new content formats, which may limit our future growth and have a negative
effect on our business, revenue, financial condition and results of operations.
One potential area of growth for us is in the development of new content formats such as premium video for distribution through our owned and
operated websites and our network of customer websites. We recently entered into a multi-channel, premium video sponsorship relationship with YouTube,
and we are investing in our content creation studio capabilities to increase our capacity to produce premium video content and other non-video longer-form
and high quality content formats. We have limited experience in developing premium video content and other types of new content formats. We cannot be
certain that we will be successful in producing new content formats or that our new content formats will gain market acceptance. Our inability to expand our
content offerings may limit our future growth and have a negative effect on our business, revenue, financial condition and results of operations.
The loss of third-party data providers could significantly diminish the value of our services and cause us to lose customers and revenue.
We collect data regarding consumer search queries from a variety of sources. When a user accesses one of our owned and operated websites, we
may have access to certain data associated with the source and specific nature of the visit to our website. We also license consumer search query data from
third parties. Our Content & Media algorithms utilize this data to help us determine what content consumers are seeking, if that content is valuable to
advertisers and whether we can cost-effectively produce this content. Some of these third-party consumer search data agreements are for perpetual licenses of
a discrete amount of data and generally do not provide for updates of the data licensed. There can be no assurances that we will be able to enter into
agreements with these third parties to license additional data on the same or similar terms, if at all. If we are not able to enter into agreements with these
providers, we may not be able to enter into agreements with alternative third-party consumer search data providers on acceptable terms or on a timely basis or
both. Any termination of our relationships with these consumer search data providers, or any entry into new agreements on terms and conditions less
favorable to us,
15