Enom 2012 Annual Report Download - page 20

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We may not be successful in developing new content formats, including paid subscription content, or acquiring, investing in
or developing new lines of business, which may limit our future growth and have a negative effect on our business, revenue,
financial condition and results of operations.
An important potential area of growth for us is the development of new content formats, including paid subscription
content. We also regularly evaluate and consider acquiring or investing in new lines of business, or developing these new lines
of business internally, including businesses that are ancillary to our existing Content and Media service offering. If we
develop, acquire or invest in new lines of business, including the development of new content formats, we will need to develop,
integrate and effectively manage these new businesses. For example, we have limited experience developing paid subscription
content and we cannot be certain that we will be successful in implementing such new lines of business. These new lines of
business may be subject to significant business, economic and competitive uncertainties and contingencies frequently
encountered by new businesses in competitive environments, many of which are beyond our control, including the lack of
market acceptance. We also may not be successful in implementing appropriate operational, financial and management
systems and controls to achieve the benefits expected to result from these new lines of business. In addition, if any new
business which we acquire or develop or in which we invest does not progress as planned, we may not recover the funds and
resources we have expended. Our inability to acquire, invest in or develop new lines of business, such as expanding our
content offerings to include paid subscription content, 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, could limit the
effectiveness of our content creation process, which would have a material adverse effect on our business, financial condition
and results of operations. In addition, new laws or changes to existing laws in this area may prevent or restrict our use of this
data. In such event, the value of our algorithms and our ability to determine what consumers are seeking could be significantly
diminished.
If we are unable to attract new customers for our content channels service offering or our social media product
applications, or to retain our existing customers of these products and services, our revenue could be lower than expected
and our operating results may suffer.
Our content channels service offering helps publishers and brands broaden their reach online by creating topically relevant
content to publish to their websites and utilizing our proprietary creation and distribution platform. We anticipate that a
significant portion of our investment in media content in 2013 will result from our expanding investment in our content
channels service offering. We currently have approximately 25 content channels partners and anticipate expanding this service
offering during 2013 and beyond. In order to expand this service offering, we need to continue to generate new content
channels customers and maintain our existing customers. If our existing and prospective content channels customers do not
perceive our media content to be of sufficiently high quality, we may not be able to expand our content offering on the websites
of existing customers, retain our current customers or identify and attract new customers. Our content channel agreements are
generally two-year arrangements for the creation and distribution of media content, and typically include a revenue sharing
arrangement with respect to different types of advertising generated by the display of our media content.
In addition, 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. We also provide social media services by powering live events with social engagement tools.
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