Enom 2013 Annual Report Download - page 47

The following table sets forth additional performance highlights of key business metrics for the periods presented:
Opportunities, Challenges and Risks
To date, we have derived the majority of our revenue from the sale of advertising in connection with our Content & Media service
offering and domain name registration subscriptions in connection with our Domain Name Services offering. We believe there is an opportunity
to diversify our Content & Media revenue streams through commerce initiatives to offer products and on-deman d services for purchase and to
create and distribute content for third party brands and publishers. To further our commerce initiatives, in June 2013 we acquired Society6, a
digital artist marketplace and e-commerce platform that enables a large community of talented artists to sell their original designs on art prints
and other products. Additionally, while our content is currently targeted primarily at users in the United States, we believe that there is an
opportunity in the longer term for us to create content and sell products targeted at users located outside of the United States and thereby increase
our revenue generated from countries outside of the United States. We may incur additional expenses associated with expanding our business
internationally.
Our Content & Media revenue is currently primarily advertising-
based and principally dependent upon page views and RPMs. We believe
that there are opportunities to grow our page views by improving the user experience on our websites, creating more content in a greater variety
of formats, particularly formats better suited for mobile devices, and expanding our network of customer websites where we can distribute
content produced through our platform. However, we rely largely on search engine referrals to o ur owned and operated websites for page
views. Google, the largest provider of search engine referrals to the majority of our websites, regularly deploys changes to its search engine
algorithms. Since 2011, we have experienced fluctuations in the total number of Google search referrals to our owned and operated websites,
including eHow.com and Livestrong.com, and during 2013, we experienced several negative changes in Google referrals that, in the aggregate,
were larger in magnitude than previous changes, and these changes resulted in substantial declines in traffic to our owned and operated websites.
Other search engines may deploy similar changes. Additional changes to search engine algorithms may result in material fluctuations in our
financial performance. Our RPMs may also be negatively impacted by changes in the online advertising marketplace, which could include lower
rates received for mobile and other ad units as well as changes in the manner in which we sell our ad inventory.
In an effort to improve user experience and engagement, we regularly evaluate and strive to continuously improve our websites, content
library and content creation platform. Such improvements include redesigning our websites, refining our content library through select removal
s
and additions, establishing more stringent criteria for the admission of content creators, adding processes to ensure that each additional unit of
content published is unique in relation to existing content units, creating new content formats designed to further diversify our content offering,
renovating and improving existing content, and integrating commerce products and services with our content experience. For example, in
response to the changes in search engine algorithms since 2011, we performed evaluations of our existing content library to identify potential
improvements. As a result of these evaluations, we elected to remove certain content assets from service, resulting in $2.4 million, $2.1 million
and $5.9 million of related accelerated amortization expense in the years ended December 31, 2013, 2012 and 2011, respectively. We may
perform similar content remediations in the future, which could result in additional accelerated amortization expense related to the content that
we remove from our library.
45
Year ended December 31,
% Change
2013
2012
2011
2013 to 2012
2012 to 2011
Content & Media Metrics
(1)
:
Owned & operated
Page views (in millions)
16,348
13,192
10,378
24
%
27
%
RPM
$
11.96
$
13.53
$
15.14
-
12
%
-
11
%
Network of customer websites
Page views (in millions)
16,793
18,989
17,436
-
12
%
9
%
RPM
$
3.03
$
3.58
$
2.77
-
15
%
29
%
RPM ex
-
TAC
$
2.08
$
2.55
$
2.06
-
18
%
24
%
Registrar Metrics
(1)
:
End of Period # of Domains (in millions)
15.0
13.7
12.7
9
%
8
%
Average Revenue per Domain
(2)
$
10.36
$
10.19
$
10.08
2
%
1
%
(1)
For a discussion of these period-to-period changes in the number of page views, RPM, end of period domains and average revenue per
domain and how they impacted our financial results, see
“
Results of Operations
”
below.
(2)
Beginning July 1, 2011, the number of net new domains has been adjusted to include only new registered domains added to our platform for
which we have recognized revenue. Excluding the impact of this change, end of period domains at December 31, 2012 would have increased
13% and average revenue per domain during the year ended December 31, 2012 would have decreased 4%, each compared to the
corresponding prior
-
year period.