Incredimail 2014 Annual Report Download - page 20

Our mobile marketing business incurs upfront costs associated with onboarding advertisers to its platform and may not recoup our
investment if it does not maintain the advertiser relationship over time. We do not have long-
term agreements with advertisers of mobile
applications, and may be unable to retain key advertisers, attract new advertisers or replace departing advertisers with advertisers that
can provide comparable revenue to us.
Our operating results may be negatively affected if we are unable to recoup our upfront costs for adding new advertisers of mobile
applications to our platform. Upfront costs when adding new advertisers of mobile applications generally include expenses associated with
entering such advertisers' data into our systems and other implementation-
related costs. Because our advertisers are billed over the term of the
insertion order, if new advertisers sign insertion orders with short initial terms and do not renew them, or otherwise do not continue to use our
services to a level that generates revenues in excess of our upfront expenses, our operating results could be negatively impacted. In cases in
which the implementation process is particularly complex, the revenues resulting from such advertiser of mobile applications may not cover the
upfront investment, so if a significant number of these advertisers do not renew their insertion orders, it could negatively affect our operating
results.
Our mobile marketing business's success requires it to maintain and expand current advertisers of mobile applications relationships and
to develop new relationships. Our agreements with advertisers of mobile applications do not generally include long-
term obligations requiring
them to purchase our services and are cancelable upon short and without penalty. As a result, we may have limited visibility as to our future
advertising revenue streams. We cannot assure that our advertisers of mobile applications will continue to use our services or that we will be able
to replace, in a timely or effective manner, departing advertisers with new advertisers that generate comparable revenue. Revenue derived from
advertisers who based their campaigns on performance are subject to fluctuation and competitive pressures. Such advertisers, which seek to drive
app downloads, "clicks," or other specific actions by viewers, are less consistent with respect to their spending volume on our platform, and may
decide to substantially increase or decrease their use of our services based on seasonality or popularity of a particular app. Advertisers of mobile
applications may shift their business to a competitor because of new or more compelling offerings, strategic relationships, technological
developments, pricing and other financial considerations, or a variety of other reasons. Any nonrenewal, renegotiation, cancellation or deferral of
large advertisers of mobile applications, or a number of insertion orders that in the aggregate account for a significant amount of revenue, could
cause an immediate and significant decline in revenue and harm our business.
Loss or reduction of business from our large advertisers of mobile applications could have a significant impact on our mobile marketing
business's revenues, results of operations and overall financial condition. If our mobile marketing business does not achieve satisfactory and
reliable results under performance-based pricing models, it could lose advertisers of mobile applications and its revenue could decline.
From time to time, a limited number of advertisers of mobile applications have accounted for, and may continue to account for, a
significant share of our mobile marketing business's revenue. Such concentration increases the risk of quarterly fluctuations in revenues and
operating results. Our advertisers of mobile applications may reduce or terminate their business with us at any time for any reason, including
changes in their financial condition or other business circumstances. If a large advertiser representing a substantial portion of that business
decided to materially reduce or discontinue its use of our platform, it could cause an immediate and significant decline in our mobile marketing
division revenue and negatively affect our results of operations and financial condition. Additionally, the large concentration of advertisers of
mobile applications increases the concentration of accounts receivable and our exposure to payment defaults by key customers. Our mobile
marketing business generates significant accounts receivable for the services that we provide to our key advertisers, which could expose that
business to substantial and potentially unrecoverable costs if we do not receive payment from them.
Sales efforts with advertisers of mobile applications require significant time and expense.
Contracting new advertisers of mobile applications requires substantial time and expense, and we may not be successful in establishing
new relationships or in maintaining current relationships. It may be difficult to identify, engage and market to potential advertisers of mobile
applications who do not currently spend on mobile advertising or are unfamiliar with our current services or self-
serve platform. Furthermore,
many of our advertisers of mobile applications purchasing and design decisions generally require input from multiple internal parties of these
advertisers. As a result, we must identify those involved in the purchasing decision and devote a sufficient amount of time to presenting our
services to each of those decision-making individuals.
The novelty of our services and business model often requires us to spend substantial time and effort educating potential advertisers of
mobile applications about its offerings, including providing demonstrations and comparisons against other available services. This process can
be costly and time-
consuming. If we are not successful in streamlining the sales processes with such advertisers, our ability to grow our business
may be adversely affected.
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