Juno 2013 Annual Report Download - page 8

Table of Contents
of the value proposition of our social networking services compete with major social networking platforms such as Facebook, as well as Internet search
engines such as Google. Many of our competitors offer their content and services free of charge. We believe the primary competitive factors are price,
features, functionality, size and engagement of the user base, and quantity, quality and scope of the content. We believe we compete favorably with
respect to certain of these areas, although many competitors have a significant advantage over us in certain other areas. For additional information, see
"Risk Factors", which appears in Item 1A of this Annual Report on Form 10-K.
Loyalty Marketing
Our Content & Media segment also offers a loyalty marketing service under the MyPoints brand. MyPoints connects advertisers with its members
by allowing members to earn rewards points for engaging in online activities. MyPoints is a free service for consumers who register and provide certain
identifying information to receive direct email marketing and other loyalty promotions. Members earn points for responding to email offers, shopping
online at the MyPoints website , taking market research companies' surveys, playing MyPoints branded online games, searching
the Internet through a MyPoints branded toolbar, and engaging in other online activities. In addition to these online point earning opportunities,
MyPoints also offers a credit card with opportunities to earn points through both online and offline shopping. Rewards points are redeemable primarily
in the form of third-party gift cards or electronic codes, currently from approximately 90 merchants, including, among others, leading retailers,
restaurants, online payment and prepaid credit card merchants, gas stations, games, airlines, hotels, and theaters. Gift cards are available for purchase on
the MyPoints website.
MyPoints provides advertisers with an effective means to reach a large online audience. MyPoints uses a variety of criteria, including personal
interests, purchasing behavior and demographic profiles, to create targeted promotions for advertisers. These marketing campaigns are tailored to meet
the goals of the specific advertiser, which are most commonly to generate incremental sales of an advertiser's products or services but may also include
objectives that do not involve purchase transactions such as generating sales leads or increased traffic to an advertiser's website. In many cases,
MyPoints sends personalized email marketing messages, called BonusMail®, that are directed specifically to individual MyPoints members to
showcase a single advertiser or offer. MyPoints members benefit not only from attractive discounts and other benefits featured in BonusMail® offers
but also can receive points for purchases and, in some cases, for clicking through the media links in BonusMail® to the advertiser's website, as well as
for other actions taken within a limited time period. We believe the limited-time nature of the BonusMail® offers adds a sense of urgency to the
promotion for the consumer.
The advertising revenues generated from our loyalty marketing service revenues are classified as advertising and other revenues. Advertisers pay
us primarily based on performance measures that include when our MyPoints emails are transmitted to members, when members respond to emails and
when members complete online transactions. Advertising and other revenues also includes revenues generated from the sale of gift cards. Loyalty
marketing advertising revenues and operating results tend to be higher in the quarter ending December 31 when compared to other quarters, though
there can be no assurance that these seasonal trends will continue in the future.
—Online retail sales are expected to grow from $225.5 billion in 2012 to $434.2 billion by 2017, according to a 2013
forecast by eMarketer. In addition, spending for online advertising is expected to grow almost 14% annually over the next several years, reaching
$66.6 billion and accounting for 31.4% of all advertising dollars by 2016, according to eMarketer. As advertisers seek methods to target, reach and
retain online consumers, loyalty marketing presents an effective option.
According to the 2013 Colloquy Loyalty Census, total loyalty memberships in the United States grew from 973 million in 2000 to over 2.6 billion
in 2012. This confluence of growth in online shopping
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