Juno 2013 Annual Report Download - page 9

Table of Contents
and advertising, and in loyalty memberships offers significant opportunities as our MyPoints loyalty marketing business is poised to realize its potential
by exploiting current assets including: strong relationships with a variety of retailers and clients, a large and engaged member base, a variety of
engagement activities to serve member needs and interests, and the ability to provide loyalty incentives to drive consumer action. Loyalty marketing
programs are generally designed to reward consumers with points that accumulate based on their activities and which may be redeemed for cash, gift
cards, or products and services from participating vendors. Some loyalty marketing programs use points as an incentive for members to opt in to
receiving certain email offers or to update their personal interest profiles, which provide useful information that helps advertisers target consumers
interested in purchasing the advertisers' products and services. While these programs have long been popular with airlines, credit card vendors, hotels,
and retailers, in recent years, loyalty marketing programs have expanded into a comprehensive direct marketing and targeted advertising strategy for
companies in a wide range of industries.
Loyalty marketing programs and similar services enable advertisers to target consumers in ways that are generally impractical with traditional
offline direct marketing channels. Loyalty marketing programs can also easily measure click-through rates on display advertising and response rates to
email campaigns, providing rapid feedback for advertisers that can be used to identify potential customers and create new targeted offers. In addition, a
loyalty marketing program that has attracted a large, responsive and loyal member base helps to improve returns on advertisers' marketing investments.
Furthermore, advertisers may prefer to work with loyalty marketing programs that offer performance-based pricing, which helps advertisers achieve
specific performance objectives within budget.
—The market for loyalty marketing services is highly competitive, and we expect competition to significantly increase in the future as
loyalty marketing programs continue to grow in popularity and expand to mobile platforms. Our MyPoints loyalty marketing business faces competition
for members from other online loyalty marketing programs, such as Ebates, as well as offline loyalty marketing programs that have a significant online
presence, such as those operated by credit card, airline and hotel companies. In addition, we also face competition for members from online providers of
discounted offerings and coupons, such as Groupon and LivingSocial. We believe the primary competitive factors in the loyalty marketing industry are
the number, type and popularity of the participating merchants, the attractiveness of the rewards offered, the number of points awarded for various
actions, the ease and speed of earning rewards, and the ability to offer members a robust, user-friendly shopping experience. We believe that we
compete favorably in certain of these areas, although some of our competitors have an advantage over us in some or all of these areas. For additional
information, see "Risk Factors", which appears in Item 1A of this Annual Report on Form 10-K.
For additional information regarding our Content & Media segment, see Note 2—"Segment Information" of the Notes to the Consolidated
Financial Statements, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
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Our principal Communications pay service is dial-up Internet access, offered under the NetZero and Juno brands. We also offer mobile broadband,
DSL, email, Internet security, web hosting services, and other services. In total, we had 553,000 Communications pay accounts at December 31, 2013,
of which 346,000 were Internet access pay accounts and 207,000 were pay accounts subscribed to our other Communications services, including email,
Internet security and web hosting services. The majority of our Communications revenues are derived from dial-up Internet access, DSL and other
Communications services. In addition, our Communications services generate advertising revenues from search placements, display advertisements and
online market research associated with our Internet access and email services.
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