ServiceMagic 2009 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2009 ServiceMagic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 146

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146

Table of Contents
Refer to Note 14 to the consolidated financial statements for reconciliations by segment of Operating Income Before Amortization to
operating (loss) income.
Sources of Revenue
For the years ended December 31, 2009, 2008 and 2007, Search was our largest revenue contributor. Our Search businesses offer
information and services via the internet and are compensated directly and indirectly by advertisers generally based on performance and volume
related measures. Our Match business offers subscription membership services and our ServiceMagic business is generally compensated on a fee
basis by home service providers who participate in our services.
Strategic Partnerships, Advertiser Relationships and Online Advertising Spend
We market and offer our products and services directly to consumers through branded websites and membership programs, allowing
consumers to transact directly with us in a convenient manner. We have made, and expect to continue to make, substantial investments in online
and offline advertising to build our brands and drive traffic to our websites and consumers and advertisers to our businesses.
We pay traffic acquisition costs which consist of revenue share payments to third parties that have distributed our toolbars and/or integrated
paid listings into their websites and similar arrangements with third parties who direct traffic to our websites. We also pay to market and
distribute our services on third party distribution channels, such as internet portals and search engines. In addition, some of our businesses
manage affiliate programs, pursuant to which we pay commissions and fees to third parties based on revenue earned. These distribution channels
might also offer their own products and services, as well as those of other third parties, that compete with those we offer.
The cost of acquiring new consumers through online and offline third party distribution channels has increased, particularly in the case of
online channels as internet commerce continues to grow and competition in the segments in which IAC's businesses operate increases.
Our various businesses provide supplier partners with important customer acquisition channels and we believe that the ability of our
supplier partners to reach a large qualified audience through our services is a significant benefit. While we aim to build and maintain strong
relationships with our supplier partners, we may not succeed in these efforts and there is always the risk that certain supplier partners may not
make their products and services available to us in the future, including advertisers on the businesses within Search.
27
Years Ended December 31,*
2009
Growth
2008
Growth
2007
Operating Income Before
Amortization:
Search
$
81,727
(40
)%
136,311
60
%
$
85,388
Match
94,124
%
91,266
16
%
78,367
ServiceMagic
21,286
(19
)%
26,244
26
%
20,764
Media & Other
(28,659
)
11
%
(32,201
)
(531
)%
(5,103
)
Corporate
(65,635
)
46
%
(121,522
)
(23
)%
(98,932
)
Total
$
102,843
%
100,098
24
%
$
80,484
* Beginning with the fourth quarter of 2009, the Company renamed and realigned its reportable segments. The Media &
Advertising segment has been renamed "Search" and the Emerging Businesses segment has been renamed "Media &
Other". Further, Evite has been moved from the Search segment (formerly Media & Advertising) to the Media & Other
segment (formerly Emerging Businesses). Certain prior year amounts have been reclassified to conform to the current year
presentation.