ServiceMagic 2009 Annual Report Download - page 8

Table of Contents
Toolbars and Applications. Through Mindspark Interactive Network, Inc. ("Mindspark"), we develop, market and distribute a variety of
downloadable toolbars through which users can access our search services, as well as applications through which users creatively and visually
express themselves and interact online, which we generally refer to as our FunWebProducts suite of applications. We market and distribute our
toolbars, together with the FunWebProducts
suite of applications, directly to consumers. These toolbars, which we offer free of charge, generally
consist of a search box powered by Ask.com or a third party search engine, plus the FunWebProducts
suite of additional features. The search box
enables users to run search queries directly from their web browser and the suite of features enables users to personalize their online activities
and otherwise make them more expressive and fun. These features include, among other applications: Smiley Central , through which users can
add emoticons to e-mails and instant messages; Webfetti , through which users can personalize their pages on various social networking
websites; MyWebFace , through which users can create cartoon-like images of themselves for download or use in connection with their profile
pages on social networks; and Zwinky , through which users can create avatars to express their persona on the web and design and update profile
pages to share with friends. Zwinky also provides users with access to Zwinktopia , a virtual world where avatars created by users can interact
through chat and other features, as well as purchase virtual items with virtual currency online. We also market and distribute our toolbars
through the Ask Partner Network to third parties, who in turn bundle our toolbars with their applications and websites.
Destinations Sites and Portals. We also operate a number of destination websites and portals through which we provide search and
additional services, including: Dictionary.com , a destination website that provides online dictionary search and related services; Girlsense.com ,
a destination website that provides a virtual fashion community for girls and teens; www.MyWay.com , which is free from banner, pop-up and
rich-media ads and through which we provide e-mail services; www.Excite.com , a content-rich portal that aggregates news, sports, weather and
entertainment content; and www.iWon.com , which offers an extensive variety of casual games and sweepstakes.
Revenues. Substantially all of the revenues of our search business and the Search segment are derived from advertising, with the
substantial majority of these revenues attributable to our paid listing supply agreement with Google. When a user submits a search query through
our search services and clicks on a Google paid listing displayed in response to the query, Google bills the advertiser that purchased the paid
listing directly and makes a related revenue share payment to us, which we either retain in its entirety or share with third parties. In some cases,
Google does not charge advertisers unless our user, after clicking on the paid listing, also takes certain actions on the advertiser's website. To a
lesser extent, we also generate revenues from the direct sale of paid listings directly to advertisers on a cost-per-click basis, as well as from the
sale of display advertising on a fixed fee per impression basis.
Competition. We compete with a wide variety of parties in connection with our efforts to attract search engine users, distribute
downloadable toolbars and applications, attract third parties to distribute our toolbars and search boxes and attract advertisers, including: Google,
Yahoo!, MSN and other destination search websites and search-centric portals (some of which provide a broad range of content and services
and/or link to various desktop applications), third party toolbar, convenience search and applications providers, other search technology and
convenience service providers, including internet access providers, social networks, online advertising networks, traditional media companies
and companies that provide online content.
Moreover, some of our current and potential competitors have longer operating histories, greater brand recognition, larger customer bases,
and/or significantly greater financial, technical and marketing resources than we do. As a result, they have the ability to devote comparatively
greater resources to the development and promotion of their products and services, which could result in greater market acceptance of their
products and services relative to those offered by us.
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