ServiceMagic 2010 Annual Report Download - page 34

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Table of Contents
Selling and marketing expense in 2010 increased $28.8 million from 2009 primarily due to increases of $21.0 million from ServiceMagic,
$15.1 million from Match and $7.0 million from Media & Other, partially offset by a decrease of $13.4 million from Search. The increase in
selling and marketing expense from ServiceMagic is due to increases of $14.0 million and $7.0 million in marketing and compensation and other
employee-related costs, respectively. The increase in compensation and other employee-related costs from ServiceMagic is primarily due to the
expansion of its sales force. The increase in selling and marketing expense from Match is primarily due to an increase of $13.3 million in
advertising and promotional expenditures related primarily to a new advertising agreement entered into during the second quarter of 2010 with
Yahoo! Inc. ("Yahoo"), as well as from the impact of the acquisitions of People Media and Singlesnet and the formation of the Latin America
venture, partially offset by the sale of Match Europe to Meetic. Selling and marketing expense from Media & Other increased primarily due to
higher online marketing costs at Pronto and advertising and promotional expenditures related to Vimeo's 2010 video festival. Partially offsetting
these factors is a decrease from Search primarily due to lower advertising and promotional expenditures of $7.2 million, as the prior year
included expenditures associated with the NASCAR partnership and an ad campaign to rebrand the Ask Jeeves UK website, as well as a
decrease in compensation and other employee-related costs at CityGrid Media, due in part, to a decrease in average headcount.
Selling and marketing expense in 2009 increased $18.9 million from 2008 primarily due to an increase of $25.1 million from ServiceMagic,
partially offset by a decrease of $10.2 million from Match. The increase in selling and marketing expense from ServiceMagic is primarily due to
an increase of $19.8 million in advertising and promotional expenditures associated with online marketing and an increase of $5.2 million in
compensation and other employee-related costs due primarily to the expansion of its sales force. The growth in service requests during the year
from paid channels outpaced the growth in free requests as a result of the increase in online marketing. Partially offsetting these increases in
selling and marketing expense is lower advertising and promotional expenditures of $7.8 million from Match. This decrease is due primarily to
the sale of Match Europe, partially offset by an increase in online marketing.
General and administrative expense
General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based
compensation) for personnel engaged in executive management, finance, legal, tax and human resources, facilities costs and fees for professional
services.
General and administrative expense in 2010 increased $34.1 million from 2009 primarily due to increases of $12.4 million from corporate,
$10.5 million from Media & Other, $5.6 million from ServiceMagic and $5.5 million from Search. General and administrative expense from
corporate increased primarily due to an increase of $10.3 million in non-cash compensation expense and $5.3 million of transaction expenses in
the current year related to the exchange of substantially all of Liberty Media Corporation's ("Liberty") equity stake in IAC, partially offset by
lower salary expense. On December 1, 2010, the Company entered into a stock exchange agreement with Liberty. Under the agreement, Liberty
agreed to exchange with IAC 4.3 million shares of common stock and 8.5 million shares of Class B common stock, which were valued at
$364.2 million based on the closing price of IAC common stock on December 1, 2010, for Evite, Gifts.com and IAC Advertising Solutions and
30
Years Ended December 31,
2010
% Change
2009
% Change
2008
(Dollars in thousands)
General and administrative expense
$316,500
12%
$282,393
(19)%
$346,623
As a percentage of total revenue
19%
(163) bp
21%
(361) bp
25%