ServiceMagic 2011 Annual Report Download - page 19

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Table of Contents
which could affect our ability to compete effectively and, in turn, adversely affect our business, financial condition and results of operations.
One of the most cost-effective efforts we employ to attract and acquire new, and retain existing, users and customers is commonly referred
to as search engine optimization, or SEO. SEO involves developing websites to rank well within search engine results. Search engines frequently
update and change the logic that determines the placement and display of results of user searches. The failure to successfully manage SEO
efforts across our businesses, including the timely modification of SEO efforts from time to time in response to periodic changes in search
engine algorithms, search query trends and related actions by providers of search services designed to ensure the display of unique offerings in
search results (which actions by search service providers may result in algorithmic listings being displayed less prominently within search engine
results), could result in a substantial decrease in traffic to our various websites, as well as increased costs if we were to replace free traffic with
paid traffic, which would adversely affect our business, financial condition and results of operations.
In addition, search engines have increasingly expanded their offerings into other, non-search related categories, and have in certain
instances displayed their own integrated or related product and service offerings in a more prominent manner than those of third parties within
their search engine results. Continued expansion and competition from search engines could result in a substantial decrease in traffic to our
various websites, as well as increased costs if we were to replace free traffic with paid traffic, which would adversely affect our business,
financial condition and results of operations.
Lastly, as discussed above, we also enter into various arrangements with third parties in an effort to increase traffic, which arrangements are
generally more cost-effective than traditional marketing efforts. If we are unable to renew existing (and enter into new) arrangements of this
nature, sales and marketing costs as a percentage of revenue would increase over the long-term.
Any failure to attract and acquire new, and retain existing, traffic, users and customers in a cost-effective manner could adversely affect our
business, financial condition and results of operations.
We may not be able to adapt quickly enough to changing industry standards.
The internet and related technologies, applications and devices are characterized by evolving industry standards, coupled with frequent and
related new product and service introductions and enhancements. The development of new product and service introductions and enhancements
in response to evolving industry standards requires significant time and resources and we may not be able to adapt quickly enough (and/or in a
cost-effective manner) to these changes or appropriately time the introduction of new products, services and enhancements to the market and our
failure to do so could adversely affect our business, financial condition and results of operations.
In the case of certain of our search services, third parties have introduced (and continue to introduce) new or updated technologies,
applications and policies that may interfere with the ability of users to access or utilize these services generally or otherwise make users less
likely to use these services (such as through the introduction of features and/or processes that make the access and use of these services
cumbersome relative to those of our competitors). For example, third parties continue to introduce technologies and applications (including new
and enhanced web browsers) that prevent users from downloading toolbars generally and/or have features and policies that significantly lessen
the likelihood that users will download our toolbars and that previously downloaded toolbars will remain in active use. In addition, there are
technologies and applications that interfere with the functionality of search boxes embedded within our toolbars and the maintenance of home
page and other settings previously selected by users. Third parties have also introduced technologies and applications that are either not
compatible with (or otherwise interfere with) the "search assistant" function embedded within our toolbars, pursuant to which our toolbars
generate search results for users that receive "DNS," "404" and other errors in response to search queries entered into search boxes embedded
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