ServiceMagic 2014 Annual Report Download - page 10

Table of Contents
substantial majority of the paid listings we display are supplied to us by Google pursuant to our services agreement with Google.
Pursuant to this agreement, we transmit search queries to Google, which in turn transmits a set of relevant and responsive paid listings back to
us for display in search results. This ad-serving process occurs independently of, but concurrently with, the generation of algorithmic search results
for the same search queries. Google paid listings are displayed separately from algorithmic search results and are identified as sponsored listings on
search results pages. Paid listings are priced on a price per click basis and when a user submits a search query through our Search & Applications
properties or services and then clicks on a Google paid listing displayed in response to the query, Google bills the advertiser that purchased the paid
listing directly and shares a portion of the fee charged to the advertiser with us. We recognize paid listing revenue from Google when it delivers the
user's click. In cases where the user’s click is generated due to the efforts of a third party distributor, we recognize the amount due from Google as
revenue and record a revenue share or other payment obligation to the third party distributor as traffic acquisition costs. To a lesser extent, we also
syndicate Google paid listings to third party websites with whom we enter into syndication agreements. See “Item 1A-Risk Factors-We depend
upon arrangements with Google and any adverse change in this relationship could adversely affect our business, financial condition and results of
operations.”
Competition
We compete with a wide variety of parties in connection with our efforts to:
In the case of our search services generally, our competitors include Google, Yahoo!, Bing and other destination search websites and
search1
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 media platforms, online advertising networks, traditional media companies and companies that provide online content). When we market our
content and other services, our competitors include destination websites that primarily acquire traffic through paid and algorithmic search results.
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.
In the case of our Websites business, we believe that our ability to compete successfully will depend primarily upon:
In the case of our Applications business, we believe that our ability to compete successfully will depend primarily upon our continued ability
to:
•
attract and retain users to our various Search & Applications properties and services generally;
•
develop, market and distribute our Applications;
•
attract third parties to distribute our Applications and related technology; and
•
attract advertisers.
•
the relevance and authority of our search results, answers and other content;
•
the quality of the content and features on our various websites, and the attractiveness of the services provided by these websites generally,
relative to those of our competitors;
• our continued ability to differentiate Ask.com from its competitors through question and answer services that provide accurate,
authoritative and direct answers to natural1language questions (in the form of algorithmic search results and/or responses from other
Ask.com users, as well as indexed question and answer pairings from various websites and online services), which depends primarily
upon our ability to deliver authoritative and trustworthy content to users, as well as our ability to attract advertisers to this initiative; and
•
our ability to successfully market our products and services effectively.
• create toolbars and other applications that resonate with consumers (which requires that we continue to bundle attractive features, content
and services, some of which may be owned by third parties, with quality search services);
• maintain industry-
leading monetization solutions for our Applications;
• differentiate our toolbars and other applications from those of our competitors (primarily through providing customized toolbars and
access to multiple search and other services through our toolbars);