ServiceMagic 2014 Annual Report Download - page 23

Table of Contents
Our success depends upon the continued growth and acceptance of online advertising, particularly paid listings, as an effective alternative to
traditional, offline advertising and the continued commercial use of the Internet.
We continue to compete with traditional advertising media, including television, radio and print, in addition to a multitude of websites with
high levels of traffic and online advertising networks, for a share of available advertising expenditures and expect to face continued competition as
more emerging media and traditional offline media companies continue to enter the online advertising market. We believe that the continued
growth and acceptance of online advertising generally will depend, to a large extent, on its perceived effectiveness and the acceptance of related
advertising models (particularly in the case of models that incorporate user targeting and/or utilize mobile devices), the continued growth in
commercial use of the Internet (particularly abroad), the extent to which web browsers, software programs and/or other applications that limit or
prevent advertising from being displayed become commonplace and the extent to which the industry is able to effectively manage click fraud. Any
lack of growth in the market for online advertising, particularly for paid listings, or any decrease in the effectiveness and value of online advertising
(whether due to the passage of laws requiring additional disclosure, an industry-wide move to self-regulatory principles that require additional
disclosure and/or opt-in policies for advertising that incorporate user targeting or other developments) would have an adverse effect on our
business, financial condition and results of operations.
We depend, in part, upon arrangements with third parties to drive traffic to our various websites and distribute our products and services.
We engage in a variety of activities designed to attract traffic to our various websites and convert visitors into repeat users and customers.
How successful we are in these efforts depends, in part, upon our continued ability to enter into arrangements with third parties to drive traffic to
our various websites, as well as the continued introduction of new and enhanced products and services that resonate with users and customers
generally.
For example, we have entered into (and expect to continue to enter into) agreements to distribute Search & Applications search boxes,
toolbars and other applications to users through third parties. Most of these agreements are either non1exclusive and short1term in nature or, in the
case of long1term or exclusive agreements, are terminable by either party in certain specified circumstances. In addition, a few of these agreements
collectively represent a significant percentage of the revenue generated by our B2B operations. Our inability to enter into new (or renew existing)
agreements to distribute our search boxes, toolbars and other applications through third parties for any reason would result in decreases in website
traffic, queries and advertising revenue, which could have an adverse effect on our business, financial condition and results of operations.
In addition, in the case of the businesses within The Match Group segment, we have entered into a number of arrangements with third parties
to drive traffic to our online personals websites. Pursuant to these arrangements, third parties generally promote our services on their websites or
through e-mail campaigns and we either pay a fixed fee when visitors to these websites click through to (or register with) our online personals
websites or pay a percentage of revenue we receive from such visitors who pay us subscription fees. These arrangements are generally not
exclusive, are short1term in nature and are generally terminable by either party given notice. If existing arrangements with third parties are
terminated (or are not renewed upon their expiration) and we fail to replace this traffic and related revenues, or if we are unable to enter into new
arrangements with existing and/or new third parties in response to industry trends, our business, financial condition and results of operations could
be adversely affected.
In the case of our HomeAdvisor business, our ability to drive traffic depends, in part, on the nature and number of home services professionals
who are members of our network. While these home services professionals are required to agree that they will operate in accordance with our terms
and conditions, we do not enter into long1term agreements with them generally and subscription memberships may be canceled at any time. In
addition, a significant number of our home services professionals are sole proprietorships and small businesses, which are particularly sensitive to
adverse economic conditions, such as constrained liquidity and decreases in consumer spending. As a result, our network of home services
professionals experiences turnover. This turnover, if significant or recurring over a prolonged period, could result in a decrease in traffic to
HomeAdvisor.com and increased costs, all of which could adversely affect our business, financial condition and results of operations.
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