America Online 2009 Annual Report Download - page 44

Table of Contents
TRENDS, DEMANDS AND UNCERTAINTIES IMPACTING OUR BUSINESS
The web services industry is highly competitive and rapidly changing. Trends, challenges and uncertainties that may have a significant impact on our
business, our opportunities and our ability to execute our strategy include the following:
• Commerce, information and advertising continue to migrate to the Internet and away from traditional media outlets. We believe this continuing
trend will create strategic growth opportunities for us to attract new consumers and develop new and effective advertising solutions.
• We believe that effectively aligning our organizational structure and costs to our strategy is an important challenge to the successful
implementation of our strategic plan. We are in the midst of a significant restructuring plan, which includes the reduction of a significant portion
of our workforce, and expect to continue to actively manage our costs, in order to realize the desired benefits of our strategic plan.
• As the amount of content that is available online continues to expand, consumers are increasingly fragmenting across the Internet. While this
fragmentation may result in fewer consumers utilizing portals for their information consumption, we own a large variety of niche sites (e.g.,
Engadget, Lemondrop and PoliticsDaily) that we expect to continue to drive consumer engagement. Furthermore, the Third Party Network,
which reaches thousands of websites, will allow us to continue to provide advertising solutions across a fragmenting Internet environment.
• In recent years, there has been a significant shift in the method of Internet access away from dial-up access. This is due to a number of factors,
including the increased availability of high-speed broadband Internet connections and the fact that a significant amount of online content,
products and services has been optimized for use with broadband Internet connections. This trend has contributed to the continuing decline in the
number of our access subscribers.
In addition to the trends, challenges and uncertainties listed above, we have historically operated as part of Time Warner's corporate organization, and
Time Warner has assisted us by providing certain corporate functions. Following the spin-off, Time Warner has no obligation to provide assistance to us other
than the interim services to be provided as described in "Note 13: Related Party Transactions" in our accompanying consolidated financial statements.
Because our business has previously operated as part of the Time Warner organization, we cannot assure you that we will be able to efficiently implement the
changes necessary to operate independently or that we will not incur additional costs that could adversely affect our business. Further, implementing these
changes may require a significant portion of our management's attention.
AUDIENCE METRICS
We utilize unique visitor numbers to evaluate the performance of AOL Properties and AOL Media. In addition, we utilize unique visitor numbers to
evaluate the reach of our total advertising network, which includes both AOL Properties and the Third Party Network. Unique visitor numbers provide an
indication of our consumer reach. Although our consumer reach does not correlate directly to advertising revenue, we believe that our ability to broadly reach
diverse demographic and geographic audiences is attractive to brand advertisers seeking to promote their brands to a variety of consumers without having to
partner with multiple content providers.
The source for our unique visitor information is a third party (comScore Media Metrix, or Media Metrix). Media Metrix has historically estimated
unique visitors based on a sample of Internet users in various countries (referred to as the "panel-only methodology"). While we are familiar with the general
methodologies and processes that Media Metrix uses in estimating unique visitors, we have not performed independent testing or validation of Media Metrix's
data collection systems or proprietary statistical models, and therefore we can provide no assurance as to the accuracy of the information that Media Metrix
provides.
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