America Online 2014 Annual Report Download - page 32

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ITEM 1A. RISK FACTORS
The risks and uncertainties described below are those which we consider material and of which we are
currently aware. In addition, this Annual Report contains forward-looking statements that involve risks and
uncertainties. You should carefully read the section “Cautionary Statement Concerning Forward-Looking
Statements”.
If any of the following events occur, our business, financial condition or results of operations could be
materially and adversely affected and the trading price of our common stock could materially decline.
Risks Relating to Our Business
Our focus on our online advertising-supported business model involves significant risks.
Growth in our advertising revenues depends on our ability to maintain and expand our existing relationships
with advertisers and publishers and our ability to develop new relationships with other advertisers and publishers.
Growth in our advertising revenues also depends on our ability to continue offering effective products and
services for advertisers and publishers. As the advertising market generates and develops new concepts and
technology, we may incur additional costs to implement more effective products and services. As programmatic
advertising gains traction with more advertisers and publishers, we continue to invest in and focus on our end-to-
end open technology and programmatic platforms. Continuing to develop and improve these products and
services may require significant time and additional investment. If we cannot continue to develop and improve
our advertising products, services and technologies in a timely and cost-effective fashion, our competitive
position and results of operations could be adversely affected.
The commercial attractiveness of the programmatic advertising solutions that we offer to publishers and
advertisers depends on a variety of complex and evolving factors, among them the successful integration of
various components of our tech stack including technology and platforms from our recent acquisitions, the
continued effective functioning and improvement of our proprietary learning algorithms, the continued ability to
access and utilize relevant data about consumers and their consumption habits across multiple devices and, with
respect to programmatic advertising exchange-related activities, continued automated access to the advertising
inventory and application programming interfaces of publishers as well as continued robust relationships with
brand advertisers and agencies.
Our programmatic advertising solutions may become less attractive, and our results of operations may
suffer, as a result of changes in laws and regulations and changes in industry standards generally. In addition, the
following factors may further diminish the appeal of our programmatic advertising solutions and thereby
negatively affect our results of operations: with respect to the availability of consumer data, changes in consumer
choices; with respect to the functioning of our algorithms, the failure or inability to access, collect or analyze
relevant data (for technological reasons or otherwise); and with respect to programmatic exchange activities,
access to publisher inventory and relationships with advertisers and agencies, technological limitations or
restrictions imposed by advertisers and publishers themselves.
In order for us to increase advertising revenues in the future, we believe it will be important to increase our
overall volume of advertising sold and to maintain or increase pricing for advertising. If we are not able to attract
consumers to, and engage consumers with, those AOL Properties that typically generate higher-priced and
higher-volume advertising, our advertising revenues may not increase even if the aggregate number of consumers
on AOL Properties increases and their aggregate engagement increases.
Additionally, there are different cost structures within our advertising business. In order to generate display
advertising revenues on Third Party Properties, we incur TAC. While a majority of the costs associated with
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