Yahoo 2005 Annual Report Download - page 23

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17
We face competition from other providers of search marketing that could affect our operating results.
We compete directly with other providers of search marketing, including Google, LookSmart, Ltd.,
Lycos Inc., Microsoft, and MIVA (formerly FindWhat.com). In addition, we believe it is likely that there
will be additional entrants to this advertising market. Some of the existing competitors and possible
additional entrants may have greater operational, strategic, financial, personnel or other resources than we
do, as well as greater brand recognition. These competitors compete against us for affiliate and advertiser
arrangements and could cause us to have to enter into such arrangements with less favorable terms, to lose
current affiliates or advertisers or to fail to acquire new affiliates or advertisers. The loss of affiliates or
advertisers or a reduction in the revenue from such arrangements could harm our business and operating
results.
We face significant competition from traditional media companies which could adversely affect our future
operating results.
We also compete with traditional media companies for advertising. Most advertisers currently spend only
a small portion of their advertising budgets on Internet advertising. If we fail to persuade existing
advertisers to retain and increase their spending with us and if we fail to persuade new advertisers to spend
a portion of their budget on advertising with us, our revenues could decline and our future operating
results could be adversely affected.
If we are unable to provide search technologies and other services which generate significant traffic to our
websites, or we are unable to enter into distribution relationships which drive significant traffic to our websites,
our business could be harmed, causing our revenues to decline.
We have deployed our own Internet search technology to provide search results on our network. We have
more limited experience in operating our own search service than do some of our competitors. Internet
search is characterized by rapidly changing technology, significant competition, evolving industry standards
and frequent product and service enhancements. We must continually invest in improving our users’
experience, including search relevance, speed and services responsive to their needs and preferences, to
continue to attract, retain and expand our user base. If we are unable to provide search technologies and
other services which generate significant traffic to our websites, or if we are unable to enter into
distribution relationships that continue to drive significant traffic to our websites, our business could be
harmed, causing our revenues to decline.
The majority of our revenues are derived from marketing services, and the reduction in spending by or loss of
current or potential advertisers would cause our revenues and operating results to decline.
For the year ended December 31, 2005, 87 percent of our total revenues came from marketing services.
Our ability to continue to retain and grow marketing services revenue depends upon:
• maintaining our user base;
• broadening our relationships with advertisers to small and medium size businesses;
• attracting advertisers to our user base;
• increasing demand for our marketing services by advertisers, users and businesses, including prices
paid by advertisers, the number of searches performed by users and the rate at which users
click-through to commercial search results;
• the effectiveness, and acceptance by advertisers, of our systems improvements to increase
monetization of our search marketing;
• maintaining our affiliate program for our search marketing;