Yahoo 2013 Annual Report Download - page 16

• maintaining and expanding our advertiser base on PCs and mobile devices;
• broadening our relationships with advertisers to small- and medium-sized businesses;
• successfully implementing changes and improvements to our advertising management platforms and obtaining
the acceptance of our advertising management platforms by advertisers, Website publishers, and online
advertising networks;
• successfully acquiring, investing in, and implementing new technologies and strategic partnerships;
• successfully implementing changes in our sales force, sales development teams, and sales strategy;
• continuing to innovate and improve the monetization capabilities of our display advertising and mobile
products;
• effectively monetizing mobile and other search queries;
• continuing to innovate and improve users’ search experiences;
• maintaining and expanding our Affiliate program for search and display advertising services; and
• deriving better demographic and other information about our users to enable us to offer better experiences to
both our users and advertisers.
In most cases, our agreements with advertisers have a term of one year or less, and may be terminated at any time
by the advertiser or by us. Search marketing agreements often have payments dependent upon usage or click-
through levels. Accordingly, it is difficult to forecast display and search revenue accurately. In addition, our
expense levels are based in part on expectations of future revenue, including occasional guaranteed minimum
payments to our Affiliates in connection with search and/or display advertising, and are fixed over the short-term
in some categories. The state of the global economy, growth rate of the online advertising market, and
availability of capital has impacted and could further impact the advertising spending patterns of our existing and
potential advertisers. Any reduction in spending by, or loss of, existing or potential advertisers would negatively
impact our revenue and operating results. Further, we may be unable to adjust our expenses and capital
expenditures quickly enough to compensate for any unexpected revenue shortfall.
If we do not manage our operating expenses effectively, our profitability could decline.
We plan to continue to manage costs to better and more efficiently manage our business. However, our operating
expenses might increase as we expand our operations in areas of desired growth, continue to develop and extend
the Yahoo brand, fund product development, build or expand data centers, acquire additional office space, and
continue to make talent acquisitions and to acquire and integrate complementary businesses and technologies. If
our expenses increase at a greater pace than our revenue, or if we fail to effectively manage costs, our
profitability will decline.
If we are unable to provide innovative search experiences and other products and services that generate
significant traffic to our Websites, our business could be harmed, causing our revenue to decline.
Internet search is characterized by rapidly changing technology, significant competition, evolving industry
standards, and frequent product and service enhancements. Even though we have substantially completed the
transition to Microsoft’s platform, we still need to continue to invest and innovate to improve our users’ search
experience to continue to attract, retain, and expand our user base and paid search advertiser base. We also need
to continue to invest in and innovate on the mobile search experience.
We also generate revenue through other online products and services, such as Yahoo Mail, and continue to
innovate the products and services that we offer. The research and development of new, technologically
advanced products is a complex process that requires significant levels of innovation and investment, as well as
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