Rosetta Stone 2012 Annual Report Download - page 15

Table of Contents
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Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our marketing expenditures, including our
ability to:
•create greater awareness of our brands and our language-learning solutions;
•select the right market, media and specific media vehicle in which to advertise;
•identify the most effective and efficient level of spending in each market, media and specific media vehicle;
•determine the appropriate creative message and media mix for advertising, marketing and promotional expenditures;
•effectively manage marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs;
•drive traffic to our websites, call centers, distribution channels and kiosks; and
•convert customer inquiries into actual orders.
Our planned marketing expenditures may not result in increased revenue or generate sufficient levels of product and brand name awareness, and
we may not be able to increase our net sales at the same rate as we increase our advertising expenditures.
Some of our radio, television and print advertising has been through the purchase of "remnant" advertising segments. These segments are random
time slots and publication dates that have remained unsold and are offered at discounts to advertisers who are willing to be flexible with respect to time
slots. There is a limited supply of this type of advertising and the availability of such advertising may decline or the cost of such advertising may
increase. In addition, if we increase our marketing budget we cannot assure you that we can increase the amount of remnant advertising at the
discounted prices we have obtained in the past. If any of these events occur, we may be forced to purchase time slots and publication dates at higher
prices, which will increase our costs.
We also seek new customers through our online marketing efforts, including paid search listings, banner ads, text links and permission-based e-
mails, as well as our affiliate and reseller programs and we engage in an active public relations program, including through social media sites such as
Facebook and Twitter.
We opportunistically adjust our mix of marketing programs to acquire new customers at a reasonable cost with the intention of achieving overall
financial goals. If we are unable to maintain or replace our sources of customers with similarly effective sources, or if the cost of our existing sources
increases, our customer levels and marketing expenses may be adversely affected.
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We believe that market awareness of our  brand in the United States has contributed significantly to the success of our business. We
also believe that maintaining and enhancing the  brand is critical to maintaining our competitive advantage. As we continue to grow our
business, expand our products and services and extend our geographic reach, maintaining the quality and consistency of our language-learning
solutions, and thus the quality of our brand, may be more difficult. In addition, software piracy and trademark infringement may harm our 
brand by undermining our reputation for quality software programs. We must continue to update our marketing communications in order to maintain
and enhance our brand awareness and the value of our brand. Failure to do so may result in a decrease in brand value and related sales.
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