Shutterfly 2010 Annual Report Download - page 6

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Please find page 6 of the 2010 Shutterfly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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In addition to driving lower customer acquisition costs through viral marketing, our customers provide input on new features, functionalities
and products. Close, frequent customer interactions, coupled with significant investments in sophisticated integrated marketing programs, enable
us to fine-
tune and tailor our promotions and website presentation to specific customer segments. Consequently, customers are presented with a
highly personalized Shutterfly shopping experience, which helps foster a unique and deep relationship with our brand.
Business and Marketing Strategy
We drive business and marketing strategies within three key categories: Personalized Products and Services (“PPS”),
Prints, and
Commercial Print. To support our business strategies within these categories, we use a variety of integrated marketing programs, including
advertising, direct marketing technologies and strategic alliances. These methods include direct marketing over the Internet, e-
mail marketing to
prospects and existing customers, search engine marketing, and traditional direct marketing mailings such as postcards and seasonal catalogs. In
addition, because many of our products are either shared over the Internet or given as gifts, the appearance of our brand on the products and
packaging provides ongoing viral advertising.
We place targeted advertisements on websites and in publications, contract for targeted e-
mail marketing services and contract for
advertising placement on leading search engines. We also maintain an affiliate program under which we pay program participants for referral
sales generated from hyperlinks to our website from the affiliate’s website and in promotional materials.
In addition, to support our commercial print initiative, we have hired a small sales force to engage with marketing fulfillment organizations
and advertisers for commercial print services.
The following paragraphs summarize our business strategies within these three categories:
Personalized Products and Services
Personalized products and services ("PPS") are comprised of our photo book products, greeting cards and stationery, and other photo-
based
merchandise. In addition, PPS also includes revenues from advertising and sponsorship activities. We also provide website services which
include our share platform called Share Sites, developed from our 2008 acquisition of Nexo Systems, Inc. Personalized products and services as
a percentage of total net revenue was 56% in 2007, 61% in 2008 and 66% in 2009. Within this category, we seek to drive the following
strategies:
We have focused substantive efforts in enhancing the products and services we offer in our PPS category. Specifically, we have
introduced a wide range of premium designer greeting cards and stationery for many occasions, including holidays, baby
announcements, birthdays, and weddings. During 2009, we launched the Simple Path feature which instantly creates photo
books in all sizes and formats, making it easier and faster for customers to create their photo books. We also have a Storyboard
feature that helps customers organize their pictures and create custom photo books. We continue to expand and develop our
sharing platform called Share Sites that enables customers to create personalized, secure websites for school activities, clubs and
other tight-
knit social groups. During 2009, we launched new templates and functionality for our Share Sites designed to support
parents and coaches who manage team sports like soccer. We also offer the ability to upload, store, and share a limited number
of video clips for free and a video subscription service that provides unlimited video storage, larger file sizes, and HD-
quality
video playback.
We intend to leverage our PPS offerings, and to promote the Shutterfly brand through word-of-
mouth referrals from existing
customers, print advertising, catalogs, online advertising, search engine marketing and complementary alliances with other
companies. We also leverage our Share Sites platform to drive increased awareness of our brand and our product offerings, as
well as increase the engagement of existing customers. In addition, we have expanded our presence across social networks by
enabling customers to post their photo books onto a variety of social networking and blogging websites such as Facebook,
MySpace, Twitter, and Blogger.
•
Enhance product and services offerings.
•
Expand our customer base.
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