Stamps.com 2009 Annual Report Download - page 28

TABLE OF CONTENTS
We use several PC Postage marketing channels to acquire customers, including partnerships, online advertising, affiliate
channel, direct mail, traditional media advertising and others. Beginning in 2007, we significantly increased our investment in
our non-enhanced promotion marketing channels based on our estimated high return-on-investment in that area, and we
continued to increase our investment in 2008 and again in 2009 as our estimated return-on-investment continued to be attractive.
Primarily as a result of these decisions, PC Postage revenue for customers acquired through our non-enhanced promotion
channels was approximately $67.4 million in 2009, an increase of 5% from approximately $63.9 million in 2008.
In the enhanced promotion channel, we work with various companies to advertise our service in a variety of sites on the
Internet. These companies typically offer an additional promotion (beyond what we typically offer) directly to the customer in
order to get the customer to try our service. Over time we have seen a decrease of the return-on-investment from this channel,
and as a result we have reduced our investment in this area in 2007, 2008 and again in 2009. As a result of these decisions, we
experienced a reduction in revenue for customers acquired through this channel to approximately $6.3 million in 2009, a
decrease of 31% from approximately $9.1 million in 2008.
The following table sets forth the breakdown of PC Postage revenue between customers acquired through our non-enhanced
promotion channels and customers acquired through our enhanced promotion channels for 2008 and 2009 and the resulting
percent change (revenue in $000s):
The increase in revenue from customers acquired through our non-enhanced promotion channels was driven by both an
increase in paid customers and an increase in average revenue per paid customer. The increase in paid customers in 2009 was
attributable to our increased customer acquisition spending in these channels. We define paid customers for the quarter as ones
from whom we successfully collected service fees at least once during that quarter and we define average paid customers for the
year as the average of the paid customers for each of the four quarters during the year.
The following table sets forth the total number of paid customers originally acquired through our non-enhanced promotion
channels (in thousands):
PC Postage Revenue 2009 2008 % Change
Non
-Enhanced Promotion Revenue
$
67,362
$
63,932
5
%
Enhanced Promotion Revenue
$
6,262
$
9,104
-
31
%
PC Postage Revenue
$
73,623
$
73,036
1%
The following table sets forth the growth in paid customers and average annual revenue per customer for customers acquired
through our non-enhanced promotion channel:
Paid Customers (000)
Year
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Annual
Average
2009
321
317
315
320
318
2008
305
314
312
311
311
For customers originally acquired through our non-enhanced promotion channels, our average annual and monthly PC
Postage revenue per paid customer in 2009 was $211.66 and $17.63 respectively, which was up 3% compared to $205.90 and
$17.16, respectively in 2008. The increase was partially attributable to having a larger number of customers on higher priced
plans and partially attributable to an increase in consumable and peripheral store sales per paid customer driven by increased
usage of our service.
Non-Enhanced Promotion Revenue 2009 2008 % Change
Average paid customers for the year (in thousands)
318
311
2
%
Average annual revenue per paid customer
$
212
$
206
3
%
Non-Enhanced Promotion Revenue ($000s)
$
67,362
$
63,932
5%
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