Vistaprint 2007 Annual Report Download - page 27

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Our failure to meet our customers’ price expectations would adversely affect our business and
results of operations.
Demand for our products and services has been sensitive to price. Changes in our pricing
strategies have had, and may continue to have, a significant impact on our revenues and net income.
We offer free products and services as a means of attracting customers and we offer substantial
pricing discounts as a means of encouraging repeat purchases. Such free offers and discounts may
not result in an increase in revenues or the optimization of profits. In addition, many factors, including
our production and personnel costs and our competitors’ pricing and marketing strategies, can
significantly impact our pricing strategies. If we fail to meet our customers’ price expectations in any
given period, our business and results of operations will suffer.
We depend on search engines to attract a substantial portion of the customers who visit our
websites, and losing these customers would adversely affect our business and results of
operations.
Many customers access our websites by clicking through on search results displayed by search
engines such as Google and Yahoo!. Search engines typically provide two types of search results,
algorithmic and purchased listings. Algorithmic listings cannot be purchased, and instead are
determined and displayed solely by a set of formulas designed by the search engine. Purchased
listings can be purchased by advertisers in order to attract users to their websites. We rely on both
algorithmic and purchased listings to attract and direct a substantial portion of the customers we serve.
Search engines revise their algorithms from time to time in an attempt to optimize their search result
listings. If search engines on which we rely for algorithmic listings modify their algorithms, this could
result in fewer customers clicking through to our websites, requiring us to resort to other more costly
resources to replace this traffic, which, in turn, could reduce our operating and net income or our
revenues, prevent us from maintaining or increasing profitability and harm our business. If one or more
search engines on which we rely for purchased listings modifies or terminates its relationship with us,
our expenses could rise, our revenues could decline and our business may suffer. The cost of
purchased search listing advertising is rapidly increasing as demand for these channels continues to
grow quickly, and further increases could have negative effects on our profitability. In addition, many of
our competitors purchase the term “VistaPrint” and other terms incorporating our proprietary
trademarks from Google and other search engines as part of their search listing advertising. European
courts have, in certain cases, upheld the rights of trademark owners to prevent such practices in
certain European jurisdictions. However, U.S. courts have not sided with the trademark owners in
cases involving U.S. search engines, and Google has refused to prevent companies from purchasing
trademarked terms belonging to other parties. As a result, we may not be able to prevent our
competitors from advertising to, and directly competing for, customers who search on the term
“VistaPrint” on U.S. search engines.
Various private ‘spam’ blacklisting or similar entities have in the past, and may in the future,
interfere with our e-mail solicitation and the operation of our websites and our ability to
conduct business.
We depend primarily on e-mail to market to and communicate with our customers. Various private
entities attempt to regulate the use of e-mail for commercial solicitation. These entities often advocate
standards of conduct or practice that significantly exceed current legal requirements and classify certain
e-mail solicitations that comply with current legal requirements as unsolicited bulk e-mails, or ‘spam’.
Some of these entities maintain ‘blacklists’ of companies and individuals, and the websites, Internet
service providers and Internet protocol addresses associated with those companies and individuals, that
do not adhere to what the blacklisting entity believes are appropriate standards of conduct or practices for
commercial e-mail solicitations. If a company’s Internet protocol addresses are listed by a blacklisting
Form 10-K
23