eBay 2001 Annual Report Download - page 15

employ a variety of methods including trade show and other event participation, public relations and word
of mouth. To attract new users, we use strategic purchases of online advertising in areas in which we
believe we can reach our target audience. We also engage in a number of other marketing activities
including radio, national and local television advertising, and print media including advertising in a number
of category-speciÑc publications.
The sustaining marketing phase is characterized by the more developed state of our U.S. business.
The primary objectives of marketing in the sustaining phase are creating a more managed brand message,
acquiring new users, and increasing the activity of existing users. To create a more managed brand
message, we are focused on producing a more consistent view of eBay through online, television, print and
radio advertising, and through educational eÅorts such as online tutorials and eBay University, a program
in which our representatives conduct free educational seminars in various local markets. To attract new
users, we continue to focus on strategic online and traditional advertising. To promote on-site activation,
we are focused on eÅectively merchandising our users' product oÅerings by organizing site inventory and
categories to address seasonal demand and changing market trends. In addition, we promote all three
objectives through direct messaging, such as emails that notify users of promotions, user updates on
transactions, and other product recommendations.
Competition
We encounter aggressive competition in our business from numerous sources. Our users can buy and
sell similar items through a variety of competing channels, including online and oÉine retailers,
distributors, liquidators, import and export companies, auctioneers, catalog and mail order companies,
virtually all online and oÉine commerce participants (consumer-to-consumer, business-to-consumer and
business-to-business) and online and oÉine shopping channels and networks. See ""Risk Factors Ì Our
market is intensely competitive'' for a listing of these competitors. As our product oÅering continues to
broaden into new categories of items, we expect our competition to continue to broaden to include other
online and oÉine channels for those new oÅerings. We also compete on the basis of price and product
selection, which are derived from our abundant and diverse user community and the quality of the eBay
user experience. To compete eÅectively, we may need to expend signiÑcant resources in technology and
marketing. These eÅorts may be expensive and could reduce our margins and have a material adverse
eÅect on our business, Ñnancial position, operating results, cash Öows and reduce the value of our stock.
We believe that we will be able to maintain proÑtability by preserving and expanding the abundance and
diversity of our user community and enhancing our user experience, but there can be no assurance that we
will be able to continue to manage our operating expenses to mitigate a decline in net income. See ""Risk
Factors Ì Our operating results may Öuctuate.''
Intellectual Property
We regard the protection of our trademarks, copyrights, patents, domain names, trade dress and trade
secrets as critical to our success. We have entered into conÑdentiality and invention assignment agreements
with our employees and contractors, and nondisclosure agreements with parties with whom we conduct
business in order to limit access to and disclosure of our proprietary information.
We aggressively protect our intellectual property rights by relying on a combination of trademark,
copyright, patent, trade dress and trade secret laws and through the domain name dispute resolution
system. As a result, we actively pursue the registration of our trademarks, copyrights, patents and domain
names in the U.S. and major countries internationally. Furthermore, we must also protect our trademarks,
patents and domain names in an increasing number of jurisdictions, a process that is expensive and may
not be successful in every location. We have registered or applied for our ""eBay'' trademark in the U.S.
and over 50 non-U.S. jurisdictions and have in place an active program to continue securing the ""eBay''
domain name in major non-U.S. jurisdictions. We have Ñled to protect our rights to the ""eBay'' name in
the certain new top level domains such as "".biz'' "".info'' and "".us'' that have recently become operational.
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