Expedia 2007 Annual Report Download - page 14

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Fulfillment Partners. We outsource certain of our airline ticket fulfillment functions to third-party
suppliers. Such functions include the issuance of airline tickets and related customer services.
Marketing and Promotions
Our marketing programs are intended to build and maintain the value of our various brands, drive traffic
and conversion through our various brands and businesses, optimize ongoing traveler acquisition costs and
strategically position our brands in relation to one another. Our long-term success and profitability depends on
our continued ability to maintain and increase the overall number of traveler transactions in a cost-effective
manner.
Our marketing channels primarily include offline advertising, online advertising including search engine
marketing and optimization, direct and/or personalized traveler communications on our websites as well as
through direct e-mail communication with our travelers. In addition, our Expedia-branded websites provide
content and services to the travel channel on the MSN.com website in the United States and MSN websites in
Canada, France, Germany, Italy, and the United Kingdom. Our marketing programs and initiatives include
promotional offers such as coupons as well as seasonal or periodic special offers from our travel suppliers
based on our supplier relationships. In addition, we introduced the ThankYou Rewards Network in 2006 and a
co-branded credit card with Citigroup in 2007, whereby Expedia travelers can earn ThankYou reward points
by purchasing select travel bookings on www.expedia.com, as well as for purchases with their co-branded
card.
We also make use of affiliate marketing. The Expedia.com and Hotels.com-branded websites receive
bookings from consumers who have clicked-through to the respective websites through links posted on affiliate
partner websites. We have agreements with thousands of third-party affiliate partners, including a number of
leading travel companies, pursuant to which we pay a commission for bookings originated from their websites.
Affiliate partners can make travel products and services available through an Expedia-branded website, a
co-branded website or their own private label website. We also provide our affiliates with technology and
access to a wide range of products and services.
Operations and Technology
We provide 24-hour-a-day, seven-day-a-week traveler support by telephone or via e-mail. For purposes of
operational flexibility, we provide this support infrastructure with a combination of outsourced and in-house
call centers, which are located in various locations throughout the world, including extensive outsourced
operations in the Philippines and El Salvador. We plan to make significant investments in our call center
technologies in 2008 and beyond.
Our systems infrastructure and web and database servers are hosted by third-party web hosting suppliers
in various locations, mainly in the United States, which provide communication links, as well as 24-hour
monitoring and engineering support. The web hosting facilities have their own generators and multiple back-up
systems. Significant amounts of our owned computer hardware for operating the websites are also located at
these facilities.
We have developed innovative technology to power our global travel marketplace. For example, our Best
Fare Search technology essentially deconstructs segment feeds in the US from GDS partners for air flight
searches and recommends the best way to re-assemble multi-leg itineraries so that they are less expensive and
more flexible for the traveler. We are looking to expand this technology internationally. We are also investing
in improving our fare discovery technologies and user interfaces to provide more comprehensive and easier
discovery of competitive rates for our travelers.
We are investing in and building a scaleable, service-oriented technology platform for our travelers, which
will extend across our portfolio of brands. We plan to significantly invest in this platform in 2008 and beyond.
We expect this investment to result in long-term cost savings, improved flexibility and faster go-forward
innovation. This transition should also allow us to improve our site merchandising, browse and search
functionality, improve search engine indexing, add significant personalization features, and ultimately improve
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