Priceline 2010 Annual Report Download - page 81

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Casualty Insurance Company, an AEGON Company. We retain a fee for every optional insurance package
purchased by our customers.
While we are currently focused on the travel services described above, over time, we may evaluate the
introduction of other services that we believe could enhance the travel experience of our customers.
Marketing and Brand Awareness
Booking.com, priceline.com and Agoda have established widely used and recognized e-commerce brands
through aggressive marketing and promotion campaigns. During 2010, our total online advertising expenses were
approximately $552.1 million, a substantial portion of which was spent internationally through Internet search
engines and online affiliate marketing. We also invested approximately $35.7 million in priceline.com-branded
offline advertising in the United States. We intend to continue a marketing strategy to promote brand awareness and
the concept that consumers can save money using our services. Underlying our marketing strategy is our belief that
our target market is all consumers, not just Internet-savvy consumers. We intend to continue to promote our brands
aggressively throughout 2011.
As our international operations have become more meaningful contributors to our results, we have seen,
and expect to continue to see, changes in our advertising expense. Specifically, because our international operations
utilize Internet search engines and online affiliate marketing, principally through the purchase of travel-related
keywords, as principal means of generating traffic to their websites, our online advertising expense has increased
significantly since our acquisition of those companies, a trend we expect to continue throughout 2011.
Competition
We compete with both online and traditional sellers of the services we offer. The market for the services we
offer is intensely competitive, and current and new competitors can launch new sites at a relatively low cost. We
may not be able to effectively compete with industry conglomerates such as Expedia, Orbitz Worldwide or Sabre,
each of which may have access to significantly greater and more diversified resources than we do.
We currently or potentially compete with a variety of companies with respect to each service we offer. With
respect to our travel services, these competitors include, but are not limited to:
x Internet travel services such as Expedia, Hotels.com, Hotwire and Venere, which are owned by Expedia;
Travelocity, lastminute.com and Zuji, which are owned by the Sabre Group; Orbitz.com, Cheaptickets,
ebookers, HotelClub and RatesToGo, which are currently owned by Orbitz Worldwide; laterooms and
asiarooms owned by Tui Travel; and Gullivers, octopustravel, Superbreak, hotel.de, Hotel Reservation
Service, AutoEurope, Holiday Auto, Car Trawler, Ctrip, Rakuten and Wotif;
x travel suppliers such as airlines, hotel companies and rental car companies, many of which have their own
branded websites to which they drive business;
x large online portal, social networking, group buying and search companies, such as Google, Yahoo!
(including Yahoo! Travel), Bing (including Bing Travel), Facebook and Groupon;
x traditional travel agencies, wholesalers and tour operators;
x online travel search sites such as Kayak.com, Mobissimo.com, FareChase.com, HotelsCombined and
SideStep.com (each sometimes referred to as “meta-search” sites) and travel research sites that have search
functionality, such as TripAdvisor, Travelzoo and Cheapflights.com; and
x operators of travel industry reservation databases such as Galileo, Travelport, Amadeus and Sabre.
Traditional online travel companies have created new promotions and consumer value features in an effort
to gain competitive advantage. For example, in 2009, Travelocity launched an opaque price-disclosed hotel booking
service that allows customers to book rooms at a discount because, similar to our Name Your Own Price® hotel
booking service, the name of the hotel is not disclosed until after purchase. In addition, in the fourth quarter of 2010,
Expedia began making opaque hotel room reservations available on its principal website under the name “Expedia
Unpublished Rates.” If Expedia or Travelocity are successful in growing their opaque hotel service, our share of the