TripAdvisor 2011 Annual Report Download - page 19

Table of Contents
our business, financial condition and results of operation. In addition, we entered into a one-year agreement with Expedia in connection with the
Spin-Off. If such contract is not subsequently renewed or is renewed on terms less favorable to us, it could have an adverse effect on our
business, financial condition and results of operations.
Furthermore, our CPC pricing for click-based advertising depends, in part, on competition between advertisers, with those paying higher
CPCs generally getting better advertising placement and more leads from us. If our large advertisers become less competitive with each other,
merge with each other, focus more on per click profit than on traffic volume, or are able to reduce CPCs, this would have an adverse impact on
our CPCs which would, in turn, have an adverse effect on our business, financial condition and results of operations.
Our success depends upon the acceptance, and successful measurement, of online advertising as an alternative to offline advertising.
We believe that a significant discrepancy exists between the percentage of the advertising market allocated to online advertising and the
percentage of consumer time spent on online media consumption as opposed to offline advertising and media consumption. Long-
term growth of
our business will depend heavily on this distinction between online and offline advertising narrowing or being eliminated, which may not happen
in a manner or to the extent that we currently expect. We compete with traditional media for advertising dollars, in addition to websites with
higher levels of traffic. If online advertising ceases to be an acceptable alternative to offline advertising, our business, financial condition and
results of operations will be negatively impacted.
Because the online marketing industry is relatively new and rapidly evolving, it uses different methods than traditional media to gauge its
effectiveness. Some of our potential customers have little or no experience using the Internet for advertising and marketing purposes and have
allocated only limited portions of their advertising and marketing budgets to the Internet. The adoption of Internet advertising, particularly by
those entities that have historically relied upon traditional media for advertising, requires the acceptance of a new way of conducting business,
exchanging information and evaluating new advertising and marketing technologies and services. In particular, we are dependent on our clients’
adoption of new metrics to measure the success of online marketing campaigns. We may also experience resistance from traditional advertising
agencies who may be advising our clients. Any lack of growth in the market for various online advertising models could have an adverse effect
on our business, financial condition and results of operations.
In addition, if advertisers materially change their transaction attribution models or their return on investment calculations and/or increase
their return on investment targets with respect to online advertising in general, or TripAdvisor traffic in particular, they might reduce the prices
they are willing to pay for our advertising products, which would have an adverse effect on our business, financial condition and results of
operations.
We may experience difficulty in achieving meaningful consumer adoption of, and creating a viable advertising market via, our applications
for mobile and tablet computing devices, which could harm our business.
In general, our content was originally designed for users accessing the Internet on a desktop or laptop computer. The number of people
who access the Internet through devices other than personal computers has increased substantially in the last few years. Although we have
developed services and applications to address the smaller screens, and less convenient typing capabilities of these devices, the efficacy of the
mobile advertising market is still developing. Moreover, if our mobile and tablet computing services prove to be less effective for users seeking
to research travel through these devices or less economically attractive for advertisers and the wireless and mobile segment of Internet traffic
grows at the expense of traditional computer Internet access, we may experience difficulty attracting and retaining traffic and, in turn,
advertisers, on these platforms. Additionally, as new devices and new platforms are continually being released, it is difficult to predict the
challenges that we may encounter in developing versions of our offerings for use on these alternative devices, and we may need to devote
significant resources to the creation, support, and maintenance of our services on
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