TripAdvisor 2012 Annual Report Download - page 18

•Enhance International Offerings. We are focused on strengthening our broad global footprint. We are
continuing to improve localization and grow our user base in Europe, Asia and South America,
especially in emerging markets, such as Brazil, Russia and China. These and the other newer sites in
Asia-Pacific represent a longer-term opportunity for us. We believe that China represents a large
international opportunity for our business. We currently have two lead product offerings in the Chinese
market—DaoDao and Kuxun—both headquartered in Beijing. We continue to invest heavily and
operate at a loss in the Chinese market.
•Acquisitions. We have a history of successfully acquiring and integrating companies that expand our
footprint either geographically or in market sectors that are complementary to our flagship properties.
We intend to continue to seek acquisition targets.
Business Model
We derive substantially all of our revenue from the sale of advertising, primarily through click-based
advertising and, to a lesser extent, display-based advertising. The remainder of our revenue is generated through
a combination of subscription-based offerings, selling room nights on our transactional sites SniqueAway and
Tingo, and other revenue including content licensing. In the year ended December 31, 2012, we earned
$588 million of revenue from click-based advertising, $94 million in revenue from display-based advertising and
$81 million in revenue from subscription-based offerings, transaction revenue and other revenue.
•Click-Based Advertising Revenue. Our largest source of revenue is click-based advertising, which
includes links to our partners’ booking sites and contextually-relevant branded and unbranded textlinks.
Our click-based advertising partners are predominantly online travel agencies and direct suppliers in
the hotel, airline and cruise product categories. Click-based advertising is generally priced on a cost-
per-click, or CPC, basis, with payments from advertisers based on the number of users who click on
each type of link. Most of our click-based advertising contracts can be terminated by the advertisers at
will or on short notice.
•Display-Based Advertising Revenue. We earn revenue from a variety of display-based advertising
placements on our websites through which our advertising partners can promote their brands in a
contextually-relevant manner. While our display-based advertising clients are predominately direct
suppliers in the hotel, airline and cruise categories and online travel agencies, we also accept display
advertising from marketing organizations, casinos, resorts and attractions, as well as advertisers from
non-travel categories. We generally sell our display-based advertising on a cost per thousand
impressions, or CPM, basis. Our display-based advertising products also include a number of custom-
built products including the sponsorship of certain site features and functionality, as well as certain
customized co-branded features.
•Subscription-Based, Transaction and Other Revenue. We offer advertising via a subscription model
that is sold for a flat fee per time period. Managed by our TripAdvisor for Business division, this
advertising product, Business Listings, is currently offered to hotels, B&Bs and other specialty lodging
properties and allows subscribers to list a website URL, email address and phone number on
TripAdvisor-branded websites as well as to post special offers for travelers. Our Vacation Rentals
product allows individual vacation property owners and property managers to pay a subscription fee to
list properties on our Holiday Lettings and FlipKey websites, as well as on select TripAdvisor-branded
websites. Other sources of revenue include selling room nights on our transactional sites, SniqueAway
and Tingo, as well as content licensing arrangements with third-party sites.
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