TripAdvisor 2012 Annual Report Download - page 24

changes its algorithms in a manner that negatively affects our paid or unpaid search ranking, or if competitive
dynamics impact the effectiveness of SEO or SEM in a negative manner, our business and financial performance
would be adversely affected, potentially to a material extent. Furthermore, our failure to successfully manage our
SEO and SEM strategies could result in a substantial decrease in traffic to our websites, as well as increased costs
if we were to replace free traffic with paid traffic.
In addition, to the extent that Google (including Google + Local and Google Hotel Finder) and ) Bing
(including Bing Travel), or other leading search or metasearch engines that have a significant presence in our key
markets, disintermediate online travel agencies or travel content providers by offering comprehensive travel
planning or shopping capabilities, or refer those leads to suppliers directly, or to other favored partners, there
could be a material adverse impact on our business and financial performance. For example, during 2011, Google
completed its acquisition of flight search technology company ITA Software and separately made changes to its
hotel search results, including both expanding and promoting the use of Google + Local. To the extent these
actions have a negative effect on our search traffic, our business and financial performance could be adversely
affected.
Declines or disruptions in the travel industry could adversely affect our businesses and financial performance.
Our businesses and financial performance are affected by the health of the worldwide travel industry. Travel
expenditures are sensitive to personal and business discretionary spending levels and tend to decline or grow
more slowly during economic downturns. Decreased travel expenditures could reduce the demand for our
services, thereby causing a reduction in revenue.
Most recently, beginning in 2008, domestic and global economic conditions deteriorated rapidly, resulting
in increased unemployment and a reduction in available budgets for both business and leisure travelers, which
slowed spending on the services that we provide. The global economy remains in a fragile state and may be
adversely impacted by a number of negative economic developments including defaults on government debt,
significant increases in fuel and energy costs, tax increases and other matters that could reduce discretionary
spending, continued tightening of credit markets, further declines in consumer confidence, and policy missteps.
Further weakness in the global economy could create uncertainty for travelers and suppliers, and result in
reduced spending by advertisers. These conditions could have a material adverse impact on our business and
financial performance.
We derive substantially all of our revenue from advertising and any significant reduction in spending by
advertisers could harm our business.
Most of our advertisers can generally terminate their contracts with us at any time or on very short notice.
Advertisers will not continue to do business with us if their investment in such advertising does not generate
sales leads, customers, bookings, or revenue and profit on a cost-effective basis, or if we do not deliver
advertisements in an appropriate and effective manner. If we are unable to remain competitive and provide value
to our advertisers, they will likely stop placing ads on our websites, which would harm our revenues and
business. In addition, we cannot guarantee that our current advertisers will fulfill their obligations under existing
contracts, continue to advertise beyond the terms of existing contracts or enter into any additional contracts with
us.
Expenditures by advertisers also tend to be cyclical, subject to variation based on budgetary constraints,
project cancellation or delay, and to reflect overall economic conditions and buying patterns. If we are unable to
generate advertising revenue due to factors outside of our control, our business and financial performance would
be adversely affected.
Click-based advertising accounts for the majority of our advertising revenue. Any changes we make to our
business model, including a transition to a hotel metasearch display, may impact our advertising revenue in ways
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