TripAdvisor 2013 Annual Report Download - page 28

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. As a result, we are continually evaluating changes to aspects of our business model to keep pace with
the expectations of users and advertisers, and these changes may not yield the benefits we expect. 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.
Growth in the use of TripAdvisor through smartphones as a substitute for use on personal computers and
tablets may negatively affect our revenue and financial results.
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, such as
smartphones and tablets, has increased substantially in the last few years and we anticipate that the rate of use of
smartphone computing devices will continue to grow. Although the substantial majority of smartphone users also
access and engage with our websites on personal computers and/or tablets, our users could decide to increasingly
access our products primarily through smartphone devices. We have developed services and applications to
address limitations of these smaller devices and our advertising revenues continue to grow, however, we
monetize users of smartphone computing devices at a lower rate compared to users who access our websites
through personal computers and the efficacy of the smartphone advertising market and our smartphone
monetizing strategies are still developing.
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
such devices. If users continue to increasingly access our smartphone products as a substitute for access through
personal computers and/or tablets, and if we are unable to successfully improve monetization strategies for our
smartphone users, our revenue and financial results may be negatively 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.
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.
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