TripAdvisor 2013 Annual Report Download - page 51

Current Trends Affecting Our Business
Increasing Competition. The travel review industry and, more generally, the business of collecting and
aggregating travel-related resources and information, continue to be increasingly competitive. In recent years, an
increasing number of companies, such as search companies Google, Inc. and Baidu.com, Inc. and several large
online travel agencies, have begun to collect and aggregate travel information and resources. We plan to continue
to invest in order to remain the leading source of travel reviews as well as continuing to enhance our content and
user experience. Refer to our discussion above in “—Competition” in Item 1 “Business” section for additional
information on our competition.
Increasing Use of Internet and Social Media to Access Travel Information. Commerce, information and
advertising continue to migrate to the Internet and away from traditional media outlets. We believe that this trend
will continue to create strategic growth opportunities, allowing us to attract new consumers and develop unique
and effective advertising solutions. Consumers are increasingly using online social media channels, such as
Facebook and Twitter, as a means to communicate and exchange information, including travel information and
opinions. We have made significant efforts related to social networking in order to leverage the expanding use of
this channel and enhance traffic diversification and user engagement. We are also continually adapting our user
experience in response to a changing Internet environment and usage trends. For example, in 2012, we invested
in building and introducing to users hotel metasearch functionality for our smartphone platforms and in 2013, we
completed the process of implementing hotel metasearch functionality on our desktop and tablet platforms. Refer
to our metasearch discussion above under “Improving the Hotel Shopper Experience” in the “Our Strategy”
section in Item 1 “Business” for additional information on our hotel metasearch transition.
Increasing Mobile Usage. Users are increasingly using smartphone and tablet computing devices to access
the Internet. To address these growing user demands, we continue to extend our platform to develop smartphone
and tablet applications to deliver travel information and resources. Although the substantial majority of our
smartphone users also access and engage with our websites on personal computers and tablets where we display
advertising, our users could decide to access our products primarily through smartphone devices. We have just
begun to display graphic advertising on smartphones, however, our smartphone monetization strategies are still
developing, as smartphone monetization was less than 20% of desktop monetization of hotel shoppers during the
year ended December 31, 2013 while tablets monetize more closely to desktops. Mobile growth and development
remains a key strategy and we will continue to invest and innovate in this growing platform to help us maintain
and grow our user base, engagement and monetization over the long term.
Click-Based Advertising Revenue. In recent years, the majority of our revenue growth resulted from higher
click-based advertising revenue due to increased traffic on our websites and an increase in the volume of clicks
on our advertisers’ placements. Although click-based advertising revenue growth has generally been driven by
traffic volume, we remain focused on the various factors that could impact revenue growth, including, but not
limited to, the growth in hotel shoppers, CPC pricing fluctuations, the overall economy, the ability of advertisers
to monetize our traffic, the quality and mix of traffic to our websites, and the quality and mix of traffic from our
advertising placements to advertisers, as well as advertisers’ evolving approach to transaction attribution models
and return on investment targets. We monitor and regularly respond to changes in these factors in order to
strategically improve our user experience, customer satisfaction and monetization in this dynamic environment.
For example, in order to improve user experience, we introduced metasearch functionality to our hotel shoppers
as discussed above under “Improving the Hotel Shopper Experience” in the “Our Strategy” section in Item 1
“Business.”
Spin-Off
During 2011, Expedia, Inc., or Expedia, announced its plan to separate into two independent public
companies in order to better achieve certain strategic objectives of its various businesses. We refer to this
transaction as the “Spin-Off.” On December 20, 2011, following the close of trading on the NASDAQ Global
Select Market (“NASDAQ”), the Spin-Off was completed, and TripAdvisor began trading as an independent
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