Expedia 2011 Annual Report Download - page 17

We rely on the value of our brands, and the costs of maintaining and enhancing our brand awareness
are increasing.
We invest considerable financial and human resources in our brands in order to retain and expand our
customer base. We expect that the cost of maintaining and enhancing our brands will increase due to a variety of
factors, including increased spending from our competitors, the increasing costs of supporting multiple brands
and the impact of competition among our multiple brands, expansion into geographies and products where our
brands are less well known, inflation in media pricing including search engine keywords and the continued
emergence and relative traffic share growth of search engines and metasearch engines as destination sites for
travelers. Our efforts to preserve and enhance consumer awareness of our brands may not be successful, and,
even if we are successful in our branding efforts, such efforts may not be cost-effective, or as efficient as they
have been historically. Moreover, successful branding efforts with respect to some brands within the Expedia
portfolio have in the past and may in the future negatively impact growth rates of other brands within our
portfolio. If we are unable to maintain or enhance consumer awareness of our brands and generate demand in a
cost-effective manner, it would have a material adverse effect on our business and financial performance.
We rely on information technology to operate our businesses and maintain our competitiveness, and
any failure to adapt to technological developments or industry trends could harm our business.
We depend on the use of sophisticated information technologies and systems, including technology and
systems used for reservations, communications, procurement and administration. As our operations grow in both
size and scope, we must continuously improve and upgrade our systems and infrastructure to offer an increasing
number of travelers enhanced products, services, features and functionality, while maintaining or improving the
reliability and integrity of our systems and infrastructure. Our future success also depends on our ability to adapt
our services and infrastructure to meet rapidly evolving consumer trends and demands while continuing to
improve the performance, features and reliability of our service in response to competitive service and product
offerings. The emergence of alternative platforms such as mobile and tablet computing devices and the
emergence of niche competitors who may be able to optimize products, services or strategies for such platforms
will require new investment in technology. New developments in other areas, such as cloud computing, could
also make it easier for competition to enter our markets due to lower up-front technology costs.
In addition, we may not be able to maintain our existing systems or replace or introduce new technologies
and systems as quickly as we would like or in a cost-effective manner. We have been engaged in a multi-year
effort, which we expect to continue for several more years, to migrate key portions of our site functionality to
new technology platforms to enable us to improve conversion, introduce innovation more rapidly, achieve better
search engine optimization and improve our site merchandising and transaction processing capabilities, among
other anticipated benefits. These migrations have been in the past, and may continue to be in the future, more
time consuming and expensive than originally anticipated, and the resources devoted to those efforts have
adversely affected, and may continue to adversely affect, our ability to develop new site innovations. In addition,
during the migration process the sites may experience reduced functionality and decreases in conversion rates.
Also, we may be unable to devote financial resources to new technologies and systems in the future. Overall,
these implementations and systems enhancements may not achieve the desired results in a timely manner, to the
extent anticipated, or at all. If any of these events occur, our business and financial performance could suffer.
Our business could be negatively affected by changes in search engine algorithms and dynamics or
other traffic-generating arrangements.
We increasingly utilize internet search engines such as Google, principally through the purchase of travel-
related keywords, to generate traffic to our websites. Search engines, including Google, frequently update and
change the logic that determines the placement and display of results of a user’s search, such that the purchased
or algorithmic placement of links to our websites can be negatively affected. In addition, a significant amount of
traffic is directed to our websites through our participation in pay-per-click and display advertising campaigns on
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