Expedia 2011 Annual Report Download - page 58

Selling and Marketing
Year ended December 31, % Change
2011 2010 2009 2011 vs 2010 2010 vs 2009
($ in millions)
Direct costs $1,121 $ 949 $ 817 18% 16%
Indirect costs 354 286 244 24% 17%
Total selling and marketing $1,475 $1,235 $1,061 19% 16%
% of revenue 42.8% 40.7% 38.7%
Selling and marketing expense primarily relates to direct costs, including traffic generation costs from
search engines and internet portals, television, radio and print spending, private label and affiliate program
commissions, public relations and other costs. The remainder of the expense relates to indirect costs, including
personnel and related overhead in our Partner Services Group, Egencia and our various Leisure brands and stock-
based compensation costs.
Selling and marketing expenses increased $240 million in 2011 compared to 2010 driven by increases in
online, offline and affiliate marketing expenses as well as higher personnel expenses across most of our brands
and supply organization. Selling and marketing expenses increased $174 million in 2010 compared to 2009 due
to an increase in online and offline marketing expenses, including search engine marketing, brand advertising
and affiliate marketing expenses, and higher personnel costs, including those associated with opening a new
global headquarters for our lodging supply group, as well as higher professional service costs. Direct costs
include online marketing expenses with TripAdvisor of $211 million in 2011, $171 million in 2010 and $140
million in 2009. Prior to the spin-off, these amounts were eliminated but are now included in selling and
marketing expense.
Technology and Content
Year ended December 31, % Change
2011 2010 2009 2011 vs 2010 2010 vs 2009
($ in millions)
Personnel and overhead $ 200 $ 157 $ 143 28% 10%
Depreciation and amortization of technology assets 84 66 61 26% 10%
Other 97 86 79 13% 8%
Total technology and content $ 381 $ 309 $ 283 23% 9%
% of revenue 11.0% 10.2% 10.3%
Technology and content expense includes product development and content expense, as well as information
technology costs to support our infrastructure, back-office applications and overall monitoring and security of
our networks, and is principally comprised of personnel and overhead, depreciation and amortization of
technology assets including hardware, and purchased and internally developed software, and other costs
including licensing and maintenance expense and stock-based compensation.
The year-over-year increase of $72 million in technology and content expense in 2011 was primarily due to
higher personnel costs for additional headcount to support the Expedia brand, our corporate technology function
and supply organization as well as increased depreciation and amortization of technology assets. The year-over-
year increase of $26 million in technology and content expense in 2010 was primarily due to increased personnel
costs for increased headcount, including contractors, to support our worldwide brands, an increase in consulting
and professional fees as well as an increase in depreciation expense.
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