Expedia 2015 Annual Report Download - page 64

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Selling and Marketing
Year ended December 31, % Change
2015 2014 2013 2015 vs 2014 2014 vs 2013
($ in millions)
Direct costs $2,718 $2,256 $1,714 20% 32%
Indirect costs 663 552 482 20% 15%
Total selling and marketing(1) $3,381 $2,808 $2,196 20% 28%
% of revenue 50.7% 48.7% 46.0%
(1) Includes the following eLong amounts: $ 54 $ 124 $ 119 N/A 4%
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 various brands and global supply organization as well as stock-based
compensation costs.
Selling and marketing expenses increased $573 million during 2015 compared to the same periods in 2014
driven by increases of $462 million of direct costs, including online and offline marketing expenses. Brand
Expedia, trivago, Hotels.com and Hotwire accounted for the majority of the total direct cost increase. In addition,
higher personnel expenses of $111 million also contributed to the increase and were driven by the additional
personnel due to an accelerated pace of hiring in the lodging supply organization as well as an increase of stock-
based compensation of $15 million. Acquisitions added approximately 8% of year-on-year selling and marketing
growth for 2015.
Selling and marketing expenses increased $612 million in 2014 compared to 2013 driven by increase of $542
million in direct costs, including online and offline marketing expenses. Brand Expedia, including commissions related
to the Travelocity agreement, trivago and Hotels.com accounted for the majority of the total direct cost increase. In
addition, higher personnel expenses of $70 million also contributed to the increase and were driven by the ramping up
of hiring in the lodging supply organization, which is expected to continue into 2015, and additional personnel at
trivago and certain of our Core OTA brands, as well as a higher incentive compensation accrual. Acquisitions added
approximately 2% to year-on-year selling and marketing expense growth.
Technology and Content
Year ended December 31, % Change
2015 2014 2013 2015 vs 2014 2014 vs 2013
($ in millions)
Personnel and overhead $ 434 $ 370 $ 324 17% 14%
Depreciation and amortization of technology assets 265 214 163 24% 31%
Other 131 102 91 29% 12%
Total technology and content(1) $ 830 $ 686 $ 578 21% 19%
% of revenue 12.4% 11.9% 12.1%
(1) Includes the following eLong amounts: $ 11 $ 21 $ 14 N/A 54%
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.
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