Travelzoo 2007 Annual Report Download - page 56

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28% of our revenue growth in the year ended December 31, 2007 compared to the year ended December 31,
2006 came from our operations in Europe. The remaining 72% came from our operations in North America (i.e.
Travelzoo Web sites, Travelzoo Top 20 newsletter, Newsflash,SuperSearch, and Travelzoo Network) and is
attributed to an increase in our advertising rates for our existing products, an increase in the number of clients,
an increase in the volume of advertising sold, and new product offerings. Approximately 27% of our revenue growth
in the year ended December 31, 2007 compared to the year ended December 31, 2006 is attributed to an increase in
our advertising rates in North America for our existing products. Due to the increase in the reach of our publications,
we increased the prices for advertising placements in our publications on average by approximately 6% as of
January 1, 2007. Approximately 45% of our revenue growth in the year ended December 31, 2007 compared to the
year ended December 31, 2006 is attributed to an increase in the number of clients in North America, an increase in
the volume of advertising sold to existing clients in North America and from new product offerings in North
America.
13% of our revenue growth in the year ended December 31, 2006 compared to the year ended December 31,
2005 came from our operations in Europe. The remaining 87% came from our operations in North America (i.e.
Travelzoo Web sites, Travelzoo Top 20 newsletter, Newsflash and SuperSearch) and is attributed to an increase in
our advertising rates for our existing products, an increase in the number of clients, and an increase the volume of
advertising sold. Approximately 23% of our revenue growth in the year ended December 31, 2006 compared to the
year ended December 31, 2005 is attributed to an increase in our advertising rates in North America for our existing
products. Due to the increase in the reach of our publications, we increased the prices for advertising placements in
our publications on average by approximately 13% as of January 1, 2006. Approximately 64% of our revenue
growth in the year ended December 31, 2006 compared to the year ended December 31, 2005 is attributed to an
increase in the number of clients in North America and an increase in the volume of advertising sold to existing
clients in North America.
As discussed in Note 7 to the accompanying consolidated financial statements, two clients accounted for 15%
and 11% of our total revenues in the year ended December 31, 2007. In the year ended December 31, 2006, two
clients accounted for 16% and 14% of our total revenues. In the year ended December 31, 2005, two clients
accounted for 15% and 12% of our total revenues. No other clients accounted for 10% or more of our total revenues
during the years ended December 31, 2007, 2006, or 2005. The agreements with these clients are in the form of
multiple insertion orders from groups of entities under common control. Management expects revenue concen-
tration to remain at the current level in the foreseeable future because there is a high concentration in the online
travel agency industry.
Management believes that our ability to increase revenues in the future depends mainly on the following
factors:
• our ability to increase our advertising rates;
• our ability to sell more advertising to existing clients;
• our ability to increase the number of clients;
• our ability to develop new revenue streams; and
• our ability to launch new products.
We believe that we can increase our advertising rates only if the reach of our publications increases. We do not
know if we will be able to increase the reach of our publications. We believe that we can sell more advertising only if
the market for online advertising continues to grow and if we can maintain or increase our market share. We believe
that the market for online advertising continues to grow. We do not know if we will be able to maintain or increase
our market share. We have historically increased the number of clients in each year since inception. We do not know
if we will be able to increase the number of clients in the future. We do not know if we will have market acceptance
of our new products.
Historically, we have increased advertising rates as of January 1 of each year. However, we did not increase our
advertising rates in the U.S. on January 1, 2008 due to intense price competition. We intend to review advertising
rates and consider increases once a year as of January 1. However, there is no assurance that there will be increases
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