Travelzoo 2011 Annual Report Download - page 30

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• Benefits of Internet Advertising vs. Print, TV and Radio Advertising. Internet advertising provides advertisers advantages
compared to traditional advertising. These advantages include real-time listings, real-time updates, and performance
tracking. See “— Benefits to Travel, Entertainment and Local Companies” below.
• New Advertising Opportunities. The Internet allows advertisers to advertise their sales and specials in a fast, flexible, and
cost-effective manner that has not been possible before.
• Suppliers Selling Directly. We believe that many travel suppliers prefer to sell directly to consumers through suppliers’
websites versus selling through travel agents. Internet advertising attracts consumers to suppliers’ websites.
Problems Travel, Entertainment and Local Companies Face and Limitations of Newspaper, TV and Radio Advertising
We believe that travel, entertainment and local companies often face the challenge of being able to effectively and quickly
market and sell their excess inventory (i.e. airline seats, hotel rooms, cruise cabins, theater seats, spa appointments or restaurant seats
that are likely to be unfilled). The success of marketing excess inventory can have a substantial impact on a company’s profitability.
Almost all costs of these services are fixed. That is, the costs do not vary with sales. A relatively small amount of unsold inventory can
have a significant impact on the profitability of a company.
We believe that travel, entertainment and local companies need a fast, flexible, and cost-effective solution for marketing excess
inventory. The solution must be fast, because services are a quickly expiring commodity. The period between the time when a
company realizes that there is excess inventory and the time when the service has become worthless is very short. The solution must
be flexible, because the demand for excess inventory is difficult to forecast. It is difficult for travel, entertainment and local companies
to price excess inventory and to forecast the marketing effort needed to sell excess inventory. The marketing must be cost-effective,
because excess inventory is often sold at highly discounted prices, which lowers margins.
We believe that newspaper, TV and radio advertising, with respect to advertising excess inventory, suffers from a number of
limitations which do not apply to the Internet:
• typically, ads must be submitted 2 to 5 days prior to the publication or airing date, which makes it difficult to advertise
last-minute inventory;
• once an ad is published, it cannot be updated or deleted when an offer is sold out;
• once an ad is published, the company cannot change a price or offer;
• in many markets, the small number of newspapers, television companies, radio stations and other print media reduces
competition, resulting in high rates for traditional advertising; and
• offline advertising does not allow for detailed performance tracking.
• creative can be very expensive to develop.
Our Products and Services
We provide airlines, hotels, cruise lines, vacation packagers, other travel suppliers, entertainment and local companies with a
fast, flexible, and cost-effective way to reach millions of Internet users. Our publications include the Travelzoo websites, the
Travelzoo Top 20 e-mail newsletter, the Newsflash e-mail alert service, the Local Deals and Getaways e-mail alert services. We
operate SuperSearch, a pay-per-click travel search tool and the Travelzoo Network, a network of third-party websites that list deals
published by Travelzoo. We also operate Fly.com, a travel search engine that enables users to find and compare the best flight options
from multiple sources, including airline and online travel agency websites. While our products provide advertising opportunities for
travel, entertainment and local companies, they also provide Internet users with a free source of information on current sales and
specials from thousands of travel, entertainment and local companies.
As travel, entertainment and local companies increasingly utilize the Internet to promote their offers, we believe that our
products will enable them to take advantage of the lower cost and real-time communication enabled by the Internet. Our listing
management software allows our advertisers to add, update, and delete special offer listings on a real-time basis. Our software also
provides our advertisers with real-time performance tracking, enabling them to optimize their marketing campaigns.