TripAdvisor will
expand its television advertising spending in the ballpark of from $100 to $130 million for its hotel
segment during 2018, with new creative and new markets, while simultaneously reducing
online marketing spend.
The company
says the changes are driven by improved attribution data across channels and devices
that have given it insight into downstream conversion and by positive
engagement spurred by a $74 million TV ad campaign that began in June 2017.
Speaking to analysts following the release of the company's full-year results for 2017, CEO Steve Kaufer says: “We have many, many years of doing the search engine marketing pieces, and we kind of know what to expect by way of how it changes the brand and how it builds or doesn’t build a lifetime value. Whereas with TV, the signs we are seeing are quite encouraging for that longer-term brand building.”
Kaufer says the
TV ads are intended to drive brand awareness and to change “the perception of TripAdvisor
from just reviews to a place where I can not only read reviews and discover but
also shop. And that shop action, finding the best price, obviously is where the
money is in hotels.”
Site updates
In tandem
with the new ad strategy will be updates to the user experience, guided by TripAdvisor’s
new Core Experience business unit.
“We are
focused internally on building that connective tissue, making sure the user feels
like they are on one TripAdvisor site experiencing multiple parts of our value proposition,”
Kaufer says.
Kaufer says
new features will be rolling out in the coming months, including new map
functionality that is in beta testing, that are focused on improving users experience
while planning and in-destination and that are not focused on a particular segment
such as hotel or attraction shopping.
The goal of
these updates is to make TripAdvisor the site where travelers turn to plan
their entire trip “because that is a piece of our differentiated experience
that really nobody else can touch,” he says.
The company
says this combination of an improved user interface and strategic TV
advertising will help TripAdvisor realize “the tremendous growth available to
us in the hotel space,” although in the short term, CFO Ernst Teunissen says he
does expect a decline in hotel revenue.
“We haven’t been able to deliver anywhere near the expectations
that we hold ourselves accountable for in the past couple of years. We know
that, and we have been doing a bunch of things over the past year to address it,”
Kaufer says.
“It starts
with delivering a better product on all fronts.”
A bright spot
Meanwhile, TripAdvisor’s
non-hotel segment continues as a rising star for the company, posting a 24%
increase in revenue in 2017 compared to a year earlier.
For 2017,
non-hotel revenue of $360 million represented 23% of TripAdvisor’s total
revenue, up from 15% in 2015, the first full year after it purchased Viator and
made acquisitions in restaurants.
Executives say they
will continue to rapidly grow this segment by adding supply, increasing demand and
improving user experience.
The brightest
part of the non-hotel portfolio continues to be tours and attractions, with TripAdvisor
now offering 83,000 bookable experiences.
“We are
thrilled to sign up as many distribution partners for our attractions business
globally,” Kaufer says.
“We think of
it as TripAdvisor is one - albeit a very large distribution channel for the
Viator supply platform - but it is only one, and they have many others and we
would love there to be hundreds more."
The company
says it sees huge growth potential for tours and attractions spurred by
existing demand from TripAdvisor users and by continuing to educate consumers
that booking online in advance can be “smarter, cheaper, safer” than booking in
person at the attraction or via a hotel concierge.
Regarding
vacation rentals, another part of the non-hotel segment, Kaufer says rentals
are a “strategic part of the offering for TripAdvisor for the accommodation
shopper and that will stay that way, but we are not making a massive new
investment in the rental category vis-a-vis the other players out there.”
Mobile first
Kaufer says mobile
development is critical as consumers become more comfortable booking travel on
their phones, and TripAdvisor has seen mobile revenue per shopper grow as they
have improved the mobile interface.
“The
industry is getting better at measuring cross-device attribution,” he says.
“Someone who
looks on our site and clicks downstream and then returns later on a desktop to
book on a client site - we are getting and we expect to get more credit for
that.”
TripAdvisor
is also pricing some of its newer products, such as sponsored listings for
hotels and restaurants, the same on mobile and desktop.
“We are
building for the phone as our future now,” Kaufer says.