It seems that the brand-building benefit that TripAdvisor's big spend on television advertising was meant to bring to the company was not enough to continue it in 2016.
The company will be putting its TV marketing spend on pause in 2016 as it focuses on its instant booking product, it reported as part of its third-quarter earnings today (Nov. 5).
TripAdvisor was slated to have budgeted about $60 million in TV advertising in 2015.
That bucks a trend since 2013 when TripAdvisor had been using TV as a marketing channel.
Kaufer said that, given that TV expenditure is something that needs to be planned in advance, the company had to decide now to pull back in 2016. He added:
"We’re not just taking all the money and hanging on to it. We will spend some of the money in other channels."
In response to investor analyst questions, he did not clarify if the TV spend was not delivering a desired return-on-investment or what share of the money would be re-allocated to other types of marketing.
The pullback seemed a bit counter-intuitive if a goal of the company is to teach travelers to book on TripAdvisor, unless the return-on-investment wasn't hot or the company needed more financial flexibility to handle anticipated financial headwinds due to its accelerated investment in its instant booking platform.
In answer to an analyst question, Kaufer said:
"I wouldn’t claim yet that I have an answer as to how we can quickly change consumers’ mindsets about booking on TripAdvisor. When I look back, TripAdvisor typically hasn't had an awareness issue in most of its markets. TV does a great job in building awareness. We've seen how it works for so many other companies.
"Other companies have tended to be at a different awareness and growth stages. We went forward with TV because we knew it wouldn't move our awareness numbers but that it would educate consumers on booking on TripAdvisor.
"We did surveys on TV, and the book message stood out. But it was harder to see the behavior change on TripAdvisor. We saw more traffic and made more money.
"But it was softer to draw the conclusion that it got people to actually complete a transaction by booking on TripAdvisor. It would be to my mind no harm whatsoever to use the same or different creative. It couldn’t possibly hurt.
"But in the judgment call of, is that where we want to push for our branding and marketing for next year, we made the judgment call to put it on 'pause'. I use that word 'pause' carefully. I'm not saying we wouldn't change our minds in late 2016 or in 2017...."
"When we look at it from the perspective of, we have 100-plus million travelers on the site in any given month. Surely that's a big enough sample size to work on an educational message...."
Instant booking is an instant hit
Kaufer said he was proud of his team having signed up more than 70 hotel chains and groups -- including 7 of the top 10 hotel brands worldwide -- to its instant booking platform. He noted that the company completed the rollout of Marriott's inventory on instant booking in less than two months after the deal was signed.
He said the company had accelerated the rollout of instant booking across its platform in September in the US and the UK and he expects it to be live in more major markets internationally soon.
By early 2016, TripAdvisor will have more than 400,000 properties in more than a dozen languages available through instant booking. Independent hoteliers can also participate via more than 130 internet booking engines worldwide.
Kaufer touted the significance of having signed Priceline Group as an instant booking partner, saying Booking.com inventory would begin to be on-boarded in the next few months, with Priceline and Agoda brand inventory coming onto the platform next year. He noted:
"We’ve always said we would go it alone without an OTA partner…. But having Priceline Group lets us go down the path faster....
"In particular, adding Priceline Group inventory is a huge win for our travelers, as their high-quality room descriptions in multiple languages, multi-currency payment capabilities, great room pricing, and stellar customer service, enables us to accelerate our international roll out of instant booking over the coming year."
TripAdvisor's revenue for the quarter was up 17% on the year, raking in more than $415 million.