TripAdvisor expects to take the “hardest hit” of the year in the third quarter as it works the kinks out of its new hotel-metasearch product.
Meanwhile, TripAdvisor is in the “test re-test” phase of its first advertising campaign, which kicked off in nine test markets in June. The campaign appears to have been somewhat aborted, although TripAdvisor denies it.
TripAdvisor CFO Julie Bradley made these points as she provided an update on the company today at the UBS Best of Americas Conference in London.
As TripAdvisor has explained before, with hotel metasearch, which replaces users searching for hotels in individual pops-up windows, TripAdvisor gets fewer clicks because users stay on the site longer, but they convert at higher rates for hotel advertisers.
Bradley said TripAdvisor is heading toward “revenue neutrality” in hotel metasearch, meaning it would be back to square one with an increase in cost-per-click rates compensating for a decrease in clicks.
TripAdvisor aims to achieve such revenue neutrality by the end of the year, Bradley says.
That means the biggest impact on financials would be in the third quarter, which ends in September, because hotel metasearch was only rolled out 100% in one month, June, during the second quarter.
Why would TripAdvisor settle for revenue neutrality then? Well, that would only be temporary.
The company believes hotel metasearch is a much better user experience than the pop-up windows, and over time TripAdvisor would be able to make substantial financial gains.
On the advertising front, Bradley said TripAdvisor ran its first TV advertisement, the test of a national campaign, in June, but is now in the “test re-test phase.”
Bradley says TripAdvisor must create a variety of ads because people aren’t always in travel-planning mode.
“We have been busy creating other ads that are memorable,” Bradley said.
But TripAdvisor brought in a new vice president of brand strategy, Anne Bologna, in June, and this isn’t a step you take in the middle of the launch of your first national TV advertising campaign, if everything is going well.
There have been reports that TripAdvisor pulled back on the campaign, although it’s unclear whether the advertisements weren’t up to par, or whether its hotel metasearch wasn’t ready for prime time — or both.
For the record, a TripAdvisor spokesperson said today: “We have not changed our plans and are committed to the ad budget spending this year that we announced in our last earnings call.”
However, on May 7, TripAdvisor CEO Steve Kaufer had said the advertising would begin in earnest in the third quarter, which ends in about two weeks. Kaufer stated at the time:
“Finally, as I mentioned previously, when hotel metasearch is live to 100% of our traffic, we will kick off our off-line branding campaign. We are scheduled to begin testing our first TV ad later this quarter, and you should expect us — expect to see us on air in a meaningful way starting in Q3 in the U.S. As always, we will test and learn. At this point, we expect to launch in at least a couple of other countries before the year is out.”
There definitely was a hiccup in TripAdvisor’s advertising schedule, although the campaign will likely make it way to the airwaves again soon.