TV advertising by online travel agencies has been very much in vogue over the last couple of years. But TripAdvisor decided it doesn't need it for now and instead is going to take its new partnership with Booking.com and run with that instead.
TripAdvisor officials decided now that Booking.com and sister companies Priceline.com and Agoda will be participating as partners in TripAdvisor Instant Booking, who needs TV advertising.
So TripAdvisor officials announced today during the its third quarter earnings call that the company will “pause” TV advertising in 2016 and devote some or all of that spend to brand advertising in other channels. TripAdvisor spent $20 million on TV advertising in the third quarter, for example.
If the logic of TripAdvisor plus Booking.com equals killing TripAdvisor’s two-year-old TV advertising campaigns escapes you, then here’s the thinking:
TripAdvisor CEO Stephen Kaufer said TripAdvisor already has enough traffic — 350 million unique visitors during peak months — and while the TV campaigns increased brand awareness, an area that was already a TripAdvisor strength, there wasn’t enough hard evidence that the TV spots were increasing consumers’ propensity to book hotels.
TripAdvisor “already has the travelers on our site,” Kaufer said, so instead of devoting money to TV advertising, TripAdvisor will accelerate its international rollout of Instant Booking because the Booking.com partnership gives TripAdvisor enhanced international features in the form of rich content in non-English languages and the ability for consumers to make hotel transactions with local credit cards and in local currencies.
The multiple currencies, diverse languages, and Booking.com’s rich room descriptions and other content for 400,000-plus hotels “gives us all of that in one fell swoop,” Kaufer said, adding that he hopes this will lead to increased conversion.
Very High Praise
Kaufer was almost gushing in his views about what the addition of Booking.com in the fourth quarter, and Priceline.com and Agoda in 2016 to Instant Booking, which enables travelers to book hotels on TripAdvisor instead of having to navigate to the hotel or online travel agency sites, would do in accelerating the international rollout and improving conversion.
He called adding the Priceline Group to TripAdvisor Instant Booking a “huge” win, a “step-change” and a “difference-maker.” Kaufer said “I can tell you that I love what I’m seeing” in the testing so far and he’s “super-excited.”
These are strong words for a usually understated guy with a computer science background.
Until now, Kaufer said, TripAdvisor offered Japanese consumers hotel descriptions in English but, with Booking.com, transactions can be conducted in Japanese in the local currency.
TripAdvisor had been prepared to go-it-alone without a major, global online travel agency participating in Instant Booking if it had to but the Priceline Group’s partnership takes things to another level, Kaufer said.
Compromises and Branding
Expedia has declined to participate in TripAdvisor Instant Booking and the Priceline Group had been holding out so what changed for the Priceline Group?
Kaufer said both TripAdvisor and the Priceline Group made compromises and the latter will get the branding it wants in Instant Booking to ensure consumers know that the Priceline Group is handling the booking despite the fact that it is being conducted on TripAdvisor sites or in its mobile apps.
Kaufer declined to provide specifics on the economics of the Priceline deal but said financial analysts can judge by his actions to accelerate the rollout of Instant Booking internationally that the deal will be economically beneficial for TripAdvisor. He said the Priceline Group wouldn’t have entered into the pact unless it was financially advantageous for its brands, as well.
Kaufer hinted that the commissions that the Priceline Group would have to pay TripAdvisor might be lower than the 12 percent or 15 percent commissions that independent hotels pay. They are likely considerably lower.
In fact, he said, generally — without mentioning the Priceline Group — that higher conversion at lower commissions would be economically beneficial to TripAdvisor.
The “pause” in the TV advertising does not mean it is gone forever as TripAdvisor could optionally reinstate in late in 2016 or 2017, Kaufer said.
Are You Kidding Me?
In the are you kidding me category — we’re not — the more than hour-long TripAdvisor conference call with financial analysts did not include a single question or comment about Expedia Inc.’s agreement to acquire HomeAway despite the fact that TripAdvisor owns a handful of vacation rental sites.
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Photo Credit: TripAdvisor is eliminating TV advertising for now because it believes it will be more beneficial to focus on increasing its international rollout of booking on TripAdvisor in partnership with Booking.com because of the latter's strength in languages, local currencies and payments, and other content. Shown is Booking.com Japan site. Booking.com
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