Next year will be a make or break year for TripAdvisor Instant Booking. Either the economics work out and consumers start treating TripAdvisor as a booking site or the company will have to pivot. It's a tough slog with much potential. TripAdvisor is playing the long game on this; let's talk next year at this time to see how the game works out.
Adam Medros, TripAdvisor’s global head of product for the last three years, has been at the company for about a dozen years.
Medros has been through numerous product launches ranging from mobile apps to metasearch three years ago, but he says the current transition into becoming a booking site “is one of the harder products I’ve ever worked on at TripAdvisor.”
“It’s hard work,” Medros says. “Maybe harder than we thought.”
Not that Medros lacks confidence about TripAdvisor’s ongoing attempt to supplement reliance on advertising clicks to online travel agencies and hotels, or metasearch, with Instant Booking transactions, where consumers can book hotels without leaving TripAdvisor sites.
“We are building off an incredible asset,” Medros says, citing the company’s 450 million user reviews and opinions, and an accelerating pace of content contributions, now averaging 280 per minute.
But these are user reviews, which is TripAdvisor’s core competency and what built TripAdvisor into a company that attracts 390 million average monthly unique visitors at a market cap of $7.6 billion.
That market cap is way down over the last year as TripAdvisor’s stock trades at $51.38 per share, not too far from its 52-week low. The stock price’s decline comes because the introduction of booking capabilities meant that the amount of revenue TripAdvisor generates from each consumer shopping for hotels is way down compared with consumers who previously viewed TripAdvisor advertising links and navigated to online travel agency or hotel websites to make their bookings.
But TripAdvisor believes it had to make a move to supplement metasearch with booking capabilities because the widespread use of relatively small-screen mobile phones meant TripAdvisor often wasn’t getting enough credit from advertising partners when customers did their research on TripAdvisor, clicked on a Hilton link, meandered over to Expedia or Walmart, went to sleep, and eventually, perhaps a few days later, booked a stay on Hilton.com.
On the Right Path?
Medros, speaking outside the Phocuswright conference in Los Angeles earlier this month, believes that TripAdvisor has closed the gap between bookings and metasearch monetization in the U.S., has laid the groundwork for success, and that 2017 will be a growth year for the company. He points to the fact that while Instant Booking still faces an uphill battle in its first year since the rollout outside the U.S., there was positive momentum in the U.S. in click-based advertising and Instant Booking revenue, and revenue per hotel shopper in September, and an acceleration of these trends domestically in October.
The company always said that things would get worse before they got better in the transition toward Instant Booking but progress in 2016 was slower than expected.
Difficulties in getting the transaction part of the business to work right for TripAdvisor and its customers might seem surprising since the company was part of the mostly transaction-based Expedia family and its precursor from 2004 to 2011, although TripAdvisor operated mostly independently.
Medros says the biggest challenge today is not things such as optimizing the mechanics of the booking path from research to selecting the “Book Now” button but in delivering the right information to consumers when they are ready to make a decision.
TripAdvisor, Medros says, has reworked some of its “attribution” techniques, or getting credit for a click when the booking takes place far afield and perhaps days later, and has “a better understanding of the value of traffic and where to buy it.”
In that regard, company officials stated during its third quarter earnings call that TripAdvisor is likely to boost its digital marketing efforts a considerable amount in 2017 — all to get consumers to better understand that they can use TripAdvisor for booking a trip, and not just for planning one, Medros says.
TripAdvisor discontinued TV advertising in 2016 and seems to be opting for increased digital advertising instead for next year.
Among Medros’ specialities is search engine marketing (paid ads) and search engine optimization (free links). He acknowledges that the marketing landscape, including using platforms such as Google, Facebook, metasearch and remarketing, has become much more complex in recent years.
Asked about how Google’s downplaying of free links in exchange for favoring its own flight and hotel products has upset the balance of power, Medros says: “If I were a startup trying to get into the meta or instant book business today, I don’t think I’d give us great odds.”
Fortunately, for Medros and TripAdvisor, the company isn’t a startup and is building off those 390 million monthly unique visitors.
As TripAdvisor CEO Stephen Kaufer told analysts recently, Google “remains a headwind. It’s been that way for many, many years now as Google continues to put their kind of owned and operated placements ahead of what users are looking for in terms of the regular organic search results. We’ve grown accustomed to it and we’re running our business accordingly.”
That’s the backdrop for what’s ahead for Instant Booking in 2017, which is shaping up as a make or break year for the product.
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Photo credit: Adam Medros, TripAdvisor's global head of product, has confidence in the ultimate success of the company's Instant Booking initiative but says there has been a lot of heavy lifting. TripAdvisor