As it tries to compete with Expedia, Priceline and others to become a leading hotel-booking site, TripAdvisor faces a dilemma that numerous competitors have faced before — getting massively outspent in marketing.
TripAdvisor has some advantages that weaker competitors such as Hipmunk, Room 77 or Hotel Tonight don’t but consider that while TripAdvisor grew its total selling and marketing spend 9 percent to $756 million in 2016, at the same time Expedia Inc. ratcheted up its marketing spend 29 percent to $4.36 billion, and the Priceline Group’s jumped 23 percent to $4.35 billion.
China’s Ctrip, meanwhile, spent a bit more on selling and marketing than TripAdvisor, $844 million, in 2016, and this amounted to a 90 percent jump that was largely tied to its taking control of online booking rival Qunar.
So TripAdvisor’s marketing budget is roughly just 17 percent of Expedia’s and Priceline’s and the bigger two competitors’ marketing budgets are growing much faster.
The Big are Getting Bigger
While Expedia and Priceline can take growing revenue and redirect more of it toward additional marketing to generate more revenue and even greater marketing spend, TripAdvisor in 2016 saw its revenue per hotel shopper decrease 15 percent year over year. TripAdvisor expresses confidence that as it transitions into a booking site that it can turn around that hotel shopper revenue decline, but in the short term, at least, it is falling further behind.
With Google turning search largely into a paid marketplace, the advantage goes to scale players such as Expedia and the Priceline Group.
It will be tough for TripAdvisor to break through as a leading booking site when it is getting so vastly outspent in digital marketing and TV.
In 2015, TripAdvisor spent $51 million on TV advertising, went dark in 2016, and is mulling a return to TV this year.
TripAdvisor acknowledged the challenge when it released its fourth quarter earnings in mid-February, noting that the competition hasn’t stood still in their respective marketing efforts while TripAdvisor works on fine-tuning hotel bookings on its site to supplement metasearch, or linking off to partner sites for bookings.
Assets of Its Own
Still, despite the daunting challenges, TripAdvisor is the largest travel site in the world. During the peak summer travel period, TripAdvisor’s unique monthly visitors reached 390 million, according to comScore Media Metrix.
When you travel around the world today, TripAdvisor signage in stores, hotels and restaurants is omnipresent, with each touting various commendations from TripAdvisor. Its global sites have 465 million reviews and opinions, and travelers know TripAdvisor as a place to consume those reviews when figuring out which hotel or restaurant to visit.
“We’ve made the point about our scale supporting TripAdvisor through this transition innumerable times,” TripAdvisor chief marketing officer Barbara Messing told Skift in an emailed statement Monday. “We have so much traffic, including hotel shopping traffic, that is already up funnel, that is already discovering us and loving the TripAdvisor brand for our review content. Our opportunity is to get those individuals to come back to book with us also and find great prices on hotel stays.
“As we provide consumers the online and mobile experience they want and need when they are ready to book, we will explore how to best grow hotel shoppers through an integrated campaign that will look at both online and offline channels that we believe will effectively and efficiently drive our highest return on any potential investment.”
The company is increasingly sending location-based notifications to users when they are ambling by a restaurant or attraction. TripAdvisor’s cross-marketing and selling opportunities are numerous.
The challenge is to change the perception that TripAdvisor isn’t just a review site any longer and is a place to book your travels, too, when competitors are massively outspending the company in their marketing — and widening the gap.
Said Messing: “As we explore these options, we are confident that any potential spend will help us teach consumers who know us well for researching their travel choices, that we can also be the best place to visit when ready to book their hotel.”