TripAdvisor Gambles on TV Campaign Promising Best Hotels at Lowest Prices

TripAdvisor is returning to television advertising in a relatively modest way in 2017 after a two-year absence as it pivots away from an earlier “book, book, book” message and positions itself as the place to help users “find and book the the best hotels at the lowest prices.”

That’s how the company characterized the thrust of its upcoming $70 to $80 million TV campaign to be rolled out in the United States and select other markets later this year, as TripAdvisor released its first quarter earnings — but it isn’t necessarily the verbiage it will use in its campaign.

There was a lot of interest in whether TripAdvisor would return to TV and concern about the costs. The company said it believes that TV will take up a larger portion of its marketing mix in future years but for 2017, “we expect the channel will have a below-break even return on advertising spend profile.”

The creative agency handling the U.S. campaign will be Supermoon of Santa Monica, Cailifornia, Skift has learned.

“However, with our streamlined product and our clearer marketing message, we are confident that we can drive steady improvements and generate positive returns from this channel within a few years,” the company said.

As Skift first reported, TripAdvisor has deemphasized Instant Booking, although that option still gets presented to some users as a booking choice at various times, depending on their search and booking history and in cases where Instant Booking has the lower price than the metasearch choice.

TripAdvisor is also rolling out a redesign of its desktop and mobile offerings across hotels, vacation rentals, flights, tours and activities, and restaurants over the next few weeks. The revamp gives more priority to the lowest price in a new Best Value sort than did its previous algorithms, which placed more emphasis on the TripAdvisor popularity index.

The redesign also unclutters the user interface by doing things such as removing review snippets in search results, for example.

Instant Booking, which enables users to book hotels on TripAdvisor without using metasearch links to book on the sites of online travel agency and hotel partners, hasn’t been abandoned, although the company has struggled to get its revenue per hotel shopper growth figures into positive territory because of the previous tilt toward Instant Booking.

“We are ruthless about what works and what doesn’t work,” Adam Medros, TripAdvisor’s senior vice president of global product, told Skift Tuesday morning. “If Instant Booking was in the category of not working, we wouldn’t have deemphasized it. We would have turned it off.”

While the execution of TripAdvisor’s TV campaign hasn’t occurred yet, one wonders whether a message about finding the best hotels at the lowest price would resonate as a differentiator because it is a very difficult premise.

After all, although plenty of hotel price differences can be found if one takes the time to search on metasearch sites such as TripAdvisor, Google, Trivago, and Kayak, there is a whole lot of price parity as well, and no site always has the lowest prices.

If TripAdvisor means that it has the same lowest prices as other sites do, then where is the pull to make TripAdvisor your metasearch site of choice? One argument for doing so would be TripAdvisor’s vast content, including hotels, restaurants, vacation rentals, tours and activities, flights, and reviews, but a message about the best hotels at the lowest price doesn’t necessarily drive home TripAdvisor’s advantages.

The Important Numbers

In other developments in the first quarter, TripAdvisor finally saw its revenue per hotel shopper growth, a key metric, skip into positive terrain, notching 2 percent growth year over year, while the number of its hotel shoppers climbed 9 percent.

The revenue per hotel shopper numbers for 2016 by quarter were -21 percent, -19 percent, -12 percent, and -7 percent from the first quarter to the fourth.

In the first quarter of 2017, TripAdvisor’s revenue from transactions and click-based revenue increased 12 percent year over year with its launch of Instant Book in some markets outside the U.S. dragging down the numbers.

For the quarter, TripAdvisor saw its net income fall 55 percent to $13 million while revenue rose 6 percent to $372 million.

TripAdvisor’s non-hotel segment, including vacation rentals, tours and activities, and restaurants, saw adjusted EBITDA improve from a $21 million loss in the first quarter of 2016 to a $15 million loss in the first quarter of this year.

The company said it expects its non-hotel segment to be “profitable on an absolute dollar basis in 2017.”