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TripAdvisor plans to spend more than $35 million on TV ads between July and September to boost its business. Brand advertising can help the company although it is a very competitive environment.

If you’re an American, Canadian, French, Spanish, British or Australian who hasn’t yet seen television commercials featuring TripAdvisor or its owl mascot, expect to see them soon.

The Needham, Massachusetts-based review and hotel-metasearch site is doubling down on its investment in TV advertising. The company spent $16 million on TV ads, which started in mid-June, during the second quarter.

But it will roughly double that between July and September by spending more than $35 million then. In mid-June, the company debuted its new campaign in the U.S., followed by Canada, France, Spain, the U.K. and, in early July, Australia.

The ads aim to persuade consumers to think of TripAdvisor’s name when looking to find the lowest rates on hotels.

The branding blitz comes in light of company’s need to turn around its hotel business, which drives a majority of its revenue despite the company’s efforts to diversify into other segments, such as restaurants, and tours and activities.

TripAdvisor’s branding effort comes after the company began to downplay its initiative to persuade customers to reserve hotels via its “instant booking” option instead of via its older price-comparison tool, which sends customers off to third-parties to complete bookings.

TripAdvisor is hoping its TV brand campaign will be able to capitalize on the novelty of its spring redesign of its websites and mobile apps. It’s also betting on the aforementioned adorable, anthropomorphic owl mascot.

The ad blitz is partly designed to counteract weakness in its hotel booking business. The company has faced a challenge over several years in that its users, like the users of most consumer services, are switching from desktop to mobile phones.

The move to mobile results in lower revenue-per-user for TripAdvisor, as it does as a rule for competitors, too.

In the second quarter, the pace of hotel shoppers’ shift to lower-monetizing mobile devices was faster than TripAdvisor had forecast, particularly outside of the U.S. That meant that TripAdvisor’s click-based and transaction revenue growth decelerated to 6 percent, year-over-year. While 6 percent still represents net growth, the company is facing a headwind. The click-based advertising totaled $214 million for the second quarter.

In comparison, that click-based advertising represents a lower dollar amount than the total of $235 million registered in the second quarter of 2014, which had represented an increase of 28 percent over the prior year. By 2014, TripAdvisor was rolling out metasearch but hadn’t yet transitioned toward instant booking.

For accounting reasons, the two sets of figures are not apples-to-apples because the latest figures also include transaction-based revenue from instant booking.

It is notable that in the second quarter of 2017 the value of click-based advertising revenue plus transaction-based revenue from instant booking was together lower than the value of click-based advertising revenue alone was in the second quarter of 2014 (when instant booking hadn’t been rolled out yet).

While the numbers aren’t broken out, the implication is that newer instant booking revenue may not be rising at a pace that makes up for the loss in traditional click-based revenue.

In after-hours trading, TripAdvisor’s stock was down 8 percent.

During the quarter that ended June 30, TripAdvisor’s revenue rose 8 percent, year over year, to $424 million. Adjusted earnings before interest, taxes, depreciation, and amortization — or EBITDA — rose 6 percent to $101 million.

The company’s core hotel booking business is on the mend, said chief executive Steve Kaufer in a statement. “Click-based revenue is growing this year, and we believe our ongoing initiatives position our hotel segment for longer-term growth.”

As for the issue of mobile shift, Kaufer said in a statement that trends are heading in TripAdvisor’s favor in the long term.

“TripAdvisor-branded click-based and transaction revenue on mobile grew by more than 60 percent year-over-year, driven by accelerated hotel shopper growth of 36 percent. Accelerated mobile hotel shopper growth … highlights our increasing engagement on this strategic platform, which we believe is a competitive advantage that will play out over time.

“On the other hand, having hotel shoppers rapidly shifting to mobile exacerbates the near-term revenue growth headwind, given mobile’s substantially lower revenue per hotel shopper relative to desktop and tablet.

“That said, the latest quarter was our third straight quarter of monetization improvements on mobile, and we see a lot more opportunity ahead as we continue to optimize the new hotel shopping experience.”


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Tags: advertising, earnings, tripadvisor

Photo credit: CEO Stephen Kaufer has been engineering a turnaround at the world's largest travel reviews company he helped to found. Pictured is the owl featured in a new series of TV ads. TripAdvisor

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