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After posting weak results in the third quarter, particularly from its hotel booking product, TripAdvisor executives were tight-lipped on the effects of its biggest advertising partners shifting share to other channels.
It seems like a new normal is in effect as advertising auctions have become less profitable, although executives believe a widespread shift has yet to happen.
“With respect to the bid downs, we’ve run this auction for so many years, [so] there’s always a fair amount of month-to-month or quarter-to-quarter [movement],” said TripAdvisor president and CEO Stephen Kaufer on the company’s earnings call Tuesday. “In this particular case, I think you’ve seen our partners’ comments on increasing marketing incrementally. They don’t seem to be commenting on an ever-declining direction, but they’re tightening to be able to do different things. We take in the new landscape and forecast our future plans based on a status quo of the current business level.”
TripAdvisor, as well, has looked to do different things with its marketing spending, moving away from digital channels and towards TV advertising to boost its declining hotel booking product. While there has been word that sites like Booking.com and Expedia — TripAdvisor’s two largest advertising partners — are looking to invest marketing dollars outside of metasearch channels, Kaufer hasn’t seen any reluctance from TripAdvisor’s partners.
“I would not lump all our partners into the ones that have [said they are] currently looking for higher [return on investment],” said Kaufer. “The partners that I’ve had the chance to speak to are all interested in more and more traffic on TripAdvisor. I think we are an excellent partner for our hotel and [online booking site] clients… I don’t detect any reluctance on partner hotels or [online booking sites] to invest in the [metasearch] channel in general. You should be asking them.”
Speaking of metasearch, rumors that TripAdvisor would explore a new alternative accommodations product seem to have been exaggerated. While the company’s non-hotel revenue, which includes vacation rentals, has surged in recent years, that has been primarily driven by activities and restaurants.
For now, the focus is on growing the alternative accommodation listings available on TripAdvisor instead of creating a whole new product for customers.
“We’re really aiming to make sure that the alternative lodging category is well-represented on TripAdvisor,” said Kaufer. “We have about 800,000 properties, that’s a pretty darn good mix. Having said that, we’re open to changes. We’d love to have even more than that and different types available globally.
“To the question of why not [create an alternative accommodations metasearch product], I’m not sure consumers are looking for the price comparison feature within a particular property more than the ability to find the widest range of properties. That’s why we do continue to grow our supply while making sure everything on our site is of high quality. We’re making no claims we’ll become bigger than some other guys, but it does aid our [customers].”
TripAdvisor also provided an explanation of why the company’s shopping revenue has slipped despite a solid increase in mobile booking. Mobile bookings tend to be less lucrative than those made on desktop, and mobile growth hasn’t picked up the slack from the company’s declining desktop performance.
“The focus on mobile monetization has been a big push, particularly on mobile Web,” said TripAdvisor chief financial officer Ernst Teunissen. “… Our revenue per shopper year-over-year was negative 11 percent… Mobile revenue per shopper was up, desktop was down but less down than the 11 percent. The 11 percent is to a significant degree driven by the mix shift behind lower-monetizing mobile traffic.”