Google officials aren't losing any sleep over TripAdvisor spending a few million dollars less on paid search, but TripAdvisor's pullback, as well as similar moves by other large travel players, symbolizes a changing advertising climate and a long-term challenge.
As part of its drive to weed out marketing inefficiencies, TripAdvisor Chief Financial Officer Ernst Teunissen said the company pulled back on its paid advertising on Google in the third quarter.
That contributed to a 5 percent decline in the number of hotel shoppers on TripAdvisor, but revenue per hotel shopper rose, as did the profitability of TripAdvisor’s hotel segment. The company reported that its consolidated direct marketing and selling expense in the quarter declined 23 percent.
“The shopper decline year-over-year is purely driven by our pullback on marketing channels, including Google as a marketing channel and all the other channels,” Teunissen said during the company’s third quarter earnings call Thursday. “In the non-paid channels, including SEO (Search Engine Optimization), our performance has been very robust this quarter.”
At the same time, while acknowledging a pullback in paid search with Google, the CFO said TripAdvisor is committed to expanding its TV advertising in 2019 to go beyond hotels and into experiences, as it already began, and perhaps other categories. TripAdvisor’s non-hotel segment, including experiences, restaurants and rentals, is experiencing robust growth.
TripAdvisor is on track to spend $100 to $130 million on TV in 2018, and hasn’t decided on the amount of spend next year, he said.
In the third quarter, TripAdvisor’s TV spend dipped by $7 million, Teunissen said, but that was only because its campaign last year was consolidated into just six months while in 2018 it is spreading out the spending over four quarters.
Google Is Still Very Important
That TripAdvisor is ratcheting back its paid advertising with Google isn’t shocking because TripAdvisor has been reducing its overall marketing spend all year. It wasn’t a giant leap to assume that Google was part of the rollback, but now TripAdvisor officials are talking about it opening.
To be clear, Google is still a very important marketing channel for TripAdvisor.
TripAdvisor CEO Steve Kaufer said “Google’s a very big paid search channel for us,” adding that part of its spend is through participation in the Google hotel metasearch channel, which is delivering revenue growth and profitability for TripAdvisor.
Beyond hotels, TripAdvisor also uses Google paid search for its experiences, restaurants, and vacations rental business as a way to capture customers, although that likely isn’t done on a profitable basis.
On the other hand, officials said that free traffic from Google is very beneficial because if TripAdvisor can turn those visitors from Google into TripAdvisor bookers, the revenue all goes toward profits.
But Kaufer noted that Google thwarts some of the free traffic, a factor that TripAdvisor objects to but has come to grudgingly accept as the state of affairs.
“But we are certainly always watching and noting how Google is interrupting the search results with their own products,” Kaufer said. “And we continue to point out that that’s not particularly fair for a dominant search engine to do. But we’re accepting it as a reality in several countries. And all of our modeling takes that into account.”
Google didn’t immediately respond to a request for comment.
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Photo Credit: TripAdvisor is reducing its advertising spending with Google. Pictured, Google is looking to expand its presence in New York City. Associated Press