Search

×

Can TripAdvisor become an industry friend?

Can TripAdvisor become an industry friend?

Since its inception in February 2000, TripAdvisor has become the world’s largest travel site with more than 50 million users, including 16 million mobile users. There is no doubt TripAdvisor was one of the pioneers of user-generated content. The website re-invented customer reviews in the hospitality space and inserted itself in the “last mile” of travelers’ hotel stay planning and booking process.  
TripAdvisor began trading as an independent public company on the Nasdaq Global Select Market last December following its spinoff of Expedia Inc. 

Is TripAdvisor coming out of its divorce from Expedia as a winner or loser? Now that TripAdvisor is an independent public company, has it become more unbiased and industry-friendly? What does the future hold for the company?

Weakened market position, negative perceptions

TripAdvisor came out of its split from Expedia with a weakened market position due to a number of reasons, one of which is the proliferation of customer reviews over the past few years. As just one example, all OTA sites have their own reviews, including Expedia’s own “verified” reviews, which already makes TripAdvisor obsolete for many OTA loyalists. Plus, many major hotel chains and brands have started introducing their own “verified” reviews, and all major hotel brands will soon follow suit. Will brand-loyal customers still need to go to TripAdvisor? 

Years of tainted, non-verified reviews and “gaming the system” cases have put a dent in the credibility of TripAdvisor. Recently, as a result of the U.K.’s Advertising Standards Authority’s adjudication regarding complaints against “claims on tripadvisor.co.uk,” TripAdvisor was told “not to claim or imply that all the reviews that appeared on the website were from real travelers, or were honest, real or trusted.”

Hotels perceive TripAdvisor as being anti-industry, pro-OTA and one-sided pro-consumer. Non-verified and obviously malicious customer reviews have ruined the sleep of many a property manager. Lack of a balanced approach and even an elementary “fair share of voice” algorithm when presenting the customer reviews continue to tarnish hotel reputations. The list goes on and on.

Business model concerns

TripAdvisor makes money not from its core audience — travel consumers — but primarily from click-based advertising (72%), display-based advertising (17%) and subscription revenue (11%). 

Back in the pre-Expedia days, TripAdvisor’s business model was far friendlier toward small and mid-sized advertisers (hotels). A property could buy an enhanced listing with a link to the property website for US$99/per year. It could have a banner campaign for US$1,000/month. 

What is the situation today? TripAdvisor’s current business model is not suited for the highly fragmented hospitality industry and could be perceived as anti-industry. The site relies heavily and almost exclusively on big OTAs and a handful of big hotel chains and advertisers. 

What are the advertising options for the 52,000-plus U.S. hotels or the 300,000 hotels worldwide? The property business listings are the only property-level advertising option today. Unfortunately, this very pricey option provides almost no benefits apart from a few tiny links to the property’s own website, hidden under the property name. The tiny text links of the property business listing are being completely overshadowed by all other advertising initiatives on the hotel profile page, such as the “Show Lowest Price” reservation widget, dominated by the OTAs or the CPC (cost per click) listings, dominated by the OTAs and big advertisers.

The minimum-spend mandate per advertising campaign, whether click-based or display-based, is way beyond what any single property could afford. I do not know of a U.S. hotel that can afford to spend US$100,000 annually on TripAdvisor alone.

TripAdvisor’s business model does not account for the fact that the hospitality industry is highly fragmented and that the bulk of the hotel advertising budget is controlled at the property level.

Remember what made Google the advertising powerhouse of today? Google’s micro-campaign advertising business model and superb online self-serve campaign management technology unleashed a multibillion-dollar online advertising phenomenon by enabling thousands of small and mid-sized businesses to become online marketers and promote their services! Via Google AdWords, any advertiser could launch a paid search campaign within a few minutes and with a budget as low as US$100 or as big as US$1 million a month!

Where is TripAdvisor’s micro-campaign business model and online self-serve campaign management technology to enable the highly fragmented hospitality industry?

Website usability concerns

Ever since the emergence of the “commercial” Internet back in 1995, there have been practices established to distinguish paid content from non-paid content on any website. This is why when you go to CNN or Fox News you see “Advertisement” under any banner advertising or “Sponsored Listings” above any click-based advertising (CPC). 

The emergence of user-generated content added additional requirements to the mix; now sites had to present all three types of content in a differentiated manner:

  • Official content: articles, descriptions, etc.
  • User-generated content: customer reviews, comments, feedback, postings, etc.
  • Advertising content: banners, sponsorships, CPC listings, etc.
When reviewing any of the content pages on TripAdvisor, the user is confronted by a total content mish-mash. There are no “demarcation lines” between the advertising, official and user-generated content, which is against all existing user expectations and best practices in 2012.

The main focus and the main revenue driver for TripAdvisor is the “Show Lowest Price” reservation widget smacked in the most visible part of the site. Needless to say, this functionality is available only to OTAs and big hotel chains and advertisers who can afford the minimum-spend mandates. You would expect that in 2012 this functionally — crucial to the well-being of the company — would offer a user-friendly interface and seamless integration with the central reservation systems of advertisers. 

So what happens when you click on the “Show Lowest Price” button? Six to eight pop-up reservation screens overwhelm the user and provide a true 1990s user experience. Compare this to the elegant user interface of Kayak.com’s (http://www.kayak.com/) search and availability functionality!

Advertiser concerns

As described by an overwhelming number of advertisers and industry insiders, TripAdvisor is an advertiser’s nightmare compared with all other advertising options in the industry today, because:

  • Manual contracting process and campaign setup make the setup process obstinate.
  • Advertisers deal with different departments to set up display-based and click-based advertising.
  • There is no online campaign automation for sign-up and management for click-based advertising similar to Google AdWords. 
  • Decreasing ROAS due to advertising saturation.
  • Increased focus on Show Lowest Price lead,s which favors OTAs and big hotel chains.
  • No real-time control over daily budget spend.
  • No real-time reporting.
I truly expected that after its “liberation” from Expedia, TripAdvisor would try everything possible to repair its strained relations with the industry. It would embrace the industry and send a strong, unequivocal message to hoteliers: “I am no longer an OTA subsidiary, and I am an industry friend. I am now part of the direct online distribution channel, and I am on your side. I will work with you to understand your need periods and help whenever possible. I am unbiased and will work with you to improve the quality and credibility of customer reviews and help you address customer concerns. I will help you reach travelers interested in your destination and in your hotel.” 

None of the above happened. TripAdvisor did nothing to pacify or smooth out things with the hospitality industry. No press releases with an “I am a hotel-friendly media company” message. It did not sponsor industry events. It did not announce scholarships for hospitality schools. Many hoteliers do not even know that TripAdvisor is no longer associated with Expedia. In other words, business as usual.

So what does the future hold for TripAdvisor? 

Unfortunately, today TripAdvisor is still a foe of the industry. TripAdvisor has to make a clear choice today: continue its anti-industry, pro-OTA and one-sided pro-travel consumer policy and business model, or dramatically change its corporate attitude toward the industry and business model.

TripAdvisor needs to transform itself into an industry friend, and it needs to do this fast. It needs to overhaul its business model and make the site industry-friendly and advertiser-friendly. It must dramatically improve its perception in the industry and site usability, and invest in online self-serve campaign management technology to enable micro-campaign management for the highly fragmented hospitality industry. The “Show Lowest Price” functionality must have a better interface with the CRS of its advertisers and open it to smaller and mid-sized hotel companies, independent hotels and resorts. 

If it fails to do that, in my humble opinion, TripAdvisor will end 2012 less like an 800-pound gorilla and more like a 600-pound gorilla, and by 2014 will be reduced to mere 400-pound-gorilla status.

Comment