TripAdvisor ‘Winning On Mobile,’ But Won't Talk Monetization

tripadvisorTripAdvisor grew revenue by 39% in the third quarter but disappointed investors by missing its guidance for Q3.

Half of TripAdvisor’s traffic now comes from mobile, big news for a site that attracts 315 million monthly unique visitors.

That shift has challenged many traditional publishers, but TripAdvisor said it has mobile monetization and user experience under control. “We’re winning on mobile,” CEO Stephen Kaufer said.

He cited strong organic growth in downloads of TripAdvisor-owned apps, as well as increases in monthly active users.

About 150 million people have downloaded TripAdvisor apps to date, with downloads up 120% year over year.

But there were also signs that mobile isn’t the powerhouse Kaufer claimed. During a previous call with investors, TripAdvisor stated that mobile contributed less than 5% to revenue. Though that number has allegedly grown, Kaufer declined to update that figure.

He hinted that gains in mobile aren’t coming from better conversions or click rates, but from an influx of mobile users. “The bigger driver [in monetization] has been growth in install base, and overall traffic growth with more app installs,” Kaufer said. “Plus, it’s getting to scale, so it’s starting to fetch a more active CPC bidding environment.”

Display advertising on smartphones doesn’t work as well as it does on larger screens. “There’s a lot of traffic shifting over to phone, and the standard CPM ad doesn’t work well there,” Kaufer said. “We do have them, but they’re not our preferred method for helping advertisers find their target audience.”

He also admitted the company can’t track users across devices.

“The challenge for us, as an Internet company that doesn’t have signed-in users, is how many smartphone users are doing the research there and then going back to desktop or tablet to the purchase. Anecdotally, we know it’s a chunk,” Kaufer said, adding the metrics to track that don't exist yet.

The company invested in technology, including a content recommendation engine called “Just for You,” which considers factors like user location, site behavior, travel preferences and intent. Kaufer cited that as a huge step forward for the company, given that consumer travel needs are “nuanced, contextual and episodic.”

That personalization may lead to long-term gains at the expense of short-term revenue.

“If we get people to the correct property quickly, they might generate two clicks, from four to five clicks,” said CFO Julie Bradler. “But the quality of our leads improves, and clients pay us more. We see that, time and time again, fewer clicks can generate higher CPCs down the road.”

TripAdvisor’s mixed quarter put it in company with Priceline, which said it was facing trouble with a weaker economy in Europe affecting travel. Expedia, which has more of a national business, grew profits by 50%. In this competitive environment, TripAdvisor ramped up television spending to $19 million for the quarter, for a total of $30 million for the year. It plans to expand offline advertising through 2015.

The digital-only company voiced a familiar complaint with gauging the effectiveness of a TV spend. “We see that lift,” Kaufer said, citing surveys, Google trend data and increases in site traffic as sources, “but it’s hard to tell who would have come anyway.”

 

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