TripAdvisor Q4: Mobile Traffic Up, But Monetization Isn’t There Yet

TripAdvisorQ42014The majority of TripAdvisor’s revenue came from advertising in Q4 2014.

Of TripAdvisor’s reported $288 million in fourth-quarter revenue – up 35% from Q3 – $181 million came from click-based advertising (63% of total revenue) and $36 million from display (13% of total revenue).

Display CPMs were up for more than 2,000 advertisers in TripAdvisor’s network, President and CEO Stephen Kaufer told investors on an earnings call Wednesday.

But mobile is really where it’s at – at least in terms of TripAdvisor’s growth strategy.

Although Kaufer didn’t get specific regarding how much mobile contributed to revenue – it was just 5% in Q3 – he said TripAdvisor’s traffic is undergoing a major shift, with mobile now representing 48% of overall traffic. TripAdvisor sees more than 140 million unique mobile users every month, a number that includes both tablets and smartphones.

As of Q4, TripAdvisor’s app had been downloaded 175 million times, up from about 150 million last quarter. According to Kaufer, the app has seen triple-digit organic growth over the last six quarters.

Mobile monetization has been “small but steady” over the last couple of years, Kaufer said. The company is pinning its hopes in that regard on Instant Booking, a feature rolled out in June which allows iOS and Android users to make direct bookings via mobile web and apps.

“We continue to lead on mobile, with just over two-thirds of traffic growth coming on phones, which is monetized at a lower rate than desktop and tablet,” said TripAdvisor CFO Julie Bradley. “[Mobile] continues to be a headwind.”

Kaufer acknowledged that monetization is a challenge and that TripAdvisor does need to do more to grow its available inventory. “We get more supply, we get more demand – and bingo,” he said. “As with any business like this, margins flow really nicely as traffic builds, especially organically grown traffic or app traffic. [Then] customer acquisition is nil and you have a beautiful margin machine.”

Personalization is also high on TripAdvisor’s list of priorities. Kaufer noted that the company gathers customer data around travel preferences, behavior and activities.

TripAdvisor is mulling over how to take better advantage of its user data sets. “We always want to explore the next generation of products,” Kaufer said. “Our scale can deliver benefits no one else can dream of.”

One recently released product in this vein is called “Just for you,” which provides users with more tailored recommendations based on their prior search activities.

As to when mobile will shift from a headwind to a tailwind and start earning its keep from a monetization perspective, Kaufer couldn’t say for certain – but he was confident that the new Instant Booking feature will help TripAdvisor get there by making it easier for users to transact within the app.

“Every data point we can find says that people are using the TripAdvisor mobile experience more than any other travel product – consumers are liking it, but they don’t monetize as well, clearly,” he said. “Maybe they’re using it to do their research and then popping back to desktop to finish the transaction on TripAdvisor or maybe they’re … popping over to somewhere else to finish buying something.”

Whatever the case may be, Kaufer is banking on TripAdvisor’s engaging in-app experience to convert users to hardcore loyal mobile converters over time. As it stands, he said that the app does monetize better than the mobile web.

“As people continue to use the app, the stickier and the stickier they’ll get with the experience,” Kaufer said. “If we can do a good job of tying mobile together with the booking piece, we feel we’ll be able to improve monetization.”

In other news, TripAdvisor also plans to double its ad spend this year to $60 million, the bulk of which will go towards a new TV campaign.

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