TripAdvisor Promotes Its Meta-Search Feature In New Branding Campaign

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 |  About: TripAdvisor Inc. (TRIP)
by: Trefis

In an effort to promote its newly launched meta-display feature, TripAdvisor (NASDAQ:TRIP) is launching its first offline campaign in the U.S. The company plans to spend approximately $30 million on the TV campaign which will start showing this fall onward. [1] Though the advertising cost could further put pressure on its operating margin, we believe that by promoting TripAdvisor’s meta-search feature to a wider audience the ad campaign can help expand its user base in the future.

In TripAdvisor’s earlier feature, its partner pages appeared behind the main browser window when a user entered a travel query. However, TripAdvisor has started integrating all the search query results on the main page known as meta-search. This enhancement allows users to see hotel pricing options and availability from booking partners on a single page. During Q4 2012, TripAdvisor rolled out the meta display feature to 100% of its smartphone traffic and started testing it on desktops and tablets in Q1 2013.

With over 50% of its global traffic using the meta feature, TripAdvisor declared last quarter that it saw higher conversion rates after the introduction of meta display. The meta-display feature will roll out to 100% of TripAdvisor’s users by the time the campaign hits the market.

Priceline recently completed its acquisition of Kayak, a leading meta-search company, which accounts for over 50% share of the U.S. meta-search market. Last year, Priceline (NASDAQ:PCLN) launched its first offline advertising campaign to build the Booking.com brand in the U.S. to narrow its market share gap with Expedia. The two companies combined spend around $65 million annually on TV advertising. (TripAdvisor prepares to launch its first TV ad campaign in the US, Tnooz, May 31, 2013)

Despite growing at a comparatively slower pace compared to other economies, the U.S. travel market is the biggest in terms of online travel sales with estimated revenues of $151 billion in 2012. [2] While the aggressive ad campaign might restrict its short-term market growth, we think that it will help TripAdvisor compete better with other established players in the region.


Our price estimate of $53.73 for TripAdvisor is at a discount of over 10% to the current market price.

Notes:

  1. TripAdvisor prepares to launch its first TV ad campaign in the US, Tnooz, May 31, 2013
  2. Online Travel Sales Explode In Latin America, eMarketer, November 20, 2013

Disclosure: No positions