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TripAdvisor Cuts Marketing Budget As Growth Slows

TripAdvisor, the travel and booking website, is reportedly reducing its overall marketing budget as it tries to weather slowing growth after the second quarter of 2018. The online travel hub’s earnings grew by just 2 percent in Q2 — down from 8.5 percent growth during the second quarter of 2017 — a slowdown being attributed largely to the industry’s major players (Expedia Group, Booking Holdings) opting to advertise their deals less frequently on TripAdvisor.

Interestingly, as part of that overall reduction in ad spending, TripAdvisor is trading online ad spending for TV spending — both across its hotel and non-hotel products. Though, by and large, TripAdvisor’s strength has increasingly become its non-hotel products (the company also showcases airfare deals, restaurant recommendations, and general travel reviews).

TripAdvisor reportedly saw a 3 percent drop year-over-year in average monthly hotel shoppers as of the second quarter (averaging about 149 million unique shoppers). While that sounds like a dramatic shift, the company claims to be more focused on “stability” in the long run. Despite the fact that Expedia and Booking are spending less on ads, TripAdvisor CFO Ernst Teunissen says that spending has largely remained stable since mid-Q4 in 2017.

CEO Stephen Kaufer reportedly told investors on Aug. 2 that these marketing changes would allow TripAdvisor to focus on maximizing revenue from existing shoppers. Kaufer claimed the company has improved its ability to convert last-minute shoppers through its mobile app and website — which isn’t a bad asset by any stretch. The question is whether or not that strategy will hold against Google’s emerging interest in the space. Google continues to improve its travel capabilities — combining booking flights, hotels, and browsing reviews with its already-robust host of apps.

Might TripAdvisor need to be doing more to compete? It’s tough to say. The landscape certainly isn’t getting any less competitive. DMN contributor Ariella Brown recently offered this insight into the competitive online travel and retail experience:

I once saw this in person when I wandered into a local children’s clothing store. A woman was there for camp shopping, but was able to relax and remain seated while a saleswoman ran around to fetch all the items on her list. Everything was to be boxed and shipped, so that the customer wouldn’t have to lift a finger. The woman gave the store her entire order to fill, because it was gave her a high level of personalized service. That, rather than the best price on each item, was her measure of value.

Perhaps services companies like TripAdvisor provide need to better address for this new kind of shopper if they want to get ahead.

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