TripAdvisor: From small B2B business above a pizza shop to the top travel site
TripAdvisor was founded in February 2000 in Massachusetts by Stephen Kaufer, the current president and CEO and Langley Steinert. The company was originally meant to be an online compilation travel tips from magazines and guidebooks with a simple button for travelers to leave a comment, however, the travelers immediate give their reviews on the site. The company decided to make a crucial pivot and succeeded to serve the need of travelers. Today TripAdvisor has over 600 million reviews and opinions, a massive 455 million unique visitors monthly, and 7.5 million sites on the website.
The company has the advantage of being one of the pioneers in the travel crowdsourcing business. They quickly realize that the secret to managing the crowd is through community building. According to an interview with Adam Medros, TripAdvisor’s VP of Global Product (at the time of the interview, 2013) there are three key things that the company did to foster the crowd. First, they implemented the status system on the website. This feature tracks how many reviews this user has given, how many people find this review useful etc. Second, TripAdvisor gamifies the experience. Users will get badges for contributing the reviews. There are badges around many aspects of traveling such as places visited, countries visited, pictures posted etc. Lastly, the company makes sure that there is no friction for users to give a review. For example, during the first wave of smartphones, they were skeptical whether users will submit the review via their mobile. However, they insist on making the function available.
Aside from fostering the community, TripAdvisor also connects the community through the partnership with the Social Media Facebook. In 2012, the company works with Facebook to allow users to see people from their social circle on TripAdvisor. This not only encourages people to use the platform more but also make the content more relevant to the users. Over time the company also leverage technology to personalize the user experience. Similar to Google TripAdvisor leverage user search result to create a more relevant trip advice for users. A combination of these factors allows the company to be the most trusted travel site. This creates a positive snowball effect for the company’s community.
Given the massive user pool TripAdvisor, like many other content-driven websites, generate money from advertising. They were able to do so quite effectively thanks to the feature added in 2013 that create the one-stop shopping experience for travelers. By leveraging the AI, TripAdvisor is able to cater appropriate content and better-targeted advertising to the users. This allows them to use a cost per click business model to charge business owners such as hotels, hotel booking websites, activities attraction, and activities booking websites are a prime customer of the business. In addition, TripAdvisor uses other traditional online advertising methods to monetize such as display advertising and Google Adsense traffic monetization.
Despite the fact that TripAdvisor is bombarding users with all these ads, the company AI made the experience better for the users. Similar to Google the company will try to display the most personalize and relevant ads to the users. Hence, in many cases, the ads are exactly the thing you will be looking for later.
Sources:
http://www.bbc.co.uk/programmes/b04l3cmq
https://www.telegraph.co.uk/travel/lists/15-things-you-didnt-know-about-TripAdvisor/
https://tripadvisor.mediaroom.com/us-about-us
https://unicornomy.com/how-does-tripadvisor-make-money-business-model/
Thanks for the post Pumchanut! It was interesting to read about TripAdvisor’s evolution over time from being a first-mover, its partnership with Facebook, and move to mobile. I am a TripAdvisor user whenever I travel, especially to read the reviews people have written about hotels.
I am interested to see how TripAdvisor will continue to evolve, especially in a what can be considered a very competitive space. Airbnb could absolutely pose a threat as the sharing economy continues to grow and people feel more comfortable staying in other people’s homes rather than hotel rooms. Google is also constantly experimenting with the travel space providing hotel reviews, flight bookings, etc. I wonder if and how TripAdvisor will respond to these potential threats.
I’m also curious about how TripAdvisor’s direct bookings are faring. I haven’t done much research, but my guess is that advertising remains the lion’s share of the revenue.