Trip Advisor Executive Memo
Trip Advisor Executive Memo MKTG 5721
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This 2 page Class Notes was uploaded by Frederick Notetaker on Monday April 18, 2016. The Class Notes belongs to MKTG 5721 at University of Missouri - St. Louis taught by Ho Kim, Ph.D. in Spring 2016. Since its upload, it has received 7 views. For similar materials see Digital Marketing Strategies and Measurement in Marketing at University of Missouri - St. Louis.
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Date Created: 04/18/16
Executive Memorandum Trip Advisor Frederick Eccher Managing Online reviews on Trip Advisor, talks about how in 2013, it was the most visited travel site in the world. With a huge repository of information on travel services, and millions of reviews written by travelers as a means of informing other travelers about their personal experiences with these services. This spurred on hotels to invest marketing dollars to manage these online reviews, with particular emphasis on Trip Advisor. Trip Advisor was founded in 2000 to get unbiased travel reviews in a single place to be easily accessed by everyone. The partnered with online travel agencies who got to place text-ad links for revenue. The click through rate was 10% when the industry average was 2%, in two short years Trip Advisor was a profitable company. It expanded its online offerings such as searching for flights, in 2009, and listings for vacation rental properties in 2010, in 2011 it started acquiring mobile application developers. By 2013 it had more than 125 million reviews from around the world with 260 million people visiting it each month. Trip advisor made its money by charging for three services: text ads, display ads and listings for hotels and property owners. The bulk of its revenue was from click through advertising on cost per click basis usually .25- 1.00. Display ads cost on average 15 dollars per thousand but were only 12% of its revenue. The business listing $500-10000 per business annually was added in 2010 allowing the businesses to be contacted directly and add sales on the site. The competition fell into three categories: search engines, online travel agencies, and hotels individual websites. Online travel agencies could cost 30-35% of the room as they charged per acquisition. Online travel agencies reviews were limited; hotel reviews were unverified. Trip Advisor made it easy to post reviews by travelers. A 2012 study showed that online reviews were more likely to lead to purchases 81% and be trustworthy 72%. Three attributes were major factors for travelers: guest experience, location and price. Most reviewers want to reward good service but the concern of online reviews are the biased reviews from hotels that are estimated as fake in the 2-6% range. Paid reviewers get anywhere from 1-200 dollars per review. But most consumers pay little heed to these reviews as they are overly positive and easy to spot. Hotels have tried to manage 3 aspects of online reviews: location it appears, quantity generated, and quality of the reviews. So getting travelers to write high quality reviews without paying them became a thing. Displays of review sites in hotel lobbies, online badges, and staff recommendations to guests. Four Seasons Hotels and Resorts devoted half of its marketing budget to digital marketing trying to romanticize the reviews with Twitter wine tastings. Homewood Suites is in the extended stay market and usually run by franchisees. Marketing took place at the corporate level usually. Traditional media spending was being reduced and they focused on every review getting a response which increased its popularity index on Trip Advisor. So online reviews let the independent hotels compete with the million dollar budgets of the Major hotel chains. Being creative with online media and actually helping customers is the best way to increase good reviews and bookings, even over sales.
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