September 12, 2013

TripAdvisor pausing TV ad campaign after disappointing tests


TripAdvisor has paused a test of its TV ad campaign and seems unlikely to spend the $40-$50 million envisioned in its second-half TV ad budget. While the delay in TV spending is positive for TripAdvisor's earnings but is likely to hurt the company's near-term revenue growth prospects.

TripAdvisor stock was down more than 2% in afternoon trading in the stock market Tuesday after Cowen & Co. issued a report saying that the provider of online travel reviews has paused a test of its TV ad campaign and seems unlikely to spend the $40-$50 million envisioned in its second-half TV ad budget.

"After testing ads in several markets starting in June, the company has not yet rolled out a nationwide campaign, and we have not noted any further testing since late July. Given the delay, we believe initial results were likely disappointing," Cowen said.

TripAdvisor announced in February that it planned to spend $40 million to $50 million in offline advertising during the second half of this year to support the launch of its new metasearch platform.

TripAdvisor is shifting to a metasearch model, a price search tool that lets users directly book hotels and other travel products. This is taking the emphasis off cost-per-click, or CPC, ads from hotels and online travel agencies. CPC is an online ad model used to direct traffic to websites.

Update: A spokesperson from TripAdvisor says: "We have not changed our plans and are committed to the ad budget spending for this year that we announced in our last earnings call."

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