TripAdvisor was founded in 2000 to provide users with a directory of travel related information as well as mechanisms for hotel and flight booking, vacation rentals, and travel guide materials along with user-generated reviews.
In March 2013, Forbes reported more than 75 million user reviews were housed on the TripAdvisor site, which was garnering 62 million unique visits per month. Of those, 45 million were generated from mobile devices.
Those figures are an impressive upsurge from the 32 million unique monthlies tallied in 2008, but like many start-ups, TripAdvisor had virtually no traffic in the beginning, especially after 9/11 decimated the travel industry.
Then, the site changed its model to cost per click or CPC. When a consumer clicked on a hotel and booked a room, TripAdvisor charged the hotel. No clicks, no charges. In three months, the company that had been earning nothing was pulling in $70,000 per month.
By making this subtle change, TripAdvisor grew their own user base while also catering to the needs of the struggling travel industry. They made advertising through membership more affordable, so both sides benefited.
All TripAdvisor site development then became focused on customer engagement to increase the number of profitable clicks. Editors were hired to bring in travel articles, and users were allowed and encouraged to post reviews of their personal travel experiences.
When the reviews themselves begin to draw in the most site traffic, TripAdvisor shifted gears again to focus on review generation. This ensured a steady supply of fresh and honest content. The more trusted the perception of the TripAdvisor reviews, the more users posted.
In 2004, the company was bought by Expedia/IAC for $210 million in cash, an amazing accomplishment since they had raised only $4 million in venture capital. TripAdvisor continued to grow under the Expedia umbrella, and was spun back out as an independent company in 2011.
“The heart of the success enjoyed by TripAdvisor lies in the belief that free content generated voluntarily by users carries the highest level of credibility and will generate the most profitable site activity.
This is a model not unlike that used by Hubspot to achieve growth. It represents good use of market fit since travel always carries the potential risk of a bad experience in multiple venues. Who hasn’t been afraid of staying in a flea bag hotel or paying through the nose for an awful meal at a restaurant?
As the repository of reviews at TripAdvisor has grown both in numbers and in depth, the “stickiness” of the site has increased. Users don’t just go to TripAdvisor to book, but also to plan. They research venues, often returning multiple times as they refine their vacation and travel plans. The longer a user stays on the site, the greater the chance they will click and make a reservation.
This is a very network-driven approach to growth, but one that proved highly successful for all parties concerned: the consumer, the advertised venues, and the hosting platform.
Because there is no point in spending good amount of money for bad marketing