TripAdvisor’s Data Strategy Yields Dividends

I suspect that many a bored office worker has spent time researching their holiday destination on tripadvisor as they dream of escaping to a far away beach. The site provides information on hotels, tours and other tourist information along with the manytravellers’ reviews. Once you have chosen a destination, you can see what accommodation gets the best reviews, and then once you’ve chosen the accommodation you can drill down to a level of detail to see exactly what different people have said. Through the partnerships with hotel booking sites you can then check and

compare rates for your chosen hotel.

There was a time, before web 2.0 platforms, when a well-thumbed copy of  Lonely Planet guide book was a favourite way of research accommodation options for the prospective traveller needing to plan their trip. The lonely planet researchers had been there before you, they had tried out the restaurants, the hotels and seen the sights, reporting back with their objective reviews. Now travel websites like Lonely Planet’s own thorn tree, tripadvisor and Gogobot, to name just a few, are able to harness the network effect to build a nearly exhaustive list of travel options for nearly any destination in the world.

Tripadvisor is an immense source of data about accommodation for travellers, with over 60 million reviews of travel services. It has aggregated these reviews to provide rankings, making it easy to navigate and evaluate the information. Tripadvisor’s data has value through aggregation but also at the detail level where real people are providing reviews of services. The coverage within the site has reached and surpassed an inflection point where it’s difficult for other sites to compete – there are few destinations it doesn’t hold information about. It uses the network effect to continue to build this data as well as more old-school strategies. It uses its close commerical relationship with booking site Expedia to prompt travellers – who have booked through Expedia – to post their reviews on their return from holidays. They have further extended the data coverage through aquisitions of other travel sites.

It’s not just traveller reviews that tripadvisor is offering, it’s also detailed listing of service providers, like hotels. These service providers are themselves providing richer data about their hotel or tour, and they are rewarded with greater findability, that is, higher search engine rankings in Google. A hotel listed on tripadvisor will show with its own site ranking in the search and again with the high ranking that the tripadvisor entry holds. Perhaps this is why Google Places, which has a high ranking within Google searches, is a target for tripadvisor’s CEO’s ire.

Tripadvisor is an excellent model of how a web 2.0 platform monetises data collected from people like you and me. The breadth and depth of the data combined with a strategy to build partnerships with the service providers means that revenue for click-based advertising for fourth quarter of 2011 was $99.8 million. This revenue stream is supplemented through syndicating the data to organisations that pay to become licensed partners who are able to use the API to add value to their own sites.

As such a large player there can be a significant commercial impact of negative reviews on tripadvisor. Some hoteliers have questioned the validity of negative reviews of their own service, as well as of positive reviews of their competitors. The very openness that is contributing to the value of the  aggregated data means it is open to individuals skewing the results.

Tripadvisor demonstrates the web 2.0 pattern of data built from network effects can

deliver strong commercial outcomes; the company manages to build increasing returns in a crowded competitive landscape.

Tripadvisor’s competitors, such as gogobot or google places, would seem to offer a more sophisticated social aspect to their platforms. I wonder if this is enough to steal a march on such a dominant player.