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On Tuesday, TripAdvisor Inc (NASDAQ:TRIP) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
So Far, So Good on Quality Improvements
Nat Schindler – Bank of America: Whenever Google makes quality improvement similar to what you suggest you did and improves the conversion rates for its client, they see a almost near instantaneous improvement in CPCs because they have a very dynamic auction, your auction is a little slower, usually it takes a couple of weeks for things to flow through. Have you seen an impact from your quality improvements hitting CPCs with your clients now willing to spending more for higher quality clicks yet?
Stephen Kaufer – CEO and Founder: We have seen since we’ve been rolling out the quality improvements over the course of the quarter we have seen some initial results in some of our clients saying that the efforts has been working. As you spoke out, since we don’t have a lot of ability for our clients to take quick actions for the properties that it is working for it is much delayed in terms of us seeing an increase in CPCs which is certainly what we would expect. All of our tracking metrics again with the clients become weak can get all the way down to conversion improvements have shown distinct benefits from the strategy that we’ve undertaken and I presume we’ve seen a modest increase or less – modest increase in the prices that they paid for their profitability metrics.
Nat Schindler – Bank of America: Just on the second questions related as you cut-off some of this lower quality SEM where do you think you will reinvest those marketing dollars going forward?
Stephen Kaufer – CEO and Founder: So, as I indicated, we’ve disclosed that we’ve reinvested some of those marketing dollars into our Facebook campaigns. We may going forward choose to invest some of the dollars into some of the search engine marketing in our newer markets where the total dollar impact is less but we are more intent on gaining trial. I’d also would add it was a meaningful shift in the way we are conducting our SEM business and SEM is a meaningful source of traffic for us so as the team have now built in the new formulas, if you will, into their model, now we get to move forward and optimize on those. So, you could well see, we would hope to see us just getting better at finding the right traffic that wants to not only convert on trip, but convert all the way downstream. So, I don’t think, we will be seeing a substantial (redeem) or cut back in the SEM versus now that we know the best spots to grow, we’ll be able to reinvest some of those dollars in SEM itself.
Heath Terry – Goldman Sachs: As you move to add to transparency within the bidding market, I was wondering if you could give us a sense of how far you think ultimately you want this to go and what kind of impact you see it having on the number of participants, either the number of participants in the market or overall potentially the impact that it could have on pricing or even volatility of pricing. Do we ultimately see over time kind of a real-time bidding market model, the way you have with things like Google AdWords?
Stephen Kaufer – CEO and Founder: We are not sure yet if it will evolve all the way to a real time. Our customers aren’t even necessarily asking for that level of information yet. But they do naturally want to know at a granular level or property level how the conversion rate – how the (click fund) TripAdvisor share the market and various bidding strategy that they can use to buy the traffic that works the best from their end. So, we’re going from a – every couple of weeks you can update a set of properties and looking to test out and we really have to learn how to do this effectively, test out over time a model where we are providing our clients a lot more information. I can absolutely appreciate how from the client perspective we are an extremely valuable channel to them and they would like to know how they can effectively spend more by buying the type of traffic that they want and that our current system is just too primitive frankly for them to be able to do so. We are approaching it gingerly, in a sense that we don’t have as many potential clients as someone like Google has that could bid for words, it harder still on our system. The dynamic is, on TripAdvisor you are essentially mostly bidding for a dated search. It’s not keyword match and it involves a specific availability question that our users are asking and show prices box. So while everyone of course compares us to the Google option that they have, ours is in one way more complicated, because we have to have the date information and in one way simpler, we don’t have to deal with broad matching or exact phrase or anything like that, because you are bidding at the property level not the keyword level.
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