Tripadvisor Dupont AnalysisTerm Paper

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Publicly Traded Company

The company I am writing about is TripAdvisor, which trades under the ticker symbol TRIP on the NASDAQ. TripAdvisor owns a number of popular Internet sites in the travel information and booking industry, including FlipKey, Cruise Critic, Virtual Tourist, Seat Guru and of course the eponymous website, available in many countries and languages. The company was founded in 2000, and earned $944 million in revenue in 2013. The company earns its revenues from click-based advertising revenue ($696 million), display advertising revenue ($119 million) and subscription-based revenue ($130 million).

The company operates entirely online. Rather than acting as a retailer, the company relies primarily on advertising revenue. This means that TripAdvisor needs to generate viewership, in order to sell ads, and preferably will be able to sell ads based on specific demographic factors. The flagship site ranks #79 in the U.S. And #220 worldwide in terms of traffic, according to Alexa.com (2015).

Goals

The goals for TripAdvisor are to grow the company, and there are two critical components to growth. The first is that the company needs to generate more traffic, and the second is that the company needs to convert that traffic to advertising dollars. The company notes in its 2013 annual report that "attracting more visitors to our sites is at the core of our strategic plan and we dedicate significant time and financial resources to maximizing the number of users who navigate to our sites" (p.9). The company has utilized a number of techniques to improve traffic flow, including search engine optimization (SEO), paid search engine marketing, referrals from partners, and customer relationship management (CRM) techniques. The company has continually increased the number of sites that it has in its portfolio -- there are nearly two dozen in total -- and the number of international sites that it has for the TripAdvisor flagship. The company has made significant investments to increase its traffic from Brazil, Russia and China in particular, but also other parts of Europe, Asia and South America. TripAdvisor introduced two sites to the Chinese market to build share there.

Strategic acquisition has been a lesser-used tool, but it allows the company to acquire established traffic flows. There were no major acquisitions in 2013, but TripAdvisor continues to count on this tactic as one of the means of increasing its traffic. All told, the company continues to grow its traffic, and improve its brand name in the travel industry. This has allowed for TripAdvisor to continue to grow revenues over the past year. The company has already grossed $958 million in the first three quarters of 2014, which is more than it made all of 2013 (MSN Moneycentral, 2015). This is the result of driving more traffic to its sites, and capturing that traffic for advertising revenue.

In order to derive advertising revenue for the company, TripAdvisor has an aggressive mobile strategy, and a team of programmers working to create the strongest possible links between its user base and the needs of advertisers. The more closely linked these two things are, the more valuable the company is to advertisers, and the more efficient it will be with respect to generating revenue. Revenue across all three major categories was up in 2013.

All told, it appears as though the goals that the company has set for itself were not only met in 2013, but will continue to be met in 2014. Revenue growth is fast for TripAdvisor, and that can only come with high traffic levels and increased ability to monetize that traffic. The company has targets for how big it wants to be within the industry, and how it will compete with some of the larger online advertising giants (Google, Yahoo, Microsoft), and thus far it has been successful because of its ability to fully exploit the niche in which it operates.

Evaluating Management

It is reasonable to suggest that the management of TripAdvisor is doing a good job with respect to performance. The ideal objective of any company is to earn a return for its shareholders. The 2013 net income for TripAdvisor was $205 million, which is the equivalent of $1.44 per share. These were both record high levels for the company. Thus far in 2014, through the first three quarters, the company has earned $190 million, which puts it on track to outperform the 2013 fiscal year. By that score, management is doing a good job.… [END OF PREVIEW]

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