Online Travel Report 2010

Understanding Online Travel Marketing Trends

Including Budgeting, Channel Shifts, Opportunities & Challenges Travel Companies Face

November 24, 2009

by Anneli Ritari

Executive Summary
The economic climate put travel companies under pressure in 2009, and the industry is predicting slow recovery
in 2010. The market place challenges caused by the economic climate are still perceived to be the key obstacles,
and the key market opportunity is expected to be continued growth of online travel sales, meaning the web has
never been more important to the travel industry. An average 50% of total marketing budgets were allocated to
the online channel in 2009 by the companies taking part in our survey. This figure is set to grow to 57% in 2010,
and it's official that online spend will receive the lion’s share of budgets. Paid search was allocated 33% of
budgets in 2009, but the growth of the channel is becoming more stagnant as travel companies are shifting
budgets to social media and search engine optimisation. Online growth will require competitive digital
strategies, which provide opportunities for growth but also pose key challenges - these include social media,
cross-channel synergy and innovations. Other key challenges listed by the companies surveyed included
consolidated measurements and reporting, and implementation of multivariate testing.
Marketing Budget Allocation & Online Advertising Spend
A key objective with the travel survey was to understand how large shares of travel companies' budgets are
allocated to online spend, and how this differs between different sub-verticals. We found that:
• The total online marketing share of budgets has increased steadily in the last few years, from 39% in
2008 to 50% in 2009 and 57% in 2010 (see figure 1).
• Villa and holiday rental sites have the largest share of online marketing budgets at 90%, followed by 85%
for both OTA and Comparison and meta search engines (see figure 2).
• Ferry and train companies have the lowest share of marketing budgets allocated to online spend, with
25% and 30% respectively (see figure 2).
• In 2009, Paid search received the highest portion of online budgets with an average 33%, followed by
SEO 18% and Display 17% (see figure 3).
• In 2010, the majority of respondents will increase spend on Social Media & Online PR and Search Engine
Optimisation (SEO) (see figure 3).

Figure 1 - The percentage of total marketing budget allocated to online marketing

Figure 2 – Budget allocation by channel and sub-vertical in 2009

The category ‘other’ was primarily defined as comparison and meta search engines and partnerships.

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 Figure 3A – Budget allocation by channel in 2009 for the whole travel vertical

Figure 3B – Budget allocation by channel in 2009

Figure 4 – Change in online budget allocation in 2010

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Change in online budget allocation by channel in 2010, results broken down by sub-vertical

Figure 5 – Change in Display budgets by sub-vertical

Figure 6 – Change in Affiliate marketing budgets by sub-vertical

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 Figure 7 – Change in Search Engine Optimisation budgets by sub-vertical

Figure 8 – Change in Paid Search budgets by sub-vertical

Figure 9 – Change in Social Media & Online PR budgets by sub-vertical

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Travel Market Opportunities & Challenges
The survey conducted was designed to understand how travel companies perceived the key travel market
opportunities and challenges in 2010. We found that:
• Continued growth of online travel sales was identified as the key travel market opportunity (see figure
10).
• Key market challenges were intensified by the poor economic climate and decreased business and
leisure demand. Brand perception, increased competition and pressure to lower prices also scored
highly.

Figure 10 – Key travel market opportunities in 2010

The ‘Other’ category includes existing customers to spend more through improved CRM and expansion into new
markets.

Figure 11 – Key travel market challenges in 2010

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Online Marketing Opportunities & Challenges
The internet is gaining the bulk of the marketing budget from the companies surveyed, meaning that having the
right strategies in place is more important than ever. We wanted to find out what the key online challenges and
opportunities are perceived to be in 2010, and our study showed that:
• Engaging in social media was listed as the key challenge, and the second highest opportunity was
incorporating social media strategy (see figure 12 and 13).
• Leveraging synergy between channels was perceived as the key online opportunity and the second
highest scoring challenge.
• Other key challenges listed were consolidated measurements and reporting, and implementation of
multivariate testing.
• Improved customer experience/usability and improved ROI were also perceived to be top listing
opportunities.

Figure 12 – Key online marketing challenges in 2010

Figure 13 – Key online marketing opportunities in 2010

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Innovations
With 3 out of 5 Europeans now participating in social media regularly, social media provides key opportunities for
the year ahead. Analysing the activities undertaken in 2009 against those planned for the year ahead, it is clear
that the majority of travel companies surveyed are incorporating social media innovations as part of their
strategy. The findings are illustrated by figure 14 below, with the key findings being:
• The number of companies taking part in social media next year will be twice as many as those
undertaking those activities in 2009.
• Setting up a Twitter and Facebook page is the top social media priority planned, followed by blogger
outreach.
• Affiliate marketing was also listed as one of the activities companies will be adding to their marketing
mix.
• Multivariate testing had a high growth - only a handful of companies stated it was an activity they
undertook in 2009, but 30 companies are planning to implement it in 2010.
• PPC API feeds also had a high growth, being the eight highest scoring new activity planned for 2010.

Figure 14 – Online innovations & activities undertaken in 2009 and planned for 2010

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Campaign Management - Agency vs. In-house
The final question of the survey looked at what the channels travel companies had either outsourced to an
agency or were managing in house. The key findings are illustrated by figure 15 below. In summary:
• Display and Search Engine Optimisation were the two channels managed primarily by agencies.
• Paid search was the third online channel with the highest share of agency management.
• Email marketing and Social Media were the two channels primarily managed in-house.

Figure 15 – Campaign management by channel

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Recommendations - How to get the Digital Edge in 2010
Integrated Digital Marketing – Maximising results across all channels
The key online marketing opportunity stated by the companies taking part was leverage synergy between
channels. A key to maximising results across all channels is to incorporate a holistic approach to marketing
activity, both on and offline. Customers have changed the way they research and book travel online.
Consequently, travel companies increasingly interact with users in different channels, and strategies should be
holistic with a view of optimising each stage of interaction with the consumer. By aligning and integrating SEO,
PPC, Affiliates, Display and Social Media strategies instead of viewing each as separate entities, results can be
maximised. In order to understand the true relationship between channels and how to maximise their potential,
it is advisable o run tests to determine how traffic and revenue are impacted by having keywords in different
positions. For example, using a handful of high volume keywords with high natural ranking, we can analyse if
moving the PPC position would save money that can be reinvested elsewhere. Based on the findings, we can
determine if a top-tier keyword might benefit from full PPC support or a low-tier keyword have its PPC spending
cut. Use of SEO and PPC should both determine, and change across, the various stages of campaigns – and also
work differently for different brands. Integrated search requires testing, technology and resources. However, the
rewards are significant and campaigns will work in synergy with investment decisions made with far more
intelligence.

Create a comprehensive Social Media strategy with clear objectives

It is clear from survey results that social media is going to be a key focus for travel companies online marketing,
and it’s not hard to see why with 3 out of 5 Europeans now participating in social media regularly. The social
media sphere is complex and the opportunities therein are also coupled with challenges to get it right. It is vital
that travel companies starting to engage in online PR and social media have a comprehensive strategy in place
with clear objectives and ownership. At bigmouthmedia we have extensive experience from creating all
encompassing Online PR and social media strategies, designed to meet objectives with a clear roadmap of
activities. The key to successful social media campaigns are reporting to ensure your campaign reaching the KPIs
and measurements you set out to achieve. Make sure your social media strategies are aligned with your other
channels and evaluate your campaign in terms of SEO benefits, as a successful campaign will have a positive
effect your search rankings.

Innovate your Paid Search Campaign by implementing FUSE

Most travel companies are not increasing their spend on Paid Search, instead it’s
more important to make existing budgets work harder. Automated bid
management has always played an important role in paid search. However, with
many parties all using the same algorithms it has become harder to find a unique
competitive advantage. With this problem in mind bigmouthmedia have
developed “FUSE”. FUSE is designed to take real business information via a feed and use this data to make logic
changes to your paid search campaign. FUSE can manage bids, update advert copy, adjust daily budgets, auto
switch off campaigns and generate reports. In short, the possibilities for travel companies are vast. Once a feed is
set up to communicate with the Adwords API, then it will be possible to feed up-to-date information such as
prices and offers into the advert copy. After implementation for one of bigmouthmedia’s existing clients the
campaign saw an uplift in conversion rate of 40%.

Methodology
The survey was sent out to bigmouthmedia’s database of travel clients, as well as to Tnooz – a third party website
specialising in proving news and insights to the wider travel industry (www.tnooz.com). In total 39
bigmouthmedia clients and 109 from the Tnooz database responded to the survey. Answers that had been
completed by non-travel companies have been filtered out, in order to focus the findings relevant to the travel
market.

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