The impact of online ad spend on the travel industry

January 23, 2020

In the travel industry, online marketing is essential. Where in the past bookings were only possible in-store or by phone, digital tools now lead us through the entire customer journey from inspiration to orientation and ultimately to a booking. This shift is pushing travel brands to spend more resources on online advertisement, but how big exactly is that impact on the travel industry?

Growing ad spend

According to eMarketer, online ad spend in the travel sector is expected to grow to almost 13 billion U.S. dollars this year. This is hardly coming as a surprise following the continuous year-on-year growth in global online travel sales to 755.94 billion U.S. dollars in 2019. The travel industry’s online media buying is even soon to overtake the consumer packaged goods (CPG) ad spend. The highly competitive travel sector and a strong economy are driving travel brands to further scale up their budgets to retain or grow their market share. 

These budgets will have to be appointed wisely to a wide range of digital channels to reach the right target audience. Travel brands lean heavily on search, which accounted for 53.7% of the total online travel spend in 2019. And for one good reason too. According to a survey conducted by Destination Analysts, 69,8% of travelers were to get information and inspiration for where to go and what to do through search engines. Nevertheless, companies also utilize channels such as (programmatic) display, video, paid social, affiliate marketing and online travel agents to ensure full online visibility of their products and services. 

Channel-driven to customer-driven

Nowadays it’s extremely important for travel companies to know what motivates their customers throughout the purchase journey, as well as how to stand out from the crowd in an online media-saturated economy. 

Modern travelers demand more. Today, consumers are turning to digital platforms to make connections with multiple brands and to share their travel experience, empowering them to make well-considered purchasing decisions. Travel brands continue to learn how to embrace this online power of consumers and how to translate their demands into digital marketing initiatives to build personal relationships with online customers in order to drive growth and increase profits. 

A brand that does stand out from the crowd today is known for delivering value to the customer. It interacts through digital touchpoints initiating customer engagement and transparent conversations to build trust and to create brand recognition. Through the many digital touchpoints, companies have shown a transformation from simple channel-driven marketing with generic messaging to a more customer-centric approach. Personalization is key with tailored travel advice for each online customer. Understanding their customer needs, by knowing what type of information they like in the process of planning their trip and how they prefer to receive it, is what’s being reflected more and better now in digital promotions by travel brands.  

Storytelling by video

Nothing prompts a customer to visit travel websites more than a stunning video. By telling a story through video ads, travel marketers create immediate excitement and truly bringing travel alive. It evokes an emotional reaction that may positively influence a potential customer’s purchase decision. This is causing video to quickly become a preferred ad format for the US travel industry. In 2019, airlines allocated 12% of their online ad spend towards video. 

Social media provides a great stage for inspiration from video travel promotions. Once travel marketers caught the customers’ attention, the likability of a video being shared with friends and family is high. But it’s not only social media anymore which travel marketers use to reach their target audience. Programmatic for video is a great tool to display engaging video ads based on behavioral data. It has become a golden opportunity to roll out mobile-first and cross-channel video strategies, which is becoming more crucial now mobile phones are being widely used for finding travel inspiration, according to Destination Analysts. While the majority of digital travel sales still occur via desktop, mobile travel sales are getting more common. The expansion of time spent on mobile is driving growth in digital ad spending of which 70% is put into mobile ads by travel companies, per eMarketer

It will continue to evolve

The currently wide selection in digital marketing channels, and those being in constant movement, will keep travel brands on top of their toes to push their boundaries in digital marketing. The challenge remains to bring value to potential, though high-demanding, customers. Being first in using new features, technologies and platforms could give businesses a head start in this highly competitive sector. Where the focus now lays on storytelling by video and reaching their audience on mobile platforms, it’s no doubt the online advertising in travel space will continue to develop. 

Instagram, Snap and TikTok - what’s what and where to go?
Finding a Formula for eCommerce Success - Why Selling over a Platform may not be Right for You