A sea of change is coming to the digital ad spend landscape in the travel industry.
NB: This article is written by Mary Russell, a copywriter at PhoCusWright.
Desktop spend on the decline
While travelers still use desktops for a significant portion of their travel research and shopping, the share of ad spend is shifting to mobile devices.
As travelers increasingly use smartphones and tablets across the travel planning process, ad spend will focus more on mobile, and less on desktops.
Travelers still uncomfortable buying on mobile
While mobile device usage has exploded and ad spend on those devices is increasing, mobile still represents a relatively small piece of the ad spend pie.
According to a new PhoCusWright report, The U.S. Travel Advertising Marketplace: Industry Sizing and Trends 2011 – 2015, companies are struggling to overcome the technical difficulties presented by this new ad medium.
Additionally, most travelers are still hesitant to purchase travel through mobile devices, both because of poor user interfaces and lack of personal preferences.
As a result, mobile’s share of ad spend does not yet correlate with its share of traffic, which continues to grow substantially.
Although one in five ad dollars spent online in 2013 by travel advertisers went toward mobile inventory - 11% to smartphones and 9% to tablets - mobile experiences must improve in order to capture significant ad market share.
Tom Powell, a PhoCusWright research analyst, says:
"If travel companies want to increase mobile share and ROI, they will have to develop and release adequate mobile experiences across browsers and apps for phones and tablets.
"Without a high-quality app or mobile-optimized site to point travelers to, advertising would be ineffective."
Search ad spend still rules, but losing share
In terms of total ad spend, two in five online ad dollars are spent on search inventory, which allows advertisers to pinpoint consumers at the moment of specific intent and to tailor a message and landing page to that intent.
Advertisers spent over $800 million in 2013 on keyword search – and are projected to spend more through 2015.
However, as budgets grow and shift to newer channels, search as a share of ad spend will slip. Budgets allocated to search will decrease from 40% in 2011 to 37% in 2015.
Attribution still an unproven science
The most-utilized attribution method for online advertising today, "last-click", is also among the most controversial.
While last-click has provided a level of ad measurement far more accurate than anything available in the offline world, this model discounts/overlooks other channels that may have influenced the purchase further up the funnel.
However, two in five advertisers either do not use any attribution model, or do not know if they are using any attribution models.
Half of smaller firms and over a quarter of larger firms stated that they don’t use any attribution models or don’t know if they do, so attribution remains a relatively new frontier in online advertising.
Getting to more effective advertising
In order for advertisers to know which advertising methods work and target the right audiences, some major changes need to occur:
- Advertisers need more sophisticated attribution models from vendors to have an accurate view of how spending affects purchases.
- Travel sites should collect valuable behavioral information about specific users, which advertisers can use for targeting across the web.
- Programmatic ad buying paired with real-time bidding will enable advertisers to present the correct offer to the correctly targeted consumer at the correct time.
- Advertisers need to consider viewability and fraud as high priorities to more accurately gauge the effectiveness of their campaigns.
NB: This article is written by Mary Russell, a copywriter at
PhoCusWright.
NB2: Learn more about mobile’s increasing claim on ad spend with PhoCusWright’s The U.S. Travel Advertising Marketplace: Industry Sizing and Trends 2011 – 2015.
This report focuses on sizing the travel advertising market in the U.S. and examines the trends, practices and budget allocations of US travel industry advertising spending from 2011 to 2015.
Topics include:
- How various segments within the travel industry (airline, cruise, DMO, hotel, OTA and other) are allocating their advertising dollars
- How much is spent on traditional offline channels (e.g., TV, print, out-of-home and radio) vs. online (e.g., search, video, social, referral, metasearch, display)
- How mobile and the rise in digital ad spend will impact the advertising landscape over the next two years
- Allocation by device, such as desktop, smartphone and tablet
- Trends in general search, metasearch, social, online video, and more
- How advertisers are dealing with the attribution dilemma
- The role of Big Data and programmatic tactics
PhoCusWright is the premier research authority in the travel industry whose analysts think about, research, analyst and report on travel industry trends and dynamics every day.
Visit Phocuswright to learn more about how PhoCusWright’s rigorous, unbiased research will provide the clarity and confidence you need to make the right strategic decisions and give your company an edge over the competition.
NB3: Mobile advertising image via Shutterstock.