Search marketing for travel in the age of AI

Travel has been profoundly reshaped by online search over the past two decades. Look no further than the undisputed industry leader, Booking.com. Its meteoric rise to the top was to a large degree fueled by a relentless focus on search marketing and booking funnel optimization. 

The dominance of search marketing in travel can also be traced by following the money. According to research company Statista, in 2023 the top 11 publicly listed online travel players alone spent $8.4 billion in Google Ads, 19% more than 2022 with a forecasted growth of another +10% in 2024. Search marketing is estimated to represent around 75% of this total spending.

At the beginning of 2024, Gartner published a bold prediction claiming artificial intelligence engines would replace 25% of current search traffic as early as in 2026. 

Should travel marketers start panicking about AI search?

Let’s face it, predicting how new computing experiences will unfold is little more than guessing, but the past 18 months of AI hype does beg the question: To what degree will it impact search marketing and how can travel companies start preparing for the potential changes?

“I want people to know that we made them dance,” Microsoft CEO Satya Nadella said in defiance of Google after releasing its AI powered chatbot in search engine Bing back in February 2023. 

Fast forward more than a year and Bing’s share of the search market has increased a meager 0.5 to 3.35 percentage points, while Google maintains a massive 91.4% share. 

In this period, OpenAI rolled out a series of innovative features including plug-ins and GPT’s aiming to give ChatGPT users better tools to browse and engage with information. Early reports seem to suggest that it isn’t moving the needle in a material way.

But certain innovations may not immediately reveal their full disruptive potential. As the chart below reflects, the launch of the iPhone combined with the App store did at first shake up the smartphone hardware market, and only a few years later went on to disrupt legacy industries such as mobility, social media and telecommunication with the emergence of killer apps like Uber, Instagram or Whatsapp.

In similar fashion, the efforts of tech giants and startups to profoundly change how humanity browses and engages with information might just have started to scratch the surface.

Google: The innovator’s dilemma in AI search

Search as we know it can potentially be upended by two types of disruptions as laid out by Harvard Business School:  sustaining versus disruptive innovation. While sustaining innovation improves and accelerates already existing services, disruptive innovation creates entirely new markets.

Google, after a slow start and some disappointing early efforts with Bard, is betting on sustaining innovation by gradually releasing AI in its core search product with SGE (Search Generative Experience), delivering chatbot-like answers in the search result powered by its large language model (LLM) Gemini.

SGE is currently available in 120 countries as an opt-in Google Search Labs experiment and was recently rolled out in the main search result to a subset of users in the United States. 

Rumors in tech circles also hint that soon Android phones will release a toggle to switch from search to Gemini chatbot.

Despite the fact that Google has not announced the full SGE rollout plan, make no mistake: The genie is out of the bottle.

Google’s CEO Sundar Pichai states it clearly in a Stanford interview: “With LLMs and AI, I think you have a more powerful tool to do that, which is what we are putting in Search with Search Generative Experience, and so we’ll continue evolving it in that direction too.”

AI search startups: A paradigm shift?

The emergence of a new breed of AI-first applications are reimagining the way we browse and find information. Two startups have managed to capture headlines in this emerging landscape:  

• Perplexity, an “AI answer engine”, claiming over 10 million monthly active users and which, according to Andreessen Horowitz Top Gen AI report, ranks seventh among most popular AI apps, combining ChatGPT-style instant answers with a small number of relevant source links for deeper information.
• Arc Browser, an iOS app that simplifies the search journey by summarizing relevant information from at least six different web pages and presenting the results in the form of a custom-built web page.

Both of these players seem light years away from representing a tangible threat to Google’s iron grip over search, but as early tech incumbents like Altavista or Myspace have proven, platform shifts can unlock exponential adoption of new behaviors in the blink of an eye.

In part two coming later this week, Mario will delve into how the travel industry can prepare for AI in search marketing.