Programmatic Advertising’s Role in Reshaping Travel Marketing
24 October 2023
Crafting compelling content to enhance your brand’s presence is effective only when your message reaches the intended audience. This is precisely where programmatic advertising solutions take center stage. Programmatic advertising leverages the power of machine learning to secure advertising placements across the vast expanse of the internet, ensuring that your message reaches the right users at precisely the right moment.
In recent times, programmatic advertising has experienced a surge in popularity. Today, many travel advertisers are embracing programmatic advertising as a strategic tool. They intend to optimize their travel advertising investments by targeting audiences most likely interested in specific travel destinations. This approach also ensures that their advertisements appear when these potential travelers actively search for holiday options on travel booking websites.
The future of travel advertising looks exceedingly promising, with a growth rate projected to outpace the broader advertising market by a significant margin from 2021 to 2023. Remarkably, travel brands are increasingly embracing digital advertising, allocating 63% of their budgets to this medium in 2020, a figure expected to rise to 70% by 2023. Worth noting, India is emerging as a standout performer in the journey to recovery, spearheading a remarkable 31% growth in travel ad spending between 2019 and 2023. This robust growth in India exemplifies the resilience and potential within the travel advertising sector.
Challenges Travel Advertising Landscape
The travel advertising sector bore the brunt of the COVID-19 pandemic’s impact, facing one of the most significant setbacks among all industries. In the tumultuous year of 2020, the travel advertising market witnessed a staggering 46% decline in value, starkly contrasting to the overall advertising market, which contracted by a comparatively modest 4%.
However, as we look ahead, there is a glimmer of optimism on the horizon. In 2023, experts anticipate the travel advertising industry to regain footing, surpassing the spending levels observed in 2019 by 9%. In this same timeframe, experts forecast that the broader advertising market will exhibit remarkable resilience, bouncing back with substantial growth of 21% compared to its 2019 figures.
The world of travel advertising is on the brink of a remarkable resurgence, fueled by the need for brands to reestablish their connections with consumers following the profound disruptions of 2020. Projections indicate that travel advertising was set to experience extraordinary growth, with a 24% surge in 2021 – a rate twice as swift as the advertising market. This momentum was poised to continue with a projected 36% growth in 2022 and a solid 19% expansion anticipated for 2023.
Faced with the existential menace posed by the coronavirus pandemic, many brands had to confront difficult decisions. They had to navigate the delicate balance of delaying or, in some cases, denying refunds to customers as the travel industry ground to a halt in 2020. Let’s look at this insightful infographic, which delves into the airline and accommodation/hotel industries. It encompasses both international and domestic sectors, spanning thirteen key markets. These markets include prominent economies like India, the USA, Australia, China, and Europe. These markets collectively represent a substantial 74% share of the total global ad spend.
Let’s look at an example of programmatic ads in the travel sphere. Embracing the digital age, Welcome Zürich, Switzerland, has become a cherished local website dedicated to discovering and reserving day trips, cultural gems, and entertainment options in and around Zurich. What sets them apart is their strategic use of programmatic advertising through the Native Channel on one of the foremost digital marketing platforms tailored for the travel industry. This cutting-edge platform leverages programmatic buying and harnesses the power of machine learning technology to optimize their advertising efforts. Furthermore, it’s noteworthy that this platform engages in partnerships with OTAs (Online Travel Agencies) and airlines, enhancing their ability to deliver tailored and appealing content to travelers.
Additionally, let’s spotlight Best Western, a leader in the world of hospitality. As a global enterprise, Best Western boasts a remarkable presence, with approximately 4,300 hotels scattered across more than 100 countries and territories worldwide. This renowned establishment, recognized for its exceptional service, also extends its reach as a trusted hotel booking service catering to travelers across the Americas, Europe, and Asia. Best Western effectively employs the display advertising channel to enhance its outreach and engagement.
The industry is currently revitalizing, and there are special awards, such as the Advanced Advertising Innovation Award 2023, which Magnite received on September 11 as part of The “Get Your Own Trip to Texas” creative. In the wake of the Covid-19 pandemic, the travel industry endured one of the most severe crises in its history. Yet, as time unfolds, the pandemic is gradually under control, leading to many countries reopening their borders to tourists without Covid-related restrictions. This encouraging trend signals a resurgence in tourism, propelling travel marketing to unprecedented heights.
Growth Of Advertising In The Travel Industry
Based on statistics from 10 companies, the RetailX UK TRAVEL REPORT 2023 indicates that the travel and hospitality industry has experienced significant technological advances and changes in consumer behavior in recent years. They collaborated with one of the industry’s leading software programs to create this report, which covers the annual growth of web traffic in the UK for various companies such as Airbnb, Skyscanner, Caravan Club, Premier Inn, EasyJet, Emirates, Mr&Mrs Smith, Travel Republic, Holiday Extras, and Red Letter Days.
The global travel industry has shown remarkable resilience in bouncing back from the challenges of recent years, which included the impact of a pandemic, political tensions, and rising living costs. Despite these ongoing factors, the annual revenue in the UK witnessed a significant surge, reaching £27 billion in 2022 compared to £13.1 billion in 2021. While this recovery is noteworthy, it’s important to note that it still falls behind the levels observed in countries such as Japan, Germany, and China, which reached £31, £44 and £100 billion, respectively. The United States generated the most revenue in this context, with £140 billion.
Shifting our focus to the future, we anticipate steady growth in the travel app market, with projections indicating an increase of approximately $730 million between 2023 and 2027. Notably, in the UK, Trainline takes the lead with the largest market share at 10%, followed by Uber and Booking.com, each holding an 8% share. Adding to the intrigue, Uber has unveiled its ambitious vision of becoming a comprehensive “super app” in the travel domain. Uber has introduced flight bookings within its UK app as part of this expansion. This development promises to introduce an exciting dynamic into the travel app and online booking market, leaving us eager to witness the impact of these strategic maneuvers on the industry’s landscape.
Cruise travel is gradually resurfacing and regaining momentum following the pandemic’s challenges. In the UK market, revenues are steadily increasing, and experts project they will continue to grow until 2027. At that point, forecasts indicate that cruise travel is on track to achieve a significant milestone, with experts expecting revenues to reach an impressive $2.48 billion.
In recent years, car rentals have witnessed a significant cost surge, primarily attributed to a shortage of vehicles. The challenging waters of the pandemic compelled many rental companies to sell off portions of their fleets to navigate the situation and maintain financial stability. As the market shows signs of resurgence, experts anticipate that the UK’s car rental industry will achieve an impressive $2.16 billion in revenue by 2023, with users expected to approach nearly 6.5 million by 2027. However, it’s worth noting that despite this positive outlook, rental prices remain elevated.
Holiday Home Rental
In recent years, the allure of short-term rentals has surged, driven by the growing preference for staycations and the quest for cost-effective getaways. While this meteoric rise is gradually stabilizing, the outlook remains promising. Projections indicate that the UK’s number of vacation rental users is on track to achieve an impressive 16.67 million by 2027. For many Britons, holiday home rentals offer a pragmatic means of optimizing their leisure time, even enabling flexible work arrangements in a cozy home away from home. This trend underscores the enduring appeal of vacation rentals as a versatile and value-conscious choice for travelers.
Key Players In The Travel Advertising Market
Booking.com, TripAdvisor, and Airbnb have firmly secured their positions as the top three players in the travel industry. Their prominence underscores the profound shift toward online platforms for research, planning, and booking. Moreover, consumers increasingly rely on peer reviews and user-generated content to inform their travel decisions.
In this digital age, convenience is paramount, and travelers seek platforms that offer seamless access to information, many booking options, and robust customer support. Budget-conscious options, including airlines like Ryanair and flight comparison platforms like Skyscanner, further enrich the landscape, reflecting the UK consumer’s keen focus on affordable travel solutions.
Let’s examine the annual growth statistics for UK web traffic for two well-known websites. In the case of Skyscanner, annual UK web traffic shifted from -6.5% in 2019 to an impressive 283.3% in 2022. Similarly, Premier Inn experienced a significant change in UK web traffic growth, from -2.5% in 2019 to 237.1% in 2022.
Within this diverse spectrum of travel and tourism services, you’ll find industry giants like Emirates, American Airlines, and Norwegian on the transportation front, complemented by the indispensable role of travel search engines such as Travelocity, Opodo, Easyjet, Skyscanner and Omio.
Even the cruise industry finds its place in this vibrant ecosystem, with notable players like Royal Caribbean, Cruise.co.uk, Diamond Resorts, Radisson Hotels, and Premier Inn catering to the diverse preferences of travelers seeking unforgettable maritime adventures.
The Importance of Programmatic Advertising for Travel Marketers
Smaller-budget hotels often face an uphill battle against industry giants with enormous marketing budgets. For savvy hotel marketers, the solution lies in harnessing the power of travel programmatic advertising, which proves to be a far more cost-effective alternative when compared to traditional methods like billboards or newspaper ads.
With programmatic advertising, you gain access to travel intent data. This invaluable resource allows you to precisely target in-market travelers who have already decided to visit your destination. Armed with this insight, you can strategically position your hotel with a compelling banner advertisement, effectively influencing potential guests and maximizing the impact of your marketing efforts. It’s an innovative, efficient way for smaller-budget hotels to level the playing field in the competitive hospitality industry.
In the niche of booking websites, travel advertisers are striving to connect with a vast consumer base. In response to this challenge, many advertisers are embracing programmatic advertising. Next, we will delve into their motivations and shed light on the advantages that programmatic advertising brings to advertisers.
Rather than wasting advertising budgets on mere impressions in the hope of conversions, programmatic advertising prioritizes the acquisition of pertinent impressions aligned with the campaign’s objectives. Advertisers can strategically target their desired audience by harnessing various data sources, including demographics, geographic factors, weather conditions, and device preferences. This precision enables advertisers to optimize their budgets and attain a more substantial return on investment, ultimately enhancing their campaigns’ efficiency.
In the past, advertisers had to engage in direct negotiations with publishers to secure ad placements. However, the advent of programmatic advertising has revolutionized this landscape. Today, advertisers enjoy the convenience of tapping into a vast and virtually limitless pool of advertising opportunities, making campaign expansion effortless. They can seamlessly target audiences across various screens, spanning TV, smartphones, tablets, desktop computers, and displays. This newfound flexibility empowers travel advertisers to reach a broader audience through diverse channels, enhancing the number of touchpoints they establish with their desired customer base.
The continuous advancements in advertising empower travel campaigns to operate with heightened effectiveness and efficiency. To achieve this, direct ads precisely toward the most relevant audiences, ensuring that advertising budgets don’t get squandered on individuals unlikely to convert. This approach gives fewer wasted impressions and programmatic advertising campaigns for travel advertisers that deliver a remarkable return on investment, demonstrating its prowess as a valuable asset in the travel industry.
Deeper Testing And Analytics
Conducting testing is the key to ensuring that travel advertisers allocate their advertising budgets wisely, targeting audiences with precision. This strategic approach leads to increased impressions and conversions on travel booking websites. While travel advertisers typically possess valuable insights into their audience demographics due to their industry expertise, testing is a potent tool for expanding customer knowledge. Through testing, advertisers can better understand their audience’s online behavior, enhancing their ability to refine and optimize their advertising strategies.
Optimization In Real Time
Advertisers wield a decisive advantage – access to real-time campaign data. This wealth of information allows them to monitor ad placements, track budget expenditures, and scrutinize the demographics of their ad viewers with remarkable precision. Harnessing the capabilities of programmatic platforms, advertisers can seamlessly review campaign performance data all in one place. This consolidation simplifies the decision-making process, enabling advertisers to swiftly and intelligently fine-tune their campaigns. In doing so, they avoid the pitfalls of investing time and resources in advertising strategies that fail to convert visitors into patrons of travel booking websites.
What Is The Result?
The global pandemic has presented the travel industry with a unique opportunity for transformation and enhancement. As we navigate this new landscape, it’s becoming clear that traditional business models must evolve. Brands will now be under closer scrutiny for their experience and service quality, surpassing the previous focus on products and pricing alone.
In this dynamic environment, technology emerges as a pivotal tool for brands to adapt and thrive. It is crucial in helping brands cater to a changed customer base’s evolved needs and preferences. This includes addressing health, hygiene, flexibility, and sustainability concerns. By embracing technology and aligning with these new expectations, travel brands can position themselves for success in this evolving era of travel.
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