The rise of mobile ad spending in the travel industry

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.

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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.

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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.

phocuswright logo

NB3: Mobile advertising image via Shutterstock.

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Viewpoints

About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.

 

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  1. Timothy O'Neil-Dunne

    One takeaway from this study has to be that advertisers are increasingly behaving like sheep. I cannot see what the source of this data is – however I suspect it is survey driven, notoriously unreliable as any form of surrogate for actual behaviour. That advertising in mobile is an emerging form is clear. That it is not returning the same form of metrics and performance as desktop is also becoming clear. So ROI on mobile spend is a tough nut to crack. The upshot is that (in my humble opinion) a lot of advertisers are firing blanks in mobile. I have spoken to several agencies and advertisers and the struggle is clear. Thus we have the swing to mobile use occurring without the ability to track and monetize ad spend. Instead advertisers (and agencies AND media) are returning to “pre-web” processes and metrics to try and justify mobile ad spend.

    I don’t think this problem is going to go away quickly.

    I further question the effectiveness of native advertising which caused such a furor at the Grey Lady – mobile or otherwise.

    Some advertisers who I spoke to have found that actually by NOT spending in the mobile channels there is has been a positive improvement in ROI. However this is bar-stool research so not to be taken as definitive. I think its a mathematical quirk.

    What I still believe is that travel needs to understand the segmentation of the various processes during the purchase cycle, I still dont see anyone clearly explaining that much of what is labelled as “mobile” is in fact PC replacement type tablet usage in the home and office. So that device substitution does not mean behaviour change.

    Sometimes obvious and apparent observations that make sense cant be explained away by “lies, damned lies and statistics”!

    Cheers

     
  2. Brian Grillafi

    I can see native advertising becoming a big thing in the travel industry — like sponsored content on the New York Times, Forbes, etc. Also, who travels without being glued to their smartphones and tablets? So the native mobile ads that Airpush and Facebook are breaking ground with, for example could drive a native mobile ad boom across the travel industry space as well. It’s an exciting time of growth for a multitude of reasons.

     
  3. Ericson Smith

    At our mobile travel startup, The Travel Valet, we’re looking at what role supplier advertising will play in our monetization future. (Not much).

    One thing that leapt out at us? The clarity that traditional “throw everything against the wall and see what sticks” supplier advertising is definitely not the way to go. Mobile is still clunky for travel; which is why we’re adding a personal travel advisor into the mix that can quickly communicate with the customer about any specific offers.

    And let’s not get started about the real-estate of a tiny screen.

    Each offer has to directly transport the customer to an agent or an extremely easy to use booking tool that works without compromises on mobile.

    More and more, we found that quality leads are gathered by knowing the customer’s intent, more than anything else. Not attribution, not even so much behavior. But simple, straightforward, intent.

    Knowing where and when a customer intends to travel wins more than half the acquisition battle.

     
 
 

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