1 year ago
 

Travel marketing is more frustrating than ever

Digital marketing is a great way to burn lots of cash, now more so than ever.

NB This is a viewpoint by Matthew Barker, head of strategy at I&ITravelMedia.

It used to be that SEO and Adwords were the only game in town. These days we’re scrambling for mobile strategy and attribution models; first we needed a plan for Pinterest, then it was Instagram, now it’s video. Even when you (sort of) know what you’re doing it can make your head spin.

And then you have to do it all in travel.

Admittedly I’m biased, but is there a more challenging B2C industry for marketers?

Over the years I’ve noticed three fundamental features to travel marketing that are the bane of many businesses—especially SMBs—and the downfall of many a travel startup.

Here’s my take from a decade or so in travel marketing. What’s yours?

1) Acquisition costs are ridiculously high

Until fairly recently, even smaller travel businesses could expect to do okay on the “free” traffic generously supplied by Google. A few meta tags her,e some cheap content there, throw in a ton of dodgy links and up the rankings you went.

For better or worse those days are largely over. SEO gimmickry is too risky and the first page results for any vaguely competitive travel query are stitched up by top tier brands.

When I started out in travel SEO ten years ago a query such as“Peru vacations” would yield a mixed bag of independent operators and specialist companies. Try it now and you’ll get a monoculture of aggregators and top-tier OTAs, occasionally punctuated by some of the larger operators.

SEO isn’t “dead” but it has changed beyond recognition.

This trend forced the minnows into paid channels—originally Adwords, more recently Facebook. But ad networks are auctions where higher demand means higher prices, so having been forced into paid traffic acquisition these companies simultaneously faced an ever increasing cost per click (CPC).

These days an Adwords CPC for travel queries can range from $2 to $7 and beyond. Depending on a website’s conversion rate that can shake out at a cost per acquisition (CPA) at anywhere from $40 to $200+.

With non-ecommerce websites an acquisition is usually a lead or enquiry that must then be closed by a sales team. That’s an awful lot of money to be paying for an enquiry.

This isn’t just a travel thing—the exact same process has unfolded across all industries and the collective response has been the move towards content or “inbound” marketing.

Roughly speaking this is about acquiring eyeballs further up the funnel where clicks are cheaper but less purchase ready, and then creating ways for some of them to come back later when they’re ready to make a purchase.

When done right this approach can certainly work. But for travel companies, the second big problem is that:

2) The customer journey is ridiculously long

There’s plenty of research on the time and length of travel purchase decisions, but we intuitively know that the process from an initial spark of inspiration down to actually booking a trip can take months, years or even decades.

And at each step of that journey people are drawing on third party sources of information, reviews, distractions and competing offers.

So once you’ve been forced to shift your acquisition efforts earlier in the customer journey, you’re instantly plugging a leaking funnel and battling exponentially diminishing conversion rates.

Using content to “build audiences” is fine in theory, but it’s painful to think that many of these people could be months or years away from making a purchase.

This, coincidentally, is why most “influencer marketing” has such a thorny relationship with attribution and ROI. “Impressions” up in the inspiration phase of the customer journey have a tenuous connection with bottom line KPIs such as bookings and revenue.)

But it’s not impossible! If you’ve got the resources to create great content and the expertise to use social media, email and retargeting in a strategic, joined-up way, content marketing can definitely work for travel companies.

But the third fundamental problem is that:

3) Purchase frequency and customer retention are ridiculously low

All of this would be okay if leisure travel, like many other consumer industries, had reasonable purchase frequencies and high retention rates.

But even in the biggest markets, people typically travel only a few times a year, with just just one or two international trips at most. Single destination operators are at a further disadvantage—how many travellers go back to the same place with the same company every year?

Even for the few companies with loyal customers who repeat book each year, that’s still a punishingly low retention rate compared to the up-front acquisition costs.

This means that even after being forced further up the funnel, where customer acquisition becomes more indirect, longer-term and leakier, the few people who do eventually book may never come back again!

Put these three factors together and you’ve got an extremely challenging environment for travel marketers, especially those on limited resources.

What to do?

There is a way through the morass, but you’ve got to work with these fundamentals, not against them.

High funnel acquisition efforts should have a relentless focus on delivering value and embrace the fact that, at this stage of the customer journey, people usually aren’t ready to book.

For those on more modest budgets, think in terms of demand capture rather than demand generation.

Use content strategically, such as downloadable assets, to capture audiences when they begin to research a destination or experience. This is still high funnel activity with relatively low acquisition costs, and it gives you an easy way to convert casual audiences into qualified prospects.

Paid channels are cheaper when the traffic is less purchase-ready and the competition is less intense. Use digital ads earlier in the customer journey, and be smart with email and retargeting to build as watertight a funnel as possible.

The key to all these activities is providing as much value and quality as you can afford, and not prematurely forcing people towards bookings. They’ll book when they’re ready, not because you’ve filled their inbox and Facebook feed with promotions.

Use different channels strategically and with restraint to provide a compelling, consistent experience as they make their own way down the journey to purchase.

A lot of this is anathema to marketers on tight budgets. But, when done right, it works out more cost effective than throwing ever more cash at Adwords and Facebook. It takes restraint, patience and plenty of added value. All things that, in an era of splogs, spam and relentless retargeting, can go a long way to win over your audience.

NB This is a viewpoint by Matthew Barker, head of strategy at I&ITravelMedia.

NB2
Image by Pixabay

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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. Justine Baker

    Conversion is a difficult task. Even posting/plugging on social media. Within 5 seconds people’s feeds are filled with other posts. We’re working on a few things to increase users from the traffic we receive. Really don’t want to make the site a member only page. I’d rather people find what they need and if they want to interact, then create a profile. Point of our company is not needing to use multiple sites for travel, reviews, booking, just one. We only use one search engine and there isn’t any need to use more than one travel site. Getting the word out, is the challenge as we discover what people want and build it. Anyway, very different strategies for marketing than the past, thank you for posting the article and to those who comment. Helpful and appreciated. -Justine http://www.StuckOver.com

     
  2. Adina

    Good article. I can totally relate to point no 2& 3.

    This is the 3rd travel product that I am working on and this market is so, so fragmented. Here are, on short, some lessons I learned during my journey in this industry:

    – Accommodation/ Stay side is always safe one to go with. People book it before going on a vacation almost all the times. Whereas, if you are thinking about tours (either led by guides or locals), meals, travellers will change their mind depending on weather, mood and their behaviour is to book only after they arrive at the destination. So this would be one important aspect to be taken into consideration!

    -As mentioned in the article, purchase frequency is low. If you are just an app, this is even worse, they will download it and after the trip it will be uninstalled. Thinking in reverse, I do the very same thing. There are few apps that people keep them almost all the time and you can count them on your fingers;

    -Building a marketplace in this industry is such a headache. You need to solve supply plus demand; both at the same time and also to maintain a healthy balance between those two; having too much demand and little supply will end up with no repeat customers and so on;

    Hopefully, my experience will help someone reading this.

    Stay inspired and creative!

     
  3. Tony Carne

    “Single destination operators are at a further disadvantage—how many travellers go back to the same place with the same company every year?”

    I can’t even begin to imagine how an independent new start up in this mold might be able to break through online. Those that have been around a while are still sustaining themselves via offline but breaking through there also isn’t easy and takes years of relationship building. It is a real pity because it just means that super passionate and committed people with great product still ultimately might not make it and I don’t think that is great outcome for shaking up travel and giving all travellers great new options.

     
    • Matthew Barker

      Thanks for the comment Tony.

      We know plenty of indie tour operators in this boat: reliant on long-standing referrers and trade relationships, but trying to get their direct business established online. Similar problem to the hotel-OTA relationship.

      It’s possible but not easy. Higher-funnel content based approaches can work for the small guys but you need a nice broad product/audience with plenty of volume. Single destination operators (like UA partners?) are in a very tough spot when it comes to building direct business.

       
      • Tony Carne

        Definitely not like UA partners Matthew. The whole point of UA and the network is that you are not left alone in your destination but rather we share customers across destinations and years and built loyal lifetime customers who always seek out the Urban Adventures brand first and foremost. On top of that as the local tour operator you don’t need to worry about your online presence as HQ takes care of that side of things. The partners just provide the spark content and we take it from there.

         
        • Matthew Barker

          Yes, that’s what I meant. Without the UA network, the partners would have a very hard time generating direct business–right?

           
      • Tony Carne

        Yep – exactly. That is our reason for being. Without our help I just couldn’t see how the people we are helping transition from being a great freelance guide to being a great small business tour operator, making it. The part of sales we leave our partners to concentrate on is offline and in destination sales. The part we help them with is direct online and via third party distribution. You need all those things firing 100% to build sufficient volume to be profitable. I can’t see how someone taking this step can have the time or knowledge to do it all themselves successfully.

         
        • Matthew Barker

          It’s a shame, because as you said above a lot of these people are *the* experts in their field. They’ve got the raw ingredients (knowledge, passion) to excel with content marketing, but lack the expertise and volume to make it work cost-effectively.

          Seems like this is where other platforms/orgs — DMOs, discovery channels like UA, marketplaces like GYG — can play a role. Hitting the volume, taking care of the demand generation, and creating qualified prospects for the suppliers.

          (Interesting that Gerry Cariou is talking about similar things in his comments below from the DMO perspective.)

          Coincidentally, we’ve been tackling the exact same problem from the publishing and content marketing angle here: http://horizontravelpress.com/

          The basic idea is that we benefit from economies of scale to do the content marketing much more efficiently, and generate the prospects & leads on behalf of our partners.

           
  4. Gerry Cariou

    Not our experience as a DMO promoting primarily 2-3 outdoor-based products in central Canada. For fishing and hunting enthusiasts (the primary targets of our efforts) we’re seeing what we define as a conversion (a request for destination information via a printed guide or a click-though to an operator listed site) in the 0.40 to 0.50 cent range with “engagement” as defined by FB in the 0,03 to 0.07 cents range per engaged consumer.

    Our strategy is to “fish where the fish are biting” and “shoot where the ducks are flying” which dramatically reduces competitive challenges. I suggest going after people who are way lower in the funnel and use anchor content (blogs/videos/images) as core assets to get their attention. Google ad words are a complete waste of time and money and I’m almost certain Google employs people in India or wherever at “click-farms” whose sole job is to sit there for 8 hours clicking on CPC adwords. of course Google denies this but it’s true based on the large spend on an AdWords campaign versus the click-throughs turning into one of our two KPIs. Facebook is still the best vehicle for digital targeting of like-minded people who are near the booking decision phase. We support our blogging with FB posts which e then boost to a carefully-selected audience. geo-targeting in our sector is key, as is knowing basic behavioral characteristics of your target audience.

    SEO has become stupidly complicated but you can have success, short-tail is largely a waste of time so try long-tail but broaden your target area and increase the market reach, and it still works okay. I do agree with the author, it can make your head spin and spammers like trip-advisor or Expedia are paying someone off just for the sheer traffic – lots of liars on there in the “reviews” – I can’t believe people are so gullible that they use these “independent” reviews to make a travel decision. Mobile-marketing is what I find to be the most challenging.

     
    • Christian Kameir

      A) SEO is 99% technology and has been for a decade.
      B) Google ‘buy trip advisor reviews’

      Just like Google does not have any incentives to truly cut search engine spam, TripAdvisor does not have any incentives to cut out comment spam .. but than again: look at any of their pages and ask yourseldf: what is the objective here?

       
      • Gerry Cariou

        To create a platform to sell digital ad space to businesses, and to return inaccurate results, the consumer doesn’t really matter to either of these behemoths, I despise both.

         
    • Matthew Barker

      That’s a great CPA — congratulations! Would be interesting to know the operators’ CPAs on the actual booking.

      DMOs can play a huge role in mitigating some of the problems I’ve written about here. As you’re doing, DMOs are well placed to generate and qualify the higher-funnel audiences, and pass them on to operators/suppliers.

       
      • Gerry Cariou

        Thnks Matthew, that is exactly what we do, however, some interesting twists, we primarily have fishing and hunting lodges as members of our Travel Association, they are slow at adopting new technologies and platforms, for example, social media, so we generate a big opportunity to them with our large social media audience, yet we can’t get them to share their customer/FB page photos to our time-line for a re-share to our larger follower base.

        The other issue is e-commerce, we purchased rights to use an on-line -e-commerce/booking/reservation system for our members to list packages on and be able to take deposits using a secure system. After making it available to them as part of their membership fee for 3 years, NONE took advantage of it. Hard to figure out that one as their rationale was – “we like to talk to the people staying at our place first” and “we don’t have the time to upload a package” etc. etc. – very frustrating since they still complain about a lack of business at certain times of the year. We believe in quality leads so we target consumer pools in great detail and generate qualified inquiries – but we don’t book the people ourselves, the members of the Association have to do that part by following up on the consumer inquiries we generate. Needless to say, some of them are better at it than others.

        My message is that even with a relatively small budget – ours is about $1 million Canadian dollars a year, you can make a difference – even with mammoth competition like tripadvisor or expedia, we do relatively well – so far….

         
  5. Christian Kameir

    The most important thing to realize is that the OTA channel sells rooms but does not create clients.

     
    • Elnur Seyidli

      if “not creating clients” meant “not creating a demand” – the point is probably true in most cases, but specialist OTAs can be an exception – it can create a new demand, meaning it may turn a potential traveller with special lifestyle requirements into an actual traveller by generating an interest of that person in the hotels/destination it market to him/her in a specialist way.

      Btw, the points mentioned in the article all apply to both generalist OTAs and specialist OTAs, but perhaps to a different degree. For example, specialisation in niche market may may lower acquisition costs and improve customer retention but at the same time prolong repeat purchases and the customer journey time.

       
      • Christian Kameir

        OTAs live and die with pay-per-click spend. A large part of their business is essentially PPC-arbitrage. And, the PPC wars between the largest OTAs has driven the prices up and into the long-tail – try “hotel new york allowing dogs”. Expedia and Priceline are even bidding on trade names. Add SEO to the mix and what you get is a consistent blanket of search engine spam. Try “diabetes friendly hotel new york” and everybody’s favorite spammer shows up on top – TripAdvisor.
        WikePedia lists 65 ‘OTAs’ – none of which indicate a lifestyle angle (as far as I can tell by their domains ..).

         
      • Rio

        if we are consistent; the demand will occur.
        should be a combined digital and brand strategy.

         
  6. Syed Fahyeaq Ahmed

    Great Article! I am surely going to concentrate on mentioned points. “providing as much value and quality as you can afford” is mostly I always work on. Thanks for this article.

     
  7. Colin J Brownlee

    One of the best articles on Travel Marketing I have ever read. Thanks Tnooz. Bring us more!

     
  8. Jared

    Hey Matt, great perspective here. Another retargeting tip: make sure you set up unique audiences to segment your users. Nothing more annoying, and money wasting, than to serve an ad to a user who has already converted.

     
  9. Elnur Seyidli

    this is a very good summary of realities/difference of marketing in travel sector. I forwarded the article to all my Marketing staff

     
  10. Tamara

    Great article.

     
 
 

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