Up-close with Expedia’s fast-growing ad agency
In 2015, the division is estimated to have generated about $200 million in revenue. That’s pocket change for the Bellevue, Wash.,-based parent company, which earned nearly $2 billion in the third quarter of last year alone.
Yet Expedia Media Solutions — or MeSo, as it’s known internally — is notable for its solid growth.
The division had a 23% annualized growth rate on a nine-month, trailing period, as of the third-quarter, according to a Tnooz analysis of the parent company’s filings, which was corroborated by Kevin Kopelman, director of research at investment firm Cowen and Company. (Expedia declined to break out official numbers for this story.)
Expedia Media Solutions helps clients — primarily travel ones, such as hotels, airlines, and tourism boards — by creating and running ad campaigns aimed at boosting bookings, visitor numbers, and awareness.
In a rare competitive advantage, it knows how much value a client earns from an ad because the bulk of its ads link-in to Expedia-owned brands, where it can measure changes in demand and user behavior before, during, and after a campaign.
A hotel chain, for instance, could see if a sponsored listing in search results generated meaningful returns in room-night growth or if a brand campaign coincided with a lift in intention-to-buy among consumers.
Expedia Media Solutions is notable for its attempt to bring enterprise-scale solutions and thinking to travel marketing — a sector that might be broadly described as being small-bore, fractured, and still heavily analogue.
Director of product management Wendy Olson Killion noted in an interview:
“For hotel franchises, for example, there are different budgets: there are national budgets, local budgets, regional budgets. You’ll see regional travel groups, maybe a certain set of hotels, or brands of hotels in a location.”
Similarly, the destination marketing organization (DMO) side is practically a cottage industry of boutique advertising agencies, small publishers (such as travel magazines), and tourism officials.
In short, travel marketing at the ad-unit level is not an obvious hunting grounds for an enterprise-scale company like Expedia.
Expedia Media Solutions has had to fight an island-by-island campaign to gain market share. It has made gains recently by adding several high-profile clients, such as Tourism Australia last June. It has done work for the destination marketing organizations of Britain, Denmark, Dubai, and the Netherlands.
Despite the big clients, Expedia Media Solutions said it is “well equipped to help the individual small supplier.” Matthew Reichek, senior director of product and analytics, cited this hypothetical example:
“If I own a B&B in Worcester, Mass., let’s say, and you represent a big chain across town, you and I can compete on a level footing using our TravelAds product….
“I can have a thousand dollars to spend, you can have a hundred thousand dollars to spend, yet if I bid more than you for certain targeting parameters, I’m going to get the positioning I want for those targeted customers until I hit my budget and you won’t, provided all the other things are equal.”
Simplicity is another factor that the division touts. A client can also come speak to one sales person to target a broad spectrum of types of travelers worldwide.
Just because it works at an enterprise scale doesn’t mean that Expedia’s ad agency arm takes a one-size-fits-all approach, said division head and global senior vice-president Noah Tratt:
“We are pretty good about identifying the nuances in people’s goals and building campaigns that are customized. We use our research and analytics to inform your creative; how much content you need to invest in; the pitch, your approach.
We can target based on a lot of activity that people do on Expedia and then we can layer on other kinds of targeting variables as well.”
“For example, clients can request ads be displayed to specific demographics in specific geographic locations who are using particular types of devices and exhibiting particular types of search behavior.”
“If I’m marketing, say, Holland to a Brazilian or to an American or someone from the People’s Republic of China, we know from booking behavior that visitors from those destinations are going to come for a lot longer, on average, than ones from, say, the United Kingdom and Germany.”
“We would tailor our campaign for a destination according to our research from booking data on each target nationality’s typical behavior and interests.”
Shaking up destination marketing
Expedia Media Solutions thinks it has a few competitive advantages over its boutique ad agency rivals. It said that it excels at enabling a DMO to target customers across Expedia-branded sites that match its preferred customer profile.
Other shift-share reporting services can tell any given tourism board what its competitive set looks like. But Expedia’s reports may be more comprehensive than its competitors’ are when analyzing at the ad-unit-level behaviors like click-through rates and impressions.
An official in, say, Macau, could choose to specifically display ads to, say, Canadians in a city whose travel buyers have recently shown a disproportionate interest in searching and buying flights to Macau and its competitors.
“Targeting may sound kind of antiseptic, but if you talk about intention-based advertising, that’s what we’re doing, because, when users come to our site, they conduct certain activities that are expressing intention, where they want to go and what they’re interested doing, and you can divine a lot of meaning from that.”
A couple of years ago, Expedia Media Solutions invented its creative partnerships group, which does custom work with a handful of clients.
The small team immerses itself with clients to find out their goals and to do the traditional ad agency storytelling work that brings their products to life.
For instance, in a campaign that has just ended for audiences in Germany and the United Kingdom, it created a microsite for Denmark’s tourist board that, among other things, emphasized the distinctive popularity of bicycling in Copenhagen with a video city tour of someone on a bike exploring local gems, such as a laundry mat café that’s a bar where you can have a drink while you’re waiting for your laundry to dry.
The interactive video was filmed “in the first-person,” letting viewers create a bookable itinerary by exploring their favorite interests, such as food, shopping, or museums.
Meanwhile in a campaign for Bermuda that launched last September on explorebermuda.us, it made interactive videos, where the user can get different outcomes depending on their interests.
On the microsite, a user can put together a highlight reel of the attractions that sound most appealing in a choose-your-own-(travel)-adventure style. They can then share that clip with friends or family, as a kind of visual, personal brochure.
Angelique Miller, the London-based director of creative partnerships, said:
“We’re very strategic in how we work with the client to maximize the burst of attention in a coordinated way. We work to create similar messages that will run on the client’s own channels, on social media channels, etc.”
Despite dabbling in bespoke work, Expedia Media Solutions is still focused on products that are massively scalable. That attitude may put it at a disadvantage relative to typical ad agencies serving the travel sector.
Expedia relies heavily on display ad units and performance-driven cost-per-click units, which — though they do hit different parts of the classical market funnel — do not equal a full-suite solution.
When asked about this, Expedia Media Solutions replied in a few ways, noting that it’s still a relatively small shop. A client who is intimidated by the technical aspects of digital marketing may find it easier to use it than other providers. Reicheck said:
“With a typical agency, you probably need to talk to them about your goals in-depth and if they’re charging you based on some services, you need to have analytical savvy and internal research to judge if those are the right services and cost-effective.
“Whereas with us, there are probably fewer decisions to make and we’ll give you the numbers. Clearly we’ll have a point of view on what’s working well, what isn’t, and you can still judge for yourself, but the information will be presented in a more intuitive, actionable way than what’s oftentimes offered by others at the relative same budget.”
Monya Mandich, senior director of marketing, noted that its research is a differentiator. The team can give clients, such as a DMO or a hotel group, the ability to shift perception within their organization on who actually is in their competitor set.
“Sometimes your competitors, in the minds of travelers, aren’t just the obvious ones you already know about.”
Tratt added that:
“If you’re a DMO, you’re probably interested in the work Expedia is doing to generate demand your market, which we could share…. Our team can also create reports on overall traveler behavior, such as the top-20 international airports that originate in-bound tourists for a destination.”
Expedia Media Solutions has a lot of insights that it hasn’t leveraged yet, said a couple of critics who work in the industry but who spoke on the condition of anonymity.
It needs to work on scaling the delivery of its data more effectively, the critics said, adding that the company appears to have under-invested on its data infrastructure and business intelligence and analytics sides.
“We have upped our game with insights we provide to our partners. DMOs, for example, don’t ‘sell’ on Expedia, Inc., brands, but they want to know how their competitive set is doing and how their ad campaigns are performing….
“With various reports, including pre/post campaign reporting as well as production reporting at the ad-unit level, we can provide our partners with actionable insights into who their competitive set is and how to target them.”
He added that the company has also identified building on its insights as an area of opportunity and is in the midst of “a robust project” to serve up its data and insights to clients in a scalable, visual and intuitive way.
Expedia’s ad agency arm has chosen not to offer its customer targeting parameters to its clients via a self-serve model over a consumer-grade intranet.
“Given our approach and ability to provide insights on consumer behavior at scale in a way that can help shift partner perception on who their target audience may be, targeting is something we want to work in consultation with our partners, versus offering via a self-serve type model.”
Last July, it debuted its first supplier-direct product when TravelAds Direct launched in beta on the flagship Expedia brand. When a user clicks a sponsored listing for, say, a hotel, a browser tab opens to the hotel’s own site — not just a link to the hotel info page within Expedia.
By mid-2016, most clients will be able to bid for it.
The division is also working on new products, such as adding email inventory for clients. For example, the day may soon come when a customer buys a plane ticket from Expedia and receives a confirmation follow-up email that includes an ad that markets, say, a destination’s lesser-known attractions.
Tratt said his top priority for 2016 involves prioritizing more innovation in Expedia Media Solutions’s campaigns.
He cited a growing industry recognition of its team’s innovation, such as through the awards Expedia Media Solutions has won for its campaigns, including in the Digiday Content Marketing Awards, the Hermes Creative Awards, and the Hospitality Sales and Marketing Association International (HSMAI) awards.
“There are a lot of other areas where the company is investing in richer media content. So we plan to build advertising products that build on our company’s investment and align our marketing partners with that.”
The industry will be watching not only how Expedia Media Solutions succeeds in growing its advertising business but also how it fits in with its parent company’s growing interest in media approaches to marketing in general.
Sean O’Neill had roles as a reporter and editor-in-chief at Tnooz between July 2012 and January 2017.