Where next for the travel vertical?
posted by Ed Harper - Senior Account Manager • 20 Jul 2012
Merchants and publishers at Tradedoubler's recent affiliate day analyse some of the more pivotal findings from the travel vertical that will contribute to future growth strategies
Last Friday Tradedoubler brought together a mix of Travel merchants and publishers for the second travel affiliate day of 2012. So far, 2012 has been a volatile year for the travel market and reigniting conversations around sales and revenue growth is a priority.
The UK is the largest European market for online travel sales in Europe, accounting for 36% of all travel bookings in 2011. However Euromonitor’s forecasts suggest growth of online travel sales will slow over the next four years. The UK is also expected to decline compared to the rest of Europe.
The Association of British Travel agents (ABTA) predicted an increase in high street travel agent bookings in 2012 after an 8% increase in footfall last year, if it continues the rise in online sales may suffer a further slowdown. Two worrying predictions that resulted in Tradedoubler initiating its Travel Insight Group to continuously monitor travel industry results and review trends to better understand how this sector is developing and what impact this has for both publishers and merchants.
Travel merchant growth slowing
Across the UK network we have seen the growth of travel merchants slow, although order values have continued to rise between January and May 2012. Travel bookings peak online in July and August as people plan their summer break and take advantage of last minute deals. As we have entered our peak booking season in June and July this year many merchants have started to heavily discount products in order to encourage additional late summer bookings.
The trends suggest that sales during peak seasons are only achieved through heavy discounting, but our analysis shows that in fact, the revenue levels depend on each particular merchant type. Airline partners have been affected more than Online Travel Agents. Affiliate programs have benefited from the ability to increase CPA on products with higher margins, thus increasing brand awareness in loyalty sectors.
Discounting for travel purchases is an important part of the sales strategy but it should not be seen as the only way to generate growth. Our research shows that while loyalty publishers take a large share of sales across the European network, Meta search partners and PPC keyword buyers also play an integral part in the channel.
It is not necessary for travel merchants to offer discounts to these publishers on every occasion. There are traffic sources and publishers that drive high quality traffic that converts well. Using the ferry industry as an example we see conversion rates doubled in the PPC space compared to all other affiliate traffic sources. It is important for publishers to drive quality traffic to add value to campaigns and ensure revenues remain high for the benefit of all involved.
Attribution opens up affiliate programme
One of the most controversial topics in affiliate marketing at the moment is attribution and awarding affiliates for their part in the customer purchasing journey. Attribution takes the affiliate model to the next stage, with multiple affiliates being rewarded for interacting with the users at different points of the sales funnel. It opens up an affiliate programme to valuable ‘interest-developing’ affiliates, who might otherwise not be interested in the affiliate model due to its acquisition based nature. Developed and set up correctly this model could prove invaluable for merchants who want to engage their user at different touch points, swaying them in the research phase and gaining branding. However attribution is going to be a huge move for publishers of successful affiliate sites who could find they are losing out on commission that they would now have to share with affiliates elsewhere in the pipeline.
This could have dramatic implications for key traffic drivers such as cashback sites and as such the viability of the model has been called into question. Over the next year one of the key challenges in the travel sector will be to discover whether this strategy can be used and how it can be used successfully.
Analysis of data is going to be key to this type of model and we have already started to see Travel merchants and publishers use data more effectively through personalisation. Personalisation is increasingly seen as a way to entice consumers into a sale. Social websites like Facebook, Twitter and, to a lesser extent, Pinterest provide endless sources of data that can be used to personalise deals as well as demographic/behavioural and retargeting.
Personalisation of the holiday
Making a holiday or a journey ‘yours’ is a key selling point with big advertising campaigns coming out from major travel retailers in support of this concept. Expedia’s brand new “Find Yours” campaign outlines that a holiday will mean very different things to different people and should be sold and treated accordingly. Further to this, British Airways has recently launched a scheme where staff use social media websites to gain pictures of people as well as record their preferences so each customer can be greeted and treated individually at every stage in their service to add that personal touch.
The Tradedoubler Travel Insight Group will continue to monitor these trends and developments to ensure that all our merchants and publishers are fully versed on the performance channel across the travel industry and can quickly react to new opportunities and recommendations as they arise.