Travel ad spend takes off with predicted 36% growth in 2022

Travel brands get their mojo back

• Zenith’s Business Intelligence Travel report paints an upbeat picture of a resurgence in travel, expanding by 24% in 2021 across 13 key markets, including the UK, US and Germany.

• The pace will quicken further to 36% in 2022, before easing back to 19% in 2023, when it will finally recover all the ground lost during the pandemic.

Post-Covid ructions

• The positive projections do not mark a return to business as usual, with Zenith warning that travel brands must rebuild their relationships with consumers amid a collapse in business travel, mounting pollution fears and health concerns.

• This has prompted a major shift to digital, with travel brands upping their digital advertising spend from 63% in 2020 to 70% in 2023, driven by the rise of travel apps, vaccine passports and digital concierge services. By comparison advertisers as a whole currently allocate just 58% of budgets to digital.

• The travel sector now conducts 32% of sales by e-commerce versus 20% for retail as a whole.

• Travel advertisers further diverge from their peers by allocating 20% of their budgets to newspapers, magazines and out-of-home (OOH), substantially up on the 13% proportion for the average brand – although travel ad spending on print continues to shrink in parallel with circulations.

• By contrast, OOH spending is expected to rise by 6% annually between 2019 and 2023.

A brutal journey

• Travel advertising was decimated by the pandemic, shedding 46% of its value in 2020 versus a depreciation of the broader advertising market of just 4%.

• Quantifying this collapse, Zenith estimates that travel ad spending in the US fell from $18bn in 2019 to $9.7bn in 2020.

• Despite the recent uptick, travel ad spend remains 33% below its 2019 level this year, even as the ad market as a whole has recovered all ground lost to stand 7% ahead.

• It won’t be until 2023 when the travel sector belatedly beats 2019, when spending could reach $19.6bn.

Zenith says

• Ben Lukawski, global chief strategy officer at Zenith, said: “Travel was one of the earliest sectors to embrace digital as booking went online. Post-Covid, the best-performing brands will complete this transformation by making the total experience digital, from reducing form filling to contactless entry, removing nearly all possible friction from the experience.”

• Jonathan Barnard, head of forecasting at Zenith, added: “As travel begins to recover from the unprecedented drop in demand in 2020, brands are rebuilding their relationships with consumers, using digital technology to guide them at every stage. Online video, in particular, will play a key role in creating emotional connections with consumers, inviting them to take their first step on their digital journey.”

• Leading the international pack will be India and Russia, where Zenith anticipates travel ad spend to stand 31% and 21% respectively above 2019 levels.