Travel ecommerce has grown rapidly since the emergence of Expedia back in 1995. With the industry now at the point of saturation, it’s time to get savvy with your digital presence to ensure a bigger piece of a diminishing pie.
The Saturation Point
For almost a decade, the air, rail, and cruise sectors had seen unrivaled growth between 3 and 5% each year. However, over the last 12 years that has changed as search interest dropped by 26%. Yet, according to Hitwise, search engines continue to be the largest driver to travel websites. Together this paints a picture of a shrinking marketplace.
Whilst we are not seeing these sectors shrink astronomically, travel booking websites such as Expedia and Lastminute.com are rapidly growing and taking larger chunks of the ecommerce market.
As the market becomes more saturated, the only option to ensure you take a bigger piece of the pie, without overstretching and overspending, is intelligent advertising.
The scattered gun approach is no longer a viable option for marketers; you could quickly spend your entire budget with very little return. This approach guarantees you less of the market share whilst others take advantage of the numerous available targeting options.
Digital marketing today allows for such granular targeting that there is no reason any advertiser should be throwing money away on areas that are not leading to conversions. It is this campaign granularity that enables you to spend less for a bigger return.
Purchasing vs researching phase
Targeting by the purchasing or researching phase of the consumer journey may not seem like the easiest way of splitting out targeting in your campaigns as there is no audience list for this, but when you take a deeper look into the data you may find something interesting.
Whilst analysing paid search data for a leading train company, we uncovered some useful insights. On the surface, the conversion rate was only mildly affected by gender or age, but what really stood out was that mixed-use computers performed 14% worse.
A mixed-use computer is a computer used by multiple people, which means an age range or gender cannot be determined. These are often family desktops, or found in corporate offices.
As any good data scientist would do, we need to stop and ask ourselves: Why do mixed-use computers see lower conversion rates? Is it because these people are using the computer as a research tool prior to leaving home or work? Perhaps, they are only trying to find train times, or see if there are any delays. Whilst undoubtedly there are other causes at play, investigating in more detail can provide some interesting clues.
In this instance, we can see that device traffic peaks at different times, with desktop traffic being the preferred method during working hours. Mobile traffic, on the other hand, peaks after working hours. Here is where you need to be careful: conversion rates fall by 8% when comparing the working day (9am to 5pm), to the few hours when commuters are most likely making their way home (5pm to 7pm).
In cases like this, where an individual is maybe researching with no intent to purchase, (often found in domestic travel situations), being able to identify when people are likely to be in the researching phase can ensure that you are spending less and improving performance.
For the train company in our above example, consumers are researching daily when they are just about to leave for a journey, or currently on one. To effectively target their audience, we can increase bid multipliers for single-use systems and desktops during working hours, whilst reducing spend during commuter hours.
Seasonality plays a major role in international travel. By understanding the consumer’s behaviour, you can ensure you’re targeting people when they are in the right frame of mind.
If your goal is to drive sales, showing ads to people who are not looking to make a purchase is counterintuitive. However, unlike domestic travel, intent does not need to be immediate and the research phase can be incredibly valuable to future sales. Generally, you will see two peaks in the travel sector when looking at the top line: January, and June-August.
During the final quarter of the year, there is significant drop in traffic and purchases. This is predominately due to the shift in the consumer mindset to Christmas; with so many things to do, and money tight, it’s not the time to be planning that luxurious holiday to Tahiti. In January however; consumers start focusing on the next big event: the summer holidays.
Domestic seasonality is slightly different. The first thing to note is that train tickets can be bought online twelve weeks prior to travel, which means that tickets for Christmas Eve become available on the 2nd of October. Anyone looking to plan their journey to see loved ones over the festive period is likely to carry out their booking in the nine weeks from this date before prices spike.
The three weeks prior to the date of travel tend to be when prices increase. During this time we see higher traffic but a drop in conversions, as more and more people are checking train times but purchasing on the day at the station.
Stand out from the crowd
Paid search advertising is vitally important in ensuring you are capturing the right people. According to Hitwise, this channel currently contributes to 50% of the traffic received by travel websites. This means competition can be fierce, especially for generic terms such as, “book flights to Spain.”
But competing in this space can seem daunting, especially when up against brands with bigger budgets. The targeting options suggested above can help to reach the right person at the right time, but now you need to make your ads stand out.
On any digital channel, the messaging used in your ads is crucial in grabbing consumer attention. Creating a relevant, accurate, and personal message will improve click through rates as well as conversions.
Consider using the consumer’s location within the ad text. For instance, if a user in Derby searched for the term, “trains to London” the headline of the ad would read “Trains to London From Derby”.
We ran this exact test with a client on paid search, and it had a remarkable effect in differentiating us from the crowd of competing advertisers. Overall, we increased our CTR, and subsequently, our conversion rate increased.
The ways consumers access and purchase travel are continually evolving. With saturation reaching an industry breaking point, advertisers need to adapt or get crowded out. This is where intelligent data, and analysis comes in.
Data has the ability to tell us so much about consumer behavior. Beyond age, or gender, it tells us how users purchase travel according to seasonality, time of day, or device. It is this insight that can help an advertiser grab a bigger portion of industry market share and stay ahead of the pack. Intelligent data allows us to anticipate shifts in consumer behavior, stay on top of travel trends, and minimise budget spend while maximising our ROI. It is the key to targeting wisely and reaping the rewards of good campaign management.
Once you have structured your campaigns in this way, you can ensure you’re spending in the right areas, maximising user interactions, and increasing conversions.
Fred Maude is senior analyst at NMPi.