It needn’t be all doom and gloom for travel, says Google

The UK, like all major economic markets, is witnessing a rapid economic slowdown. Businesses are struggling where they once flourished, and consumer confidence and behaviours have changed.


This slowdown is very different to previous downturns – this time a growing percentage of the economy is digital.


Evidence suggests consumers’ use of the web to research purchases and find ways of saving money will accelerate during this time, and smart businesses can use targeted, efficient online advertising to take advantage of this and speed up in the slowdown.


Online is now very much a mass medium and despite the economic gloom, the online travel sector is proving remarkably resilient.


Online travel sales in the UK now account for around 30% of all travel transactions. According to Eye for Travel, last year pan-European online travel sales grew 24% and now account for €49 billion in revenue. 


The latest monthly figures suggest the public’s appetite for online purchases is not only robust but continuing to grow. People are turning to the web to find the lowest prices available on thousands of different products and services.


While the British Retail Consortium reported a fall in high-street shop sales of 0.9% in July compared to the previous month, online sales grew over the same period by 11.3%.


The slowdown is likely to accelerate consumer use of the web, where consumers will look for bargains, share views and search more rigorously for the best available value.


Consumers are likely to undertake a greater number of searches in pursuit of the best deals for what amounts to one of their biggest annual expenditures.


The growth of e-commerce shows no signs of slowing. Almost two-thirds (41 million) of the UK population is connected to the internet, with the number expected to rise to 70% by 2012. In the UK, we spend more time online than any other country in Europe – the average Brit spends 33 hours a month online.


The importance of the web for all travel purchases is badly underestimated. In addition to the 30% of travel transactions taking place online, there are still many consumers who don’t yet feel fully comfortable buying online but increasingly use the internet to research products, read reviews and compare prices, taking their experiences with them into high-street agencies or completing travel purchases via call centres.


In the first quarter of this year 41% of the UK population undertook a travel search. The web is the first place the vast majority of consumers go to form opinions about which brands to buy. This year, a third of British adults planned to conduct all of their holiday planning (including bookings) online – that figure is likely to rise in 2009.


With less disposable income to spend on leisure and an increasing wealth of information and content found online, staying in is the new going out. Having more time and less money means families are even more determined to spend wisely and will search more in the hope of finding the best deals. With the cost of web access falling and its speed accelerating, it is going to be an increasingly powerful tool for users.


However, consumers aren’t alone in searching for value, businesses are now working more resourcefully to understand how they can improve the efficiency of their online spend.


In the near future many travel businesses will be forced to take difficult decisions – questioning whether to cut marketing spend, reduce headcount or decrease capacity in order to remain competitive. In previous downturns the marketing department has often been first to feel the pinch.


September’s Bellwether report found only 12% of UK companies reporting an upward revision of marketing budgets in the third quarter, while 35% reduced ad spend. But how do we know if cutting marketing spend is sensible during tougher economic times?


Paid search isn’t a traditional advertising medium; in fact at Google we regard ourselves as a technology company. We aim to build applications for the internet that scale and support businesses in driving efficient and cost-effective distribution. As a consequence we like to measure and improve. We like maths and proving that things work, or don’t work, with cold hard numbers.


CEOs and CFOs are rightfully beginning to ask questions about the efficacy of all types of advertising investment.


For example, what is the return we are getting from the millions invested in TV ads? What is the right amount to spend on a local press campaign? How do we really know the impact these advertisements are having on sales?


Here, the Internet comes into its own, allowing brands to engage with consumers, drive profitable online sales, influence consumers’ purchase decisions and impact offline sales – while being extremely measurable to boot.


With search marketing and online advertising, businesses know precisely how much it costs to acquire a customer, thus removing the guesswork around marketing spend.


Search marketing not only gives greater flexibility, but enables businesses to target consumers at a time when they are actively searching for a product or service.


It allows them to pay only for quantifiable results and to monitor and control costs. Online advertising is not an art form, but a science.


This downturn suggests times ahead may be challenging for most businesses. It is also apparent that businesses that fail to respond to these evolving trends in consumer behaviour and the resulting opportunities risk falling further behind their competitors.


Organisations that do invest in their online presence will be those that speed up despite the slowdown, and are likely to emerge as stronger, more resilient businesses.



Robin Frewer is industry leader for travel at Google UK.

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