Last year travel advertisers began to take steps to move their money online.
According to the European Interactive Advertising Authority’s Internet AdBarometer, travel advertisers planned to increase their online advertising budgets by 35% in 2006 – compared to an average planned increase of 21% (across consumer electronics, entertainment, automotive, FMCG and travel).
While this is positive for the online travel industry, this escalation still originates from a very small base. According to Nielsen Media Research’s 2005 AdDynamics study, the average travel advertiser only spent around 2% of their budget online. Other industries are diverting spend from a mix of media, but in travel the majority of this budget is being diverted from print advertising.
By the end of 2006 we saw several of the leading newspapers making serious investments in developing the travel areas of their business. The Times, The Daily Telegraph and The Guardian all relaunched their travel sites and the Daily Mail has announced plans to launch a travel section, TravelMail, this month.
Most of the sites are built on a ‘content plus search’ model, in which the newspapers will exploit their audience reach and unique content to drive traffic to existing players in the travel market, invariably through search and comparison. A desire to capture their slice of the valuable travel advertising revenue that is now shifting online is undoubtedly a strong motivating force.
In addition to media advertising revenue, many have also cited contextual advertising as a key component in further monetising their sites. This will open up more opportunities for travel advertisers to target consumers by advertising with companies such as Yahoo! Search Marketing, Google and MSN who provide these contextual ads.
Although the level of travel advertising revenue that is currently spent online is increasing, a vast chasm remains between the number of consumers who research and buy travel online and the share of ad spend. As travel is currently the e-commerce category that is most commonly purchased online, there is still enormous potential for further growth in online travel advertising.
The print media industry has highlighted the potential for growth in this sector, generating a 23% year-on-year increase in visits to travel sites from news and media. This makes them the seventh most popular industry supplying traffic to travel sites.
As the online audience diversifies, travel agencies will have more opportunities to provide a range of solutions for different audiences. While ‘content plus search’ will undoubtedly satisfy the demands of some researchers, other users are likely to adopt a community-led approach and look to wikis and technology mashups to satisfy their needs.
According to Nielsen//NetRatings, 83% of the UK Internet population used a web application last November and the adoption of Internet applications presents an array of opportunities for the travel industry. An early example of an interesting technology mashup was the tie-up with Yahoo! Messenger and WAYN.com.
Since March 2005 WAYN.com has grown from 45,000 members to nearly seven million from all over the world. WAYN.com recently received sizeable investment from leading names such as David Soskin and Brent Hoberman.
All signs point to further expansion and deeper engagement in 2007. (In 2006 75% of European surfers connected via broadband and 45% accessed the web daily). This all creates the right market conditions for user-generated content and social media innovations to take off, and it will be interesting to see if – having already adopted the model of a number of travel portals – the newspapers will also harness their audience to build on this model.
Tim Frankcom is general manager for Yahoo! Travel Europe