It’s Time for the Travel Industry to Take Flight

After an unprecedented year of turmoil, travel brands are preparing, and in many cases already starting, to ramp up their digital marketing efforts. The summer season is heating up competition in an advertising ecosystem that is very different  from the one these marketers left behind in the spring of 2020.

The overnight change in consumer demand was the first factor changing the game. While the biggest drop is well behind us and customers seem eager to book their holidays again, volatility remains high and volumes are still small.

“Flexibility is key, thus we have implemented as much automation as possible so we can change targeted destinations and creatives as efficiently and effectively as possible. Creative testing still is instrumental. However, with the changed volumes in conversions, we have shifted from scientific A/B testing towards more observational testing”, Nicolas Elshout Manager of Digital Media at TUI Belgium observes.

Same goes for destinations, as airlines have learned to react constantly to the changing situation.

“Our approach now is much more on a market-to-market basis, monitoring in- and external signals and any changes in topics that might influence travel demand, like travel restrictions”, Metten de Vries, Social Commerce team lead at KLM Royal Dutch Airlines says.

There Are Signs of Recovery in the Horizon

We have seen that the travel industry has been ramping up their advertising efforts and ad spend on the Smartly.io platform significantly since February 2021. As competition is heating up, so does the cost of advertising. CPM rates are not only back to pre-covid levels, but beyond. In 2021 alone, we have seen a 40% increase in CPM for travel advertisers. The rise has been steady, but clearly accelerating in the past two months.

“We are cautiously and slowly rolling out new campaigns that focus slightly more on prospecting, in which we are testing different content and trying to find out what message resonates most with the ‘Post-Covid traveler”, de Vries describes.

“We want  to be able to set and scale campaigns as quickly as needed. Creatives and targeting needs to be very flexible, making workflow automation and creative templates key. We also expect competition to be fierce when travel starts opening up again, thus we are thinking about how we can stand out as much as possible and,more than before, looking at new and engaging formats”, Elshout says.

Cruise lines are one of the hardest hit travel companies. As they are heavily dependent on regulations and rules across markets, they need to prepare for every possible scenario to get back to business.

“We have several plans on the shelf, but what we roll out will be entirely dependent on the developments in both travel demand and restrictions”, one cruise line marketing executive says. Another consideration is consumer sentiment. “We currently do focus group research on a monthly basis to determine consumer readiness and understand their expectations for safety”.

However, Much Has Changed

The advertising industry itself has gone through a lot of disruption in the past 12 months - changes in consumer tracking, a new setup for ad operations is a must-have. In addition, consumer behavior and online shopping and ad engagement models are shifting. All the while the pandemic still impacts the way travelers  plan and book trips.

“We try to adapt to the changes in travel demand as fast as possible, quickly launching campaigns whenever we see opportunities, and adjusting  our tone of voice with the customer’s state of mind. For large scale social advertising, we need to be patient, but at the same time we have seen that specific campaign messages can work really well - for example: campaigns with  our flexible rebooking policy”, de Vries comments.

One common theme that all travel advertisers brought up is dramatically longer  booking cycles. It’s not uncommon for a consumer to book a trip 12 months, even 24 months in advance, creating new opportunities to test upper-funnel tactics.

For the cruise industry, competition is tighter than ever as other areas of travel are now also experiencing longer booking cycles:

“Creative is key to differentiate, build credibility and preference and to inform our passengers”. As the recovery is only beginning, it’s not unrealistic to expect competition - and ad prices with it - to skyrocket in the coming months.

Just like we have seen different stages in the pandemic, we will definitely  see different stages in the recovery as well. To succeed in the new landscape, both social advertising volume and creatives need to transform and adapt constantly.