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It’s easy for Online Travel Agencies (OTAs) to focus on the major spikes in revenue that they experience over seasonal events like Spring Break and Christmas, but looking solely at peak customer purchasing times may render online travel advertisers short-sighted. Studies researched and led by eMarketer over the past year suggest that there are many investment and ROI opportunities available to companies who zoom out to see the bigger picture.
How are trends like mobile usage, local targeting and traveler behavior around ancillary services affecting the travel industry? Here are a few key takeways from a recent eMarketer webinar.
The online gaming industry’s current love affair with app install ads is an obvious example of how mobile is shaping marketing strategy, but the travel vertical is also seeing some heavy shifts, especially in terms of sales, ad spend and customer service.
Over the past few years, travelers have been using smartphones and tablets to browse destinations and offers, ultimately making a purchase on desktop. But eMarketer predicts that travel reservations on mobile will begin to squeeze out desktop in 2015, due to several factors:
Not only are people changing how they complete travel bookings – they’re also changing when they book. Before mobile took center stage, travelers would reserve flights, hotels, car rentals and activities far in advance, taking the time to research the local flavor of a destination and build out an itinerary. Now travelers are booking tours and choosing restaurants on the spot, using last minute deal companies like Hotel Tonight for accommodations.
From the eMarketer chart below, you can see that mobile local ad spending is predicted to shoot up 54% over the next year, whereas budgeting for search remains nearly static.
Primary reasons why online travel companies will be investing so heavily in local advertising:
Many frequent flyers were not pleased when JetBlue recently announced it would reduce leg room in certain planes and start charging for checked bags. The truth is that travelers have grown used to paying for “extras,” and people are disappointed by this move because JetBlue was an exception rather than the rule.
Selling amenities that used to come standard (like free checked bags and hotel wifi) and amenities that offer something “extra” (like increased leg room and additional checked bags) can be extremely profitable to OTAs, particularly if they are offered when a traveler needs them most. As you can see from the graph above, customers are willing to pay for comfort.
But how likely is it that airline passengers will use mobile devices to purchase ancillary services? According to SITA’s 2013 Passenger IT Trends Survey, travelers worldwide were 47% likely to “definitely use” mobile for booking changes, and 39% likely to “definitely use” mobile to purchase ancillary services (with 28% at “may use”).
The combination of passengers’ willingness to pay for extras, mobile’s ability to present deals based on location, and real-time bidding’s ability to serve up timely offers should be irresistible to travel advertisers looking to make an impact.
Ready to boost your marketing efforts in 2015? Read Passport to Profit: The Massive Mobile Opportunity for Travel Marketers to learn how.