However, with the distribution of vaccines on the rise, many travel decision makers are forecasting a rebound in ad spending with the prospect of real growth in 2022, according to a new study from Sojern.
The report, How Travel Marketers Are Activating Digital Advertising in 2021, surveyed more than 300 senior travel decision makers across Europe, Asia Pacific, North America and the Middle East and Africa to understand how COVID-19 has impacted budget, ad spend, allocation by channel and how advertisers are thinking about the future of ad tech.
Spending strategy
According to the report, developed alongside Worldwide Business Research Insights, 56% of travel marketers agree that the current online environment is ideal for direct response campaigns.
Travelers are booking directly with providers because they can find clear cancelation and refund policies. With online travel agencies, on the other hand, travelers have often been frustrated by confusing cancellation policies amid the pandemic.
Overall, 88% of companies have increased or kept their digital advertising strategy budget the same since COVID-19, and 87% of companies tightened spending on brand campaigns and increased spending on performance campaigns in 2020.
In Europe, nearly 49% of travel organizations are dedicating from 26% to 49% of their overall marketing budget to digital advertising, while in Asia Pacific, 44% of travel brands are dedicating from 26% to 49% of their overall marketing budget to digital advertising.
In North America, 50% of marketers are dedicating from 26% to 49% of their overall marketing budget to digital advertising, and 55% of marketers in the Middle East and Africa are budgeting the same.
As for their digital advertising performance, 56% of respondents say they are “satisfied,” while 40% say they are “highly satisfied.”
Travel marketers who expressed dissatisfaction with their digital advertising performance cite a number of challenges including developing unique content, gathering and using customer insights, measuring advertising effectiveness and improving personalization.
Meanwhile, challenges to performance optimization include fraud, cyber threats, a drop in demand, tight budgets and lack of insights into key performance indicators.
“Time spent on ads” is the most commonly used metric for measuring campaign success, cited by 23% of European respondents, 22% of Asia Pacific respondents, 28% of North American respondents and 25% of Middle East and Africa respondents. “Number of views” was also highly important to marketers from all regions.
Although marketers are tightening spend on brand advertising, they still find value in branding as a way to build trust and loyalty with consumers. According to the report, 13% of travel marketers say they spend the majority of their budget on branding, or that their budget is evenly split between branding and performance.
Future tech
According to Sojern vice president of product Dave Goulden says, connected TV (CTV) “is a great option for brands trying to reach engaged travelers with video advertising.
“Streaming services are becoming increasingly popular and, as more consumers cut the cord, CTV has become the industry’s answer to increasing brand awareness and driving consumer engagement.”
Of those surveyed, 14% agree that marketers have an unprecedented opportunity to reach new customers at a lower cost and with more control than they could expect from traditional broadcast television.
Yet despite the benefits of CTV and video, uptake remains relatively low. In Europe, 78% of travel marketers allocate 10% or less of their budget for CTV and video. In Asia Pacific, 43% of marketers allocate 10% or less of their budget, and 74% of marketers in North America and 45% of marketers in the Middle East and Africa allocate 10% or less of their budget for CTV and video.
Looking ahead, travel marketers say they plan to increase their usage of machine learning and artificial intelligence technology in 2021 and 2022.
In fact, 84% of respondents say machine learning and AI for personalization is a high or very high priority across channels in their company.
However, using machine learning and AI for personalization comes with unique challenges, including the high costs of maintaining records, technology risks and spending on technology upgrades.
Many travel brands are delaying implementation of the technology and are instead focusing on increasing sales through traditional marketing techniques.
Overall, 68% of travel companies are optimistic and believe that budget or ad spend will go back to pre-COVID-19 levels.
Of those surveyed, 37.5% of travel marketers believe that budget and spend will return to pre-COVID levels before 2025. Meanwhile, 44.9% say it will occur between 2025 and 2030, while 17.6% believe pre-COVID spend levels will return after 2030.
BY JILL MENZE
