E marketer the_us_travel_industry_2013-digital_ad_spending_forecast_and_key_trends (1)

THE USTRAVEL
INDUSTRY
2013
Digital Ad Spending Forecast
and Key Trends
AUGUST 2013
Victoria Petrock
Contributors: Christine Bittar,Tobi Elkin, Daniel Munns, Martín Utreras, Stephanie Wharton
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eMarketer for iPad

THE US TRAVEL INDUSTRY 2013: DIGITAL AD SPENDING FORECAST AND KEY TRENDS ©2013 EMARKETER INC. ALL RIGHTS RESERVED 2
CONTENTS
2 Executive Summary
3 Digital Ad Spending Forecast
5 Mobile Investments Accelerate
8 Direct Response vs. Branding: A 73-27 Split
14 Data and Tech Underpin Multichannel Push
16 Conclusions
16 eMarketer Interviews
17 Related eMarketer Reports
17 Related Links
17 Editorial and Production Contributors
EXECUTIVE SUMMARY
The US travel industry’s advertising spending in paid
digital media will hit $3.35 billion in 2013 and will
rise to $4.96 billion by 2017, for a five-year compound
annual growth rate (CAGR) of 11.0%.While growth
has slowed from a post-recession high of 30.4%
in 2011, travel’s share of digital spending relative
to other industries will remain stable during the
forecast period.
This year, eMarketer has taken a deeper dive into digital
spending to determine how much marketers are investing
in ad tactics that are primarily focused on obtaining sales
and/or leads vs. those designed to drive favorable opinion
about a brand.
eMarketer estimates that marketers in the travel
industry—led by online travel agencies (OTAs), but
also including hotels, airlines, cruise lines, rental car
companies, destination marketing organizations, tour
operators and others—will invest 73% of their paid digital
dollars in direct-response efforts this year. Brand-focused
campaigns will make up the remaining 27%. Search and
display will still command the largest chunks of digital
spending across the category, but growth will come in
newer hybrid formats such as remarketing. Spending
on mobile, video, social and native advertising is also
expected to increase.
KEY QUESTIONS
■■ How much will travel marketers spend on paid
digital advertising in the next five years?
■■ How much of their digital budgets are travel
marketers spending on direct-response vs.
branding initiatives?
■■ How are online and mobile platforms changing the
way the travel industry approaches advertising?
billions, % of total digital ad spending and % change
US Travel Industry Digital Ad Spending, 2011-2017
2011
$2.40
7.5%
30.4%
2012
$2.94
8.0%
22.7%
2013
$3.35
8.0%
14.0%
2014
$3.91
8.3%
16.6%
2015
$4.31
8.3%
10.2%
2016
$4.70
8.3%
9.0%
2017
$4.96
8.2%
5.6%
Digital ad spending % of total digital ad spending % change
Note: CAGR (2012-2017)=11.0%; includes advertising that appears on
desktop and laptop computers as well as mobile phones and tablets, and
includes all the various formats of advertising on those platforms; data
through 2012 is derived from IAB/PwC data
Source: eMarketer, June 2013
157365 www.eMarketer.com

DIGITAL AD SPENDING FORECAST
The US travel industry will invest $3.35 billion in paid
online and mobile media advertising in 2013.This
figure will grow to $4.96 billion by 2017, for a five-year
CAGR of 11.0%.
While a post-recession surge in growth has begun to
moderate, the travel industry’s share of digital spending,
relative to other industries, will remain stable during the
forecast period, driven by increased competition among
OTAs, supplier pushes for direct distribution (that is,
booking through supplier websites rather than through
OTAs and other intermediaries) and an increasingly
complex search environment. Marketers are also upping
their use of online and mobile data to retarget consumers
across multiple screens and create more personal,
one-to-one connections.
billions, % of total digital ad spending and % change
US Travel Industry Digital Ad Spending, 2011-2017
2011
$2.40
7.5%
30.4%
2012
$2.94
8.0%
22.7%
2013
$3.35
8.0%
14.0%
2014
$3.91
8.3%
16.6%
2015
$4.31
8.3%
10.2%
2016
$4.70
8.3%
9.0%
2017
$4.96
8.2%
5.6%
Digital ad spending % of total digital ad spending % change
Note: CAGR (2012-2017)=11.0%; includes advertising that appears on
desktop and laptop computers as well as mobile phones and tablets, and
includes all the various formats of advertising on those platforms; data
through 2012 is derived from IAB/PwC data
Among the industries tracked by eMarketer, travel is
currently the sixth-highest spender in the US when it
comes to paid online and mobile media.The industry’s
compound annual growth in digital ad spending is
expected to remain slightly above average, at 11.0%,
during eMarketer’s forecast period.
billions
US Digital Ad Spending, by Industry, 2012-2017
Retail
Financial services
Automotive
Telecom
CPG & consumer
products
Travel
Computing products &
consumer electronics
Media
Entertainment
Healthcare & pharma
Other
Total
2012
$8.2
$4.6
$4.3
$4.3
$3.0
$2.9
$2.8
$1.8
$1.7
$1.1
$2.1
$36.8
2013
$9.4
$5.2
$5.1
$4.8
$3.5
$3.4
$3.2
$2.2
$1.9
$1.2
$2.2
$41.9
2014
$10.4
$5.9
$5.8
$5.3
$4.0
$3.9
$3.6
$2.6
$2.2
$1.2
$2.3
$47.2
2015
$11.5
$6.4
$6.5
$5.8
$4.4
$4.3
$4.0
$3.0
$2.5
$1.3
$2.3
$52.0
2016
$12.5
$6.9
$7.2
$6.2
$4.9
$4.7
$4.3
$3.3
$2.7
$1.4
$2.5
$56.6
2017
$13.3
$7.4
$7.8
$6.6
$5.3
$5.0
$4.6
$3.5
$3.0
$1.5
$2.6
$60.5
CAGR
(2012-
2017)
10.2%
9.9%
12.8%
8.9%
12.3%
11.0%
10.2%
14.2%
11.9%
5.6%
4.8%
10.5%
Note: includes advertising that appears on desktop and laptop computers
as well as mobile phones and tablets, and includes all the various formats
of advertising on those platforms; data through 2012 is derived from
IAB/PwC data; numbers may not add up to total due to rounding
eMarketer also expects the travel industry’s share of the
total US digital advertising pie to rise slightly, from 8.0%
in 2013 to 8.2% in 2017.
% of total
US Digital Ad Spending Share, by Industry, 2011-2017
Retail
Financial services
Automotive
Telecom
CPG & consumer
products
Travel
Computing products &
consumer electronics
Media
Entertainment
Healthcare & pharma
Other
2011
22.4%
12.6%
11.3%
12.3%
7.8%
7.5%
7.8%
4.5%
4.4%
3.2%
6.2%
2012
22.3%
12.5%
11.6%
11.7%
8.1%
8.0%
7.7%
4.9%
4.6%
3.0%
5.6%
2013
22.3%
12.4%
12.1%
11.4%
8.3%
8.0%
7.6%
5.3%
4.6%
2.8%
5.2%
2014
22.1%
12.4%
12.3%
11.2%
8.4%
8.3%
7.6%
5.6%
4.7%
2.6%
4.8%
2015
22.1%
12.3%
12.5%
11.1%
8.5%
8.3%
7.6%
5.8%
4.8%
2.5%
4.5%
2016
22.0%
12.2%
12.7%
11.0%
8.7%
8.3%
7.6%
5.9%
4.8%
2.4%
4.4%
2017
22.0%
12.2%
12.9%
10.9%
8.8%
8.2%
7.6%
5.8%
4.9%
2.4%
4.3%
of advertising on those platforms; data through 2012 is derived from
IAB/PwC data; numbers may not add up to 100% due to rounding

eMarketer’s US Digital Ad Spending Forecasts:
Scope and Definitions
eMarketer’s US digital ad spending estimates for 2012
and the years prior are benchmarked against data
from the Interactive Advertising Bureau (IAB) and
PricewaterhouseCoopers (PwC); estimates after 2012
are eMarketer’s own projections. eMarketer’s estimates
are based on the analysis of reported revenues from
major digital ad selling companies; estimates from other
research firms; consumer internet usage trends; and
eMarketer interviews with ad agency executives, brands,
digital ad publishers and other industry leaders.
eMarketer’s digital ad spending figures include advertising
that appears on desktop and laptop computers, as well as
on mobile phones and tablets, and include all the various
formats of advertising on those platforms: banner ads
(static display), classified ads, email (embedded ads only),
mobile messaging (SMS, MMS and peer-to-peer [P2P]
messaging), rich media, search ads (including contextual
text links, paid inclusion, paid listings and search engine
optimization [SEO]), sponsorships, lead generation
(referrals) and video (including in-banner, in-stream and
in-text).
eMarketer based our breakouts of direct-response vs.
branding spending on overall estimates of spending by
media from the IAB; analysis of third-party travel industry
ad spending data; and interviews with travel brand
marketers, agency media planners and other industry
marketing strategists.
ONLINETRAVELAGENCIES OUTSPEND
THE PACK
Paid ad spending in the travel industry is currently
dominated by OTAs—notably Priceline.com, Expedia
and Orbitz—which make the largest US and global
ad investments. (Privately heldTravelocity spends
significantly less.) According to estimates from Mark
Mahaney, an RBC Capital Markets analyst, that were
published in a March 2013 Bloomberg article, Priceline
alone—fueled by its Booking.com unit—spent
$1.27 billion on internet advertising worldwide in 2012, up
from $919.2 million in 2011 and $552.1 million in 2010.
Priceline’s surge, according to RBC calculations, put the
company ahead of Expedia, which spent $870 million on
overall global advertising in 2012. Priceline, Mahaney said,
has tripled spending in the past three years in the midst
of aggressive international expansion.
Spending by Orbitz is lower but not insignificant.
Investment bank Lazard Capital Markets estimated that
the OTA would invest $260 million in global advertising
this year, according to a May 2013 article in Barron’s.
Despite these large outlays, no travel firm alone spent
enough to make Kantar Media’s annual list of the 10
highest-spending companies in the US. Likewise, though
Kantar reported that travel expenditures for online display
advertising were “robust” in Q4 2012, travel spending in
all media was not significant enough to make the firm’s
2012 top 10 list of product categories with the highest
US ad spending.This was because the travel industry
is fragmented, with a higher concentration of smaller
players than some other higher-spending industries.
And because Kantar’s online ad spending figures do not
include search advertising—a significant component
of online travel industry spending—they are likely an
underestimate of the sector’s true online investment.
DIGITAL STAYSTHE COURSE
For many travel marketers, digital spending continues to
grow as a percentage of their total advertising budget.
“The digital world is not slowing down,” said RobTorres,
managing director of travel at Google. “Growth is slowing
a bit as the market matures, but I don’t see any decline,
especially in 2013.”
Conversations earlier this year with a variety of
high-level marketers—representing travel brands and the
agencies that work with them—revealed that industry
firms spend an average of 40% to 50% of their paid ad
budget on digital media. However, they noted, there
are wide variations depending on the type of advertiser.
Digitally native companies, including OTAs,TripAdvisor,
aggregators and metasearch providers, direct the vast
majority of their ad dollars to digital; smaller organizations,
such as destination marketers (DMOs), tend to earmark
much less. Larger hotel companies and airlines usually fall
somewhere in the middle.
“Digital is an extremely important component of our
total paid advertising, and each year it seems to become
increasingly more important as consumer behavior
changes,” said Flo Lugli, executive vice president of
marketing at Wyndham Hotel Group. “Right now, we
average about 50% digital across all our brands, but some
brands are as high as 80%.”

US travel marketers appear far more bullish on digital
media than on traditional tactics. A fall 2012 study from
Advertiser Perceptions asked industry ad and marketing
execs whether they planned to increase or decrease their
ad spending in specific media in the next 12 months and
then calculated the difference between percentages.The
study’s “optimism index” showed high numbers for most
digital media, indicating high intent to boost spending.
optimism index*
Travel Ad Spending Outlook According to US
Ad/Marketing Executives, by Media, Fall 2012
Mobile 59
Digital video 52
Digital display 44
Digital search 41
Advanced/interactive TV30
Cable TV 15
Broadcast TV3
Magazines2
National newspapers-30
Note: *difference between the percent of respondents increasing and
those decreasing their ad spending in the next 12 months
Source: Advertiser Perceptions, "Advertiser Optimism Index Advertiser
Intelligence Reports (AIR) Wave 18, Fall 2012," March 14, 2013
Positive—though lower—scores for cableTV, broadcastTV
and magazines also indicated a continued role for offline
media. “In the past five years, we’ve seen double-digit
growth in our share of digital advertising as a percentage
of total advertising,” said Felipe Carreras, senior manager
of ecommerce at Best Western International. “We’ve
shifted our focus to be more online without taking our eye
off the value and importance of traditional advertising.”
MOBILE INVESTMENTS
ACCELERATE
Travel-related mobile use continues to rise at a
healthy pace. Not only do internet users go online
to research and book travel, they make fluid use
of tablets and smartphones during the purchase
cycle, often switching back and forth among PCs,
smartphones and tablets.
Paid mobile advertising is similarly growing quickly. A
study fromThe Search Agency found that between
Q1 2012 and Q1 2013, the majority of US travel and
leisure paid search clicks came from PC searches, but the
proportion from mobile devices had risen fairly steadily.
% of total
US Travel and Leisure Paid Search Click Share,
by Device, Q1 2012-Q1 2013
Desktop Tablet Smartphone
Note: numbers may not add up to 100% due to rounding
Source: The Search Agency, "State of Paid Search Report - Q1 2013,"
April 18, 2013
Q1 2012
87.1% 9.0%
3.9%
Q2 2012
84.3% 11.0%
4.7%
Q3 2012
82.3% 12.3%
5.3%
Q4 2012
82.9% 12.7%
4.4%
Q1 2013
76.8% 16.7%
6.5%

The Mobile Marketing Association (MMA) predicted that
“accommodation and food services marketers” would
collectively spend $281 million on US mobile marketing in
2013, up 52% from the $181 million they spent in 2012.
The study also estimated that spending would grow
another 82% by 2015.
millions
US Mobile Marketing Spending, by Industry, 2010-2015
Finance, insurance,
real estate
Retail trade—other
Manufacturing—other
Information
Professional, scientific
and business services
Manufacturing
—consumer
packaged goods
Retail trade
—consumer
packaged goods
Government
Transportation
and warehousing
Wholesale trade
Accommodation
and food services
Healthcare and
social assistance
Resources (agriculture,
mining, utilities,
construction)
Educational services
Arts, museums, sports
and recreation
Other
Total
2010
$470
$397
$269
$240
$152
$139
$107
$116
$93
$72
$68
$56
$42
$20
$17
$145
$2,405
2011
$784
$648
$471
$389
$245
$227
$171
$179
$156
$119
$110
$95
$74
$36
$27
$227
$3,957
2012
$1,332
$1,082
$842
$648
$407
$382
$281
$294
$266
$202
$181
$164
$132
$64
$44
$371
$6,693
2013
$2,080
$1,676
$1,373
$991
$632
$597
$433
$432
$422
$322
$281
$265
$218
$105
$67
$562
$10,456
2014
$3,032
$2,425
$2,023
$1,401
$903
$867
$625
$622
$612
$473
$403
$396
$323
$156
$95
$807
$15,162
2015
$4,017
$3,164
$2,691
$1,778
$1,163
$1,123
$804
$771
$814
$630
$512
$539
$446
$204
$120
$1,028
$19,806
Note: includes mobile media advertising, mobile-enhanced traditional
advertising and mobile CRM; numbers may not add up to total due to
rounding
Source: Mobile Marketing Association (MMA) and mLightenment, "Mobile
Marketing Economic Impact Study" in partnership with IHS Global Insight,
May 9, 2013
Though the MMA’s definition of marketing includes more
than just paid advertising, and the organization includes a
narrower definition of the industry than does eMarketer,
the numbers still serve to illustrate the massive
investment hospitality companies are making—and the
future potential they envision—in the mobile platform.
Tata Consultancy Services projected that by 2015, 50.0%
of North American airlines’ (up from 27.3% in 2012)
and 47.8% of the region’s travel, hospitality and leisure
firms’ (up from 29.1% in 2012) marketing campaigns
would be designed exclusively for mobile consumers.
These industries were second and third only to telecom
advertisers in the projected rankings.
Percent of Marketing Campaigns Designed Exclusively
for Mobile Consumers According to Large Companies
in North America, by Industry, 2012 vs. 2015
Projected
(2015)
Telecom services 51.8%
Travel, hospitality and leisure 47.8%
Airlines 50.0%
Automotive manufacturing 44.3%
Energy and utilities 36.5%
Retail 41.5%
Industrial manufacturing 36.5%
Media, entertainment and sports 35.8%
Computer (hardware and software) 32.9%
Government (federal, state, local) 35.0%
Banking/ﬁnancial services/insurance/
private wealth management
34.1%
Transportation logistics 31.2%
Consumer products manufacturing
(food, beverages and durables)
33.3%
Healthcare services 32.7%
Pharmaceuticals 29.1%
Other 25.1%
Average
Current
(2012)
35.0%
29.1%
27.3%
27.1%
26.3%
23.2%
20.9%
20.0%
19.9%
18.9%
18.0%
17.3%
17.2%
16.3%
15.0%
13.4%
21.4% 36.9%
Source: Tata Consultancy Services, "The New Digital Mobile Consumer:
How Large Companies Are Responding" conducted by Research Now,
Sep 26, 2012
Mobile advertising in the travel industry has already seen
enormous growth, both in the US and around the world.
Millennial Media reported that travel industry advertising
on its worldwide network grew 495% year over year in
2012 and accounted for 9% of its mobile campaigns.

% change vs. prior year
Leading Industries Worldwide, Ranked by Mobile Ad
Spending Growth, 2012
Government services
860%
Employment
523%
Travel
495%
Personal & home services
461%
Health: ﬁtness & wellness
281%
Energy & power
265%
CPG/FMCG
235%
Entertainment
224%
Automotive
193%
Telecommunications
143%
Retail & restaurants
106%
Real estate
103%
Note: based on campaigns on Millennial Media's network
Source: Millennial Media, "Scorecard for Mobile Advertising Reach and
Targeting (SMART)," March 12, 2013
Though mobile ad opportunities are still more limited
than those on the desktop, they are often more effective
because advertisers can provide unique options to
on-the-go customers who make activities like booking
travel more convenient. For example, when Wyndham
shifted a “significant portion” of its ad budget to mobile
this year, Lugli said the hotel company saw success from
adding trackable click-to-call functionality to its mobile ads
and same-day booking capabilities to its mobile site.
In an earlier study, Millennial Media also found that a
higher-than-average number of travel industry mobile
campaigns were focused on driving app downloads.This
tracks with insights from other industry marketers, who
said their mobile campaigns had been focused not only
on the research and booking phases of travel planning,
but also on encouraging app usage. “This year, we have
increased our mobile marketing and are spending a good
amount on driving mobile downloads for our app, which is
something that at this time last year we really weren’t
doing,” said Jon Guljord, senior director of marketing
operations at Expedia. “We believe that there’s good
long-term value in doing it and are spending more
on mobile downloads and mobile marketing than we
have before.”

DIRECT RESPONSE
VS. BRANDING: A 73-27 SPLIT
This year, eMarketer has taken a closer look at paid
digital spending in the US to determine how much
marketers in vertical industries are investing in ad
tactics primarily focused on obtaining sales or leads,
compared to those designed to drive favorable
opinion about a brand. As a result of this analysis,
eMarketer estimates that the US travel industry this
year will spend 73% of its digital advertising dollars—
or about $2.45 billion—on direct-response tactics.
eMarketer includes online and mobile paid search,
classifieds, online directories and paid ads embedded
in email messages in our definition of direct response.
billions and % of total
US Travel Industry Digital Ad Spending, by Objective,
2013
Direct response*
$2.45 (73%)
Branding**
$0.91 (27%)
of advertising on those platforms; *includes classiﬁeds & directories, email,
lead generation, mobile messaging (SMS, MMS and P2P messaging) and
search; **includes banner ads, rich media, sponsorships and video
Total=$3.35
The remaining 27%, or $910 million, will be invested
in brand-focused digital formats, including online and
mobile banner ads, rich media, online video, paid social
placements, in-game ads, content sponsorships and
native ads.
TRAVEL SEARCH POISED FOR CHANGE
Search is a critical discovery tool for travel research and
booking, consistently proving to be one of the most
influential sources in purchase decision-making. “Our
research last year found that 85% of people begin travel
research through a search,” Google’sTorres said. An
October 2012 survey of leisure travelers worldwide from
Text100 found that search was the top online source used
to choose a travel destination.
% of respondents
Online Sources Used to Choose a Travel Destination
According to Leisure Travelers* Worldwide, Oct 2012
Internet search 55%
Individual provider websites 49%
Online travel sites 46%
Internet reviews 44%
Tourist board websites 41%
Online travel forums 37%
Facebook 27%
Deal sites 26%
YouTube/Vimeo 24%
Pinterest 22%
Twitter 21%
Note: *traveled for leisure purposes in the past 12 months or intend to do
so in the next 12 months
Source: Text100, "Digital Index: Travel & Tourism Study" conducted by
Redshift Research, Nov 28, 2012
Search-engine marketing is the backbone of the travel
industry’s digital direct-response efforts, with online and
mobile paid search and SEO making up a large segment
of many travel advertisers’ budgets. “Search makes up
the majority of spending” for travel marketers, said Neeraj
Kochhar, managing director at digital marketing agency
Reprise Media. “It’s a core foundational aspect of the
media plan.”

An analysis of US paid search spending compiled by
AdGooroo found that in Q3 2012 alone, travel advertisers
spent nearly $200 million on online search advertising on
Google AdWords and $27.89 million onYahoo! Bing.
millions
US Paid Search Ad Spending, by Search Engine
and Industry, Q3 2012
AdWords Yahoo! Bing
Shopping and classiﬁed $497.74
Financial services $418.82
Computer and internet $305.97
Business $220.42
Education $201.39
Travel $199.42
$56.05
$81.01
$42.95
$18.31
$17.50
$27.89
Note: PC data only, excludes searches via mobile devices
Source: AdGooroo, "Yahoo! Bing PPC Performance Metrics" What Search
Marketers Need to Know About 'The Other Search Engine'," March 19, 2013
Not surprisingly, OTAs and their subsidiaries are among
the biggest search spenders in the US. According to the
Bloomberg article that analyzed ad spending by top OTAs,
these online firms spend the majority of their digital ad
dollars on search. “Even as social-networking services
Facebook Inc. andTwitter Inc. capture a widening share
of the web-advertising market, the top online travel
agents still choose to place most of their ads on search
sites, where consumers can quickly compare prices
and complete a transaction in a matter of clicks,” the
article said.
And RBC Capital Markets’ Mahaney noted that Priceline
spent about 90% of its online ad budget on Google
last year. “One of the secrets to Priceline’s success
has been its ability to manage search campaigns,” he
told Bloomberg. “There is a major new marketing war
going on between Priceline and Expedia, and Google is
the beneficiary.”
An analysis of the top 10 US travel industry advertisers,
based on pay-per-click impressions on AdWords, revealed
that all of the top search advertisers in 2012 were indeed
online companies, according to AdGooroo. “With the
vast majority of travel bookings now taking place online,
travel is a highly competitive category for paid search,” the
company said in a May 2013 blog post.
millions
Top 10 US Travel Industry Advertisers, Ranked by
PPC-Generated Impressions on AdWords in the US,
2012
1. KAYAK 883
2. Priceline.com 699
3. Orbitz 670
4. TripAdvisor 663
5. Cheapoair 629
6. Expedia 595
7. Booking.com 538
8. Travelzoo.com 469
9. Bookingbuddy.com 353
10. Hotels.com 349
Note: excludes searches via mobile devices
Source: AdGooroo as cited in company blog, May 21, 2013
A snapshot of Google search advertising from the same
time period, compiled by WordStream, revealed that the
travel industry was second only to financial services in its
Google AdWords investments. Google served 345 million
travel-related search ad impressions daily during Q3 2012,
which received 16.80 million clicks. Collectively, they had
a 4.88% clickthrough rate (CTR) and a 29-cent cost per
click.The analysis revealed that that the travel industry
had the second-highest CTR for search, but one of the
lowest costs per click (CPCs) and the lowest conversion
rate—defined by Wordstream as sales, leads generated
and other actions—of all industries studied.
Travel Industry Google Advertising Metrics, Q3 2012
Metrics
Ad impressions (millions)
Clickthrough rate
Number of clicks (millions)
Cost per click
Top 5 advertisers
1. Expedia
2. Hotels.com
3. Booking.com
4. Priceline.com
5. KAYAKConversion rate
Completed sales* (thousands)
Google
search
345
4.88%
16.80
$0.29
1.45%
244
Google
display
network
2,140
0.18%
3.89
$0.28
2.99%
116
Note: *includes all conversions, including sales, lead generation, etc.
Source: WordStream as cited by Search Engine Watch, Oct 26, 2012

AdGooroo used a different methodology to assess
cross-industry search performance during the same
time period. While AdGooroo’s calculations differed from
Wordstream’s, they similarly indicated high CTRs and low
CPCs relative to other industries.Travel had the highest
CTR on both Google AdWords (4.14%) andYahoo! Bing
(1.27%), while CPCs were among the least expensive
(83 cents and 64 cents, respectively). Findings from both
studies are consistent with the peripatetic nature of travel
research and the likelihood that consumers may explore a
wide range of options—and click on a higher-than-average
number of ads—before committing to a purchase.
Search Becomes More Competitive
During the past several years, travel search has
undergone significant changes.The entire travel search
landscape is evolving to accommodate new paid search
products, new pricing models and new formats—
including metasearch, social search, mobile and local.
While OTAs and suppliers—including airlines and hotels—
have long been mired in intense competition for the same
customers and visibility, they are now facing additional
challenges as companies such as Google,Yahoo! Bing,
Microsoft and others move aggressively into the travel
arena.These companies are seeking to more definitively
insert themselves into the travel-shopping process,
control the direction of more travel traffic and become
consumers’ search mechanism of choice.
Google is playing a prominent role in this evolution.The
recent rollout of Google Enhanced Campaigns will make it
possible for travel marketers to create a single campaign
that targets desired audiences across devices with
contextually appropriate messages.This will likely result in
an increase in search prices, as lower-priced mobile CPCs
rise to parity with their online counterparts. But it will also
likely result in more efficiency for advertisers.
Google is also taking steps to control more of the search
traffic to online travel destinations, with new metasearch
products such as Google Hotel Finder, Google Flight
Search and its “local search” Carousel. While this move
might result in less spending on AdWords, it could mean
more overall click monetization for Google.
As competition for search terms intensifies, and more
search real estate becomes paid instead of organic, travel
marketers will likely find themselves spending more to
appear “above the fold” in search-engine results. As a
countermeasure, many are taking steps to streamline
their campaigns and make them more effective. In
addition, OTAs have been vertically integrating and
investing in metasearch engines that move searchers
away from Google.The most recent of these acquisitions
have been Priceline’s purchase of KAYAK and Expedia’s
purchase of trivago.
Reprise Media’s Kochhar said he was seeing more clients
interested in what he called holistic search. “They are
increasingly looking for a search agency that can provide
both paid as well as organic services, because ultimately
it’s all about real estate on the search results page,”
he said.
DOUBLING DOWN ON RETARGETING
Travel advertisers looking to drive bookings from the
middle-to-lower purchase funnel have also found success
with “hybrid” search and display performance-based
formats—such as retargeting (sometimes known as
remarketing) and keyword targeting across display
networks.Though these formats typically involve display
advertising, they are often linked with search campaigns
and convert much more like direct response.
In fact, a number of industry experts noted that
travel industry advertisers are among the heaviest
users of retargeting, because it has consistently driven
conversions in ways that basic search cannot. “We
track all of our online advertising marketing very closely
to understand the ROI, and different channels will
have different levels of ROI,” Wyndham’s Lugli said.
“Retargeting does produce for us, and we’ll continue to
do it and continue to try and optimize that ROI, utilizing
the available data that we’re able to gain access to.”
Best Western’s Carreras also confirmed that his company
works with display networks to retarget paid advertising
messages to its site visitors. “People who have visited
our site are among the most valuable customers or
potential customers for us,” he said. “If there’s any
chance we can serve them something more specific to
them or what they’ve been searching for on our site, we
want to take that opportunity.”

Travel retargeting will likely see more growth now that
Google has entered the picture in a bigger way. In
June 2013, the company announced the launch of its
dynamic remarketing program, which is being rolled out
initially to Google Merchant Center clients in the travel
and education industries.The program enables advertisers
to create dynamic ads for products that Google search
users have already seen on a company’s website. Google
also offers the Google RemarketingTag, which lets
advertisers simultaneously tag all pages on a site and
design dynamic ads that are served to visitors based on
pages visited and actions taken.
BRANDING CAMPAIGNS GET SECOND LOOK
While travel industry marketers rely on direct-response
ads to drive leads and conversions, a post-recession
renaissance in digital brand advertising is also
taking place.
Branding efforts are primarily aimed at bolstering brand
image, improving loyalty and, in the case of hotels and
airlines, encouraging more direct bookings. “It’s really
an overall paradigm shift for a lot of our advertisers in
viewing digital as a branding mechanism, and that hasn’t
been the case in years past,” said Claire Bishop, senior
vice president of integrated media strategy at travel
marketing agency MMGY Global. “They’ve been siloed in
the direct-response category. But as consumers’ usage
habits move more online, there’s an opportunity to create
branding messages that resonate.”
Torres said these display investments are growing across
the board, though the mix is slowly evolving away from
standard banner units to rich media, video, mobile-
social display and hybrid formats that can deliver brand
messages and integrate more tightly with traditional
branding workhorses likeTV and print. Bishop agreed.
“We don’t buy as many straight-line flash banners
as we used to,” she said. “Our buys are often banner
ads, rich media executions with video capabilities or
expanding with multiple calls to action or some other
embedded functionality.”
Travel suppliers invest significantly in digital display. In
July 2012, comScore Ad Metrix reported that the top
display advertisers among travel brands were Southwest
Airlines, Disney, La Quinta, Starwood, Westin and Choice
Hotels International.
billions
Top 6 Travel Brands Among US Internet Users, Ranked
by Total PC Ad Impressions, July 2012
1. Southwest Airlines 3.6
2. Disney 2.2
3. La Quinta Inns & Suites 1.9
4. Starwood Hotels & Resorts 1.7
5. Westin Hotels & Resorts 1.6
6. Choice Hotels International1.5
Note: ﬁve-month aggregate ending July 2012
Source: comScore Ad Metrix Advertiser and Ad Metrix Advertiser Mobile as
cited by Expedia Media Solutions and comScore, "The Rise of Mobile:
Adoption, Sentiment & Opportunity," Nov 14, 2012
Video and Social Poised for Growth
Newer, richer and more engaging display formats hold
significant promise for the travel industry, but they are
just beginning to take off as advertisers get better at
measuring their value. Digital video is the fastest-growing
of these but is still significantly underutilized by travel
when compared with other industries, according to some
sources. For instance, Q1 2013 statistics from Videology
showed that travel advertisers represented only 3.2% of
video advertisers on its network.
% of total
US Digital Video Advertiser Share, by Industry,
Q1 2013
Consumer goods 22.2%
Financial services 14.5%
Entertainment 11.7%
Retail 9.9%
Automotive 7.9%
Restaurants 7.7%
Education 5.2%
Pharmaceutical4.2%
Healthcare 4.0%
Telecom 3.9%
Travel 3.2%
Business2.5%
Other 3.1%
Source: Videology, "US Video Market at a Glance Q1 2013," April 2013

Still, marketers using video are doing so to reach target
audiences in ways not possible withTV. “I think video
today is really more of a pure brand play, and a lot of
people look at it as an extension of or as an alternative
to television,” Google’sTorres said. “We are trying to
position video not as a replacement for television, but an
opportunity to target and to do micro-targeting. We want
to be able to go after audience buckets that may not be
possible withTV.”
MMGY’s Bishop said she saw tremendous potential in
digital video. “It’s a format in which you can really lay the
emotional and contextual groundwork for some of the
bigger picture, more important purchases in a person’s
life,” she said. “If a picture is worth a thousand words, a
video is worth a million.”
Online ad metrics appear reasonably favorable for
travel-related video advertising. A VideoHub study
from Q2 2012 found that travel-related online pre-roll
video ads had a click rate of 0.71%, about average
among industries.
Completion and Click Rate of US Online Pre-Roll*
Video Ads, by Industry, Q2 2012
Food and drink
Business and ﬁnance
Entertainment
Automotive
CPG
Computing/tech
Health and lifestyle
Travel
Telecom
Retail
Consumer electronics
Total
Completion rate
78.18%
77.79%
75.50%
73.95%
73.03%
72.66%
72.34%
69.41%
67.51%
60.47%
53.22%
71.65%
Click rate
0.48%
0.82%
0.75%
0.77%
0.51%
0.80%
0.84%
0.71%
1.20%
1.12%
0.56%
0.71%
Note: *includes both pre-roll and interactive pre-roll video ads
Source: VideoHub, "Performance Replay Report: Q1 2012," Oct 1, 2012
Nielsen research commissioned by the IAB showed
strong results for online video when compared with
television. Hospitality-related online video ads outscored
TV commercials by a large margin for general recall, brand
recall and message recall.
% of respondents
Ad Recall of US TV vs. Online Video Advertising,
by Industry, Jan 2011-March 2012
General recall Brand recall Message recall
Finance
Retail
Restaurants
Hospitality
Pharmaceuticals
Telecom
Food & beverage
Health & beauty
Technology
Automotive
71%
67%
65%
65%
63%
62%
61%
61%
60%
60%
50%
47%
47%
45%
45%
51%
46%
37%
46%
44%
53%
53%
53%
55%
49%
44%
50%
45%
44%
42%
30%
30%
32%
26%
26%
26%
30%
19%
24%
23%
43%
44%
45%
44%
36%
36%
40%
35%
32%
34%
21%
23%
24%
19%
18%
21%
23%
13%
18%
17%
Note: ages 18+; online and TV data based on responses up to 1 day post-ad
stream; limited to the same brands that streamed online and aired on TV
during the same period
Source: Nielsen, "A Comprehensive Picture of Digital Video and TV
Advertising: Viewing, Budget Share Shift and Effectiveness" commissioned
by Interactive Advertising Bureau (IAB), Feb 25, 2013
Online video ads in full episode players
TV commercials (broadcast & cable)
For more detailed information about the dynamics of
the online video advertising market, see the May 2013
eMarketer report, “Buying Online Video Advertising:
Making the Most ofYour Budget.”
In addition to an underuse of video advertising, the travel
industry appears to be lagging others when it comes to
paid social network advertising. eMarketer estimates
that paid social spending is currently less than 10% of
total digital travel ad spending, depending on the type of
advertiser. And an analysis from Business Insider found
that no travel companies made the list of the top 30
advertisers on Facebook.
One reason for this lag is that travel companies’ “social”
efforts have been heavily focused on the top online
travel-review properties, such asTripAdvisor and
Yelp, which have proven critically influential to travel
researchers and bookers.
Another reason: Advertisers haven’t yet quite cracked
the code on how to drive bookings through social
networks. “Social media has been mostly focused on
an engagement and brand strategy,” Expedia’s Guljord
said. “There have been some retail messages and some
sweepstakes and promotions we do, but I don’t think
the industry has it figured out from a direct-response
perspective. It’s one of those things that’s emerging, but I
wouldn’t say we’ve got the formula down.”

Still, travel companies do appear to be expanding their
presence on social networks. Worldwide, the number of
new Facebook pages for the travel industry grew 23%
between Q2 2012 and Q3 2012, according to data from
Socialbakers.com.
% change vs. prior quarter
Top Industries on Facebook Worldwide, Ranked by
Growth in Number of New Pages in Industry, Q3 2012
Health 28%
Travel 23%
Ecommerce 22%
Finance 20%
FMCG 17%
Beauty 16%
Retail 13%
Automotive 12%
Fashion 12%
Airlines 11%
Alcohol 11%
Media 11%
Electronics 8%
Telco 8%
Note: read as the travel industry's number of new pages on Facebook grew
by a net increase of 23% vs. prior quarter
Source: Socialbakers.com as cited in company blog, Nov 28, 2012
This presents an opportunity for more paid social network
placements to enhance this owned and earned content.
“We’re not going to recommend throwing a lot of money
at paid social for a client that’s not executing particularly
well in the social space on the organic side,” MMGY’s
Bishop said. “But it does make a good complement to
effective editorial efforts.”
For this reason, some of the top social networks
have begun aggressively courting travel advertisers.
In December 2012, Facebook hired former Expedia
marketing pro Lee McCabe as its first “head of travel”
for the company’s global vertical marketing team. In
a February 2013Travel Weekly article, McCabe said
he would aim to work with major hotel brands and
independents to help them use Facebook products—such
as Facebook Exchange, Graph Search and Nearby—more
strategically, and in coordinated ways.
These efforts—coupled with a more sophisticated array
of ad products—appear to be making headway within
the industry. “Up until now, it hasn’t been a high priority,”
Wyndham’s Lugli noted, adding that the hotel company
recently began using Facebook Exchange, a retargeting
solution that enables users to click on an ad that redirects
them to a booking engine. “We’ll also probably move
forward with testing new things such as hashtags, which
are onTwitter and Instagram, but will soon be available on
Facebook,” she said.
Increases in programmatic buying are also contributing
to the growth in targeted display.The travel industry
is fairly active in programmatic display ad buying, as
compared with other industries. Casale Media’s quarterly
breakouts of ad purchasing on the Index ad serving
platform show that the industry consistently ranks among
the top five of 10 ranked industries in terms of real-time
bidding (RTB) impressions.
Top 10 US Industries, Ranked by Share of Real-Time
Bidding (RTB) Impressions Purchased, Q1 2012-Q4 2012
Q1 2012
Retail
Financial
Telecom
Travel
Automotive
Computers
Food &
drink
Consumer
electronics
Media
Business
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
26.6%
14.1%
11.3%
11.1%
8.4%
8.2%
3.8%
3.7%
2.8%
2.0%
Q2 2012
Retail
Telecom
Financial
Automotive
Travel
Computers
Food &
drink
Media
Business
Fashion
24.6%
14.3%
12.0%
11.1%
11.0%
5.0%
4.5%
3.5%
2.3%
2.0%
Q3 2012
Retail
Telecom
Travel
Automotive
Financial
Food &
drink
Media
Health
Business
Education
31.6%
16.5%
11.4%
10.5%
9.3%
5.2%
3.0%
2.6%
2.5%
1.8%
Q4 2012
Retail
Telecom
Automotive
Financial
Travel
Food &
drink
Media
Health
Entertain-
ment
Business
35.9%
13.0%
11.0%
9.7%
7.7%
6.2%
4.0%
3.7%
2.5%
2.3%
Note: data is based on the RTB impressions purchased over the Index
ad-serving platform
Source: Casale Media, "Index Quarterly Report: Issue 2, Q3-Q4 2012,"
April 11, 2013

Similarly, the Rubicon Project found that travel was
the No. 4 industry in RTB spending on its platform in
Q3 2012, and that spending had risen 25% from
the prior quarter. Southwest Airlines ranked as the
fifth-largest advertiser on the platform, with a 48%
increase in spending from Q2 2012 to Q3 2012.
% change vs. prior quarter
Top 10 US Advertisers and Advertising Categories,
Ranked by Real-Time Bidding (RTB) Spending, Q3 2012
Advertisers
1. AT&T
2. Toyota
3. Sprint Nextel
4. American Express
5. Southwest Airlines
6. Amazon
7. Chrysler
8. Verizon Communications
9. Unilever
10. Ford Motor Co.
Industries
1. Technology & computing
2. Personal ﬁnance
3. Automotive
4. Travel
5. Shopping
6. Arts & entertainment
7. Business
8. Style & fashion
9. Home & garden
10. Food & drink
% change vs. prior
quarter
12%
143%
94%
11%
48%
261%
6%
43%
453%
82%
1%
16%
44%
25%
38%
26%
22%
1%
22%
21%
Change in
ranking
No change
8
4
1
No change
29
3
No change
66
9
No change
No change
1
1
No change
No change
1
1
No change
No change
Note: impressions served over the Rubicon Project REVV platform; includes
mobile and video
Source: Rubicon Project, "Real Time Trading Marketplace Report Q3 2012,"
Oct 23, 2012
DATA AND TECH UNDERPIN
MULTICHANNEL PUSH
The growing availability of digital data—and the
travel industry’s increasing sophistication about how
to collect and use it—will be a game-changer for
travel advertising. Not only can data tell marketers
who potential customers are, which devices they
use and where they are in the purchase funnel, it
can help them target ads across media platforms
and reach audiences with personal, relevant and
actionable communications.
A 2012 study conducted by social marketing analytics
company 33Across found that 60% of US travel brand
marketers and their agencies strongly agreed that data
access and use was very important to their ad spending.
At the other end of the spectrum, 20% were neutral on
the subject, and none disagreed.
% of total
US Brand Marketers and Agencies Who Believe Data
Access/Use Is Very Important to Their Ad Spending
in 2012, by Industry
Automotive
71.5% 14.6% 13.9%
Financial services
70.4% 15.3% 14.3%
Travel
60.0% 20.0% 20.0%
Consumer packaged goods (CPG)
55.6% 44.4%
Entertainment
45.5% 36.4% 9.1% 9.1%
Retail
44.7% 42.9% 12.4%
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
Note: numbers may not add up to 100% due to rounding
Source: 33Across, "Advertiser & Agency Survey," May 17, 2012
Total
60.6% 30.3% 6.1%
3.0%

Studies suggest major benefits in using data for
targeting. An analysis by Jumptap showed that the use
of third-party targeting data in the mobile ads it served
increased the CTR a significant 72.03% for the travel
vertical.This lift was more than for any other industry.
Increase in Clickthrough Rate (CTR) from Using
Third-Party Targeting Data in Mobile Ads Served by
Jumptap, by Vertical, July 2012
Travel 72.03%
Automotive 68.75%
Pharma 37.45%
Finance 35.27%
Retail/CPG/QSR 32.28%
Insurance 30.15%
Technology 24.72%
Source: Jumptap, "Simple Targeting and Audience Trends (STAT)," Aug 7,
2012
Location-based targeting has dramatically improved
and is gaining momentum among travel companies,
especially on the mobile platform. Advertisers can now
target in a host of different ways that weren’t available
just a few years ago. In an example illustrative of targeting
options, Verve Mobile reported that 57% of travel-related
campaigns it served in 2012 were targeted by designated
market area or ZIP code, while 30% made use of
location-based real-time data, and 13% were targeted to
specific audience segments that were built based on a
user’s location and time.
% of total
US Location-Based Mobile Ad Campaigns Served by
Verve Mobile, by Industry and Target, 2012
Political
73% 27%
Auto
70% 10% 20%
Financial
67% 11% 22%
Travel
57% 30% 13%
Retail
55% 32% 13%
Restaurant
50% 43% 7%
Consumer goods
49% 30% 21%
DMA/ZIP/ZIP+4 Geoaware or geofenced Audience*
Note: *includes third-party data and place-based targeting
Source: Verve Mobile, "Location Powered Mobile Advertising Report,"
Feb 6, 2013
Telco
69% 28% 3%
With the help of more sophisticated tools, systems and
know-how, marketers are beginning to bring together
operational data from CRM systems, company databases,
website analytics, search engines, social media, third
parties and other sources to reach their target audiences,
across screens and in more precise and granular ways.
“We use data that comes from our own customer
relationship management systems, from our own email
systems and direct marketing databases to help us
understand more about what our customers are looking
for, and what’s important and relevant to them at that
time,” Best Western’s Carreras said.

CONCLUSIONS
Travel-related US digital ad spending will continue to
grow. Paid digital investments by OTAs, travel suppliers,
DMOs and others are expected to grab a larger slice
of the total advertising pie, even as overall budgets
remain flat.
Mobile is critical to the ad spending mix. Mobile
campaigns are no longer viewed as afterthoughts or
add-ons. Marketers understand that smartphones and
tablets present unique ways to target audiences and
deliver specific and actionable messaging.
The search landscape is becoming more complex.
Search engine marketing has long been a top performer
for the travel industry. Now, new products, new channels
and more sophisticated targeting are forcing advertisers
to optimize their search-marketing strategy in a highly
competitive environment.
Branding campaigns are back. Suppliers that dialed
back their brand-building campaigns during the Great
Recession are reviving efforts to boost loyalty and
reputation.They are turning to richer and more engaging
display formats that go beyond a simple banner ad.
There’s more to do with data.Travel industry marketers
are getting smarter about collecting and acquiring
audience data and using it for more effective targeting
and measurement.
EMARKETER INTERVIEWS
Verified User Reviews Pay Off forWyndham
Flo Lugli
Executive Vice President, Marketing
Wyndham Hotel Group
Interview conducted on June 21, 2013
Travel Seekers Have Integrated Online and
Offline Experience
RobTorres
Managing Director,Travel
Google
Interviews conducted on December 17, 2012, and January 29, 2013
Claire Bishop
Senior Vice President, Integrated Media Strategy
MMGY Global
Interview conducted on February 11, 2013
Felipe Carreras
Senior Manager, Ecommerce
Best Western International
Jon Guljord
Senior Director, Marketing Operations
Expedia
Neeraj Kochhar
Managing Director
Reprise Media
Interview conducted on January 23, 2013

RELATED EMARKETER REPORTS
Travel Search Redefined:What Google’sTravel Content
Means for Marketers
US DigitalTravel Sales: Mobile Drives Changes in
Mature Marketplace
MarketingTo MobileTravelers: Device Usage During
Travel Offers NewTouchpoints
US Ad Spending: Mid-2013 Forecast and
Comparative Estimates
Buying OnlineVideo Advertising: Making the Most of
Your Budget
State of Mobile Search 2013: KeyTrends in Mobile
SEO and SEM
RELATED LINKS
33Across
AdGooroo
Advertiser Perceptions
Casale Media
comScore
Experian Marketing Services
Google
Interactive Advertising Bureau (IAB)
Jumptap
Kantar Media
Millennial Media
MMGY Global
Mobile Marketing Association (MMA)
Nielsen
RBC Capital Markets
Reprise Media
Rubicon Project
The Search Agency
Socialbakers.com
Tata Consultancy Services
Text100
Verve Mobile
VideoHub
Videology
WordStream
EDITORIAL AND
PRODUCTION CONTRIBUTORS
Cliff Annicelli Senior Editor
Kaitlin Carlin Copy Editor
Joanne DiCamillo Senior Production Artist
Stephanie Gehrsitz Senior Production Artist
Dana Hill Director of Production
Heather Price Copy Editor
Nicole Perrin Associate Editorial Director
Allie Smith Director of Charts

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