This article was originally posted on AdExchanger on March 20, 2017 as part of their Data-Driven Thinker series.
Google set its eyes on the travel industry a while ago. Travel is one of its top ad revenue sources. The Priceline Group alone reportedly spent a big chunk of its $3.5 billion investment in search engine marketing with Google in 2016. That’s not to mention Google’s many travel products, including consumer travel planning apps and Google flights.
Now Facebook, with its formidable 1.7 billion monthly active users and penetration in more than 200 countries, is also beginning to consider the opportunities in the lucrative travel sector. But is it too late to the game?
When Facebook shuttered its ad exchange (FBX) in early 2016, travel brands could no longer use display ads on the social media giant to reach customers, unless they used Facebook’s Dynamic Product Ads. But there was a catch: Dynamic Product Ads were designed for ecommerce and lacked many parameters relevant to travel advertisers.
Take the real-time inventory feeds, for instance. The risk of serving the wrong price for an airline ticket could be construed as bait-and-switch, make consumers angry or even lead to a lawsuit, particularly in Europe, where the regulatory environment is even tighter than in the US. Add to that the fact that most real-time inventory feeds were created for websites, not for programmatic advertising – where you have 40 milliseconds to win the bid and serve the ad to the consumer – and you have a potential recipe for disaster.
To Facebook’s credit, it recognized early on that its Dynamic Product Ads were not suitable for travel brands, where the sheer number of core consumer purchase considerations – where, when, with whom and so on, combined with the rapidly changing pricing and product availability – all present a significant marketing challenge unique to the travel industry. So, the social networking giant started to cater to the hotel industry last year, with its first verticalized advertising product, Dynamic Ads for Travel (DAT), which it later expanded to destinations and flights.
If Facebook aims to take travel ad dollars from Google, DAT is certainly a step in the right direction. It combines the best of Dynamic Ads with parameters relevant to travel, such as specific arrival and departure dates, number of travelers, star ratings and airport codes. It also creates upsell opportunities by showing ads for more expensive hotels to users who viewed or searched for cheaper hotels in the same neighborhood and vice versa.
Until recently, Facebook was not a name with great visibility in the context of travel performance marketing, but that is changing rapidly as travel advertisers become aware of Facebook’s enormous potential to bring their ads in front of very highly targeted audiences, push the cost per booking down and boost revenues. One major advantage for brands is that Facebook is present throughout the entire funnel because of its ability to influence users through peer interactions at the very early stages of the path to purchase.
In travel, specifically, Facebook has a unique opportunity to capitalize on its vast reach at the top of the funnel, but the road ahead is steep. It remains to be seen if Facebook will jump on that upper-funnel discovery that is so important for travelers and often entails a significant amount of video consumption of things like destination promos, hotel room tours and city videos. Facebook could really hit gold with a solid video product that incorporates real-time pricing information and reach those coveted travelers before they get to the booking stage.
Even at the lower end of the funnel, DAT itself is not a panacea. Unlike most of Facebook’s ad products, it doesn’t work well with a “set-it-and-forget-it” strategy, and its pricing and availability feed setup, which allows in-marketing travelers to see pricing in real time, is quite complex.
Travel is a massive industry, and there might just be enough room for Google and Facebook to play in the sandbox together. But, for now, Facebook is just cracking the door open.
Stephen is based in London and oversees Sojern’s international operations. Throughout his career, Stephen has been a pioneer of data-driven marketing and is passionate about building global businesses. Most recently, Stephen served as the CEO of Qype, acquired by Yelp!. Prior to that, he led Yahoo!’s European consumer business. Early in his career, Stephen was one of the first employees at Air Miles (acquired by British Airways) and also launched Safeway’s innovative loyalty program. Stephen graduated with honors from the University of Birmingham and is a non-executive director of several other internet businesses.
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