What a year it has been for Facebook and the travel industry and it's not over yet. For a company with the unparalleled size and reach of Facebook to say that travel is the industry it's putting some of its most significant investment towards in the next year should tell you something about the state of the industry. We can't wait to see what's in store for 2017.
The travel industry has been at the center of Facebook’s advertising growth during the past year and despite market concerns over Facebook’s statements that the uptick in its advertising revenue will decelerate in the future, Facebook expects its investment in travel to keep trending up in 2017.
This week Skift talked to Facebook’s Head of Travel, Christine Warner, who’s held the post since 2015, about Facebook’s pivotal year in the travel industry. From its new ad products and video platforms to the company’s continued foray into virtual reality, Facebook has been active in trying to build its traction in the travel industry.
We talked about Facebook’s role in travel inspiration and planning, why it’s important to get the “brilliant basics” right when it comes to mobile (a term Warner and many other Facebook executives use) and what the company learned from its new products this year and where those are headed in 2017.
In the process, Warner discusses how Westin, InterContinental Hotels Group, Delta Air Lines, HomeAway, and Carnival Cruise Lines used the platform this year.
See the interview below.
Facebook also reported third quarter earnings November 2, and speaking during the earnings call, Facebook COO Sheryl Sandberg said that it took the company a long time to break into the travel industry but that it’s now seeing some really nice traction.
“[Travel] is a vertical that we are really investing in,” said Sandberg. “We have rolled out different types of product ads that we think will help. So in [the second quarter], we rolled out Dynamic Ads that were specifically focused on the travel vertical.”
Sandberg highlighted Celebrity Cruises‘ use of the Dynamic Ads for Travel product, which helps brands re-target users with relevant content, as an example of a brand that was able to increase online bookings through the ads. “They worked with one of our [facility management professional]s, StitcherAds and they created custom audiences who viewed specific itineraries by date,” said Sandberg.
“So they look for people that at a certain date have used specific itineraries and then created Dynamic Ads which showed the available cruises and pricing and had a Book Now button. They saw a three times increase in their online bookings and I think those kind of results are made possible by more vertical-specific products, and we’re going to continue to invest there.”
Facebook’s third quarter revenue exceeded $7 billion for the first time, a 56 percent increase year-over-year. Of that, third quarter ad revenue was $6.8 billion, up 59 percent year-over-year.
Asia-Pacific and North America were Facebook’s fastest growing regions for ad revenue in the third quarter with growth rates of 64 percent and 62 percent, respectively.
What’s more notable — mobile ad revenue is surpassing desktop. Mobile ad revenue for the third quarter was $5.7 billion of the total, up 70 percent and representing about 84 percent of total ad revenue.
Market research company eMarketer estimates that Facebook’s total mobile ad revenue will hit nearly $22 billion this year and climb to nearly $30 billion by the end of 2017. It found that a larger share of that total each year is coming from outside the U.S. (54 percent in 2016).
While Facebook says transparency is important, it recently fell short on that promise. “Facebook had a hiccup in September when news broke that it was overstating to marketers and advertisers the amount of time people spent watching video on its platform,” said eMarketer principal analyst Debra Aho Williamson in a post on eMarketer’s site.
“Though eMarketer doesn’t believe the revelation will cause brands to pull back their Facebook spending, we expect that in the future there will be a push for more rigorous third-party measurement of ad performance on properties like Facebook,” she said.
Facebook has about 1.8 billion global users as of September, 1.1 billion of which used the platform every day that month. It also has about 500 million users on Instagram and another billion on WhatsApp.
Facebook CFO David Wehner said during the call that mobile continues to drive the platform’s growth. More than one billion people accessed Facebook on mobile each day in September, up approximately 197 million users or 22 percent compared to last year, Wehner said.
Following is an edited version of our conversation with Warner:
Skift: It seems like I can’t open the Facebook app anymore without seeing example after example of ads from travel brands, many of which feature compelling creative. In particular, you rolled out Dynamic Ads for Travel in June which I’ve seen all over Facebook recently. How have those been performing?
Christine Warner: Dynamic Ads for Travel is the first example in Facebook’s history that we’ve actually created a product directly for a vertical, and the reason why we did this is because we recognized that there was a massive shift happening.
This applies to all of Facebook and Instagram, not just for travel, in that people are spending more and more time online than ever, and that’s eclipsed TV and in fact, time spent online is now being eclipsed by mobile. People in the U.S., for example, 79 percent of smartphone owners have their mobile phones with them all but two waking hours of every day.
But a lot of our travel marketers are doing so much more with us.
On Facebook, we serve more than a 100 million hours of video on mobile every single day. Travel marketers see that as an opportunity for us to be able to inspire travelers at that moment when they’re thinking about planning their next trip.
Westin has actually worked with us, not only through video, but also through Carousel, which is an immersive ad format that can bring the trip to a traveler by extending full screen within Facebook, to have a more immersive experience that allows a marketer to really tell their story more fully than what a video or a link ad offsite may be able to do.
Westin later re-targeted a Carousal ad to reach the same people who had seen that video in order to drive a direct booking. They were able to drive a nine-point increase in ad recall, a 15-point increase in message association and a nine-point increase in intent.
Skift: Do you feel that most travel brands like Westin that are using Facebook products, advertising and otherwise, are maximizing the platform’s potential for how they can use it and how they can benefit from it?
Warner: If we look across Facebook, we have over four million active advertisers, and travel partners are a subset of that. I think we have seen a really great partnership with the industry evolve over the past year, as we’ve invested very closely in the industry in order to build solutions that will drive value for their business, and also help them tell stories that will help them authentically connect with travelers across Facebook and Instagram.
I think that there’s an area that we could also have done better in the industry. That is, in order for us to be able to partner together, to build out a mobile approach to marketing and measurement, there are three things that I encourage our partners to do with us that could apply anywhere in the marketplace.
The first thing is working to build a top-down relationship, because we’re asking for people to change. If you look at what’s happened in the industry over the past couple of years, we’ve seen a significant shift of bookings moving to mobile, and because of that, there’s also the massive consumer shift that’s happening. People’s attention has shifted and their actual booking behaviors have shifted.
In order to be able to get ahead of that and take advantage of it, you have got to work differently. Build out new mobile solutions, align teams that haven’t necessarily worked closely together and frankly, even engineering or third party partners. The only way that that change happens, to be able to take advantage of this shift, is to have top-down alignment.
Skift: Making sure the higher-ups are on board is what’s most important. What are your other two pieces of advice?
Warner: The second thing that I really would encourage the industry to focus on is putting in place all the right infrastructure. Infrastructure in mobile is everything, to ensuring that you’re working with all of the right partners that can help you tell your story better, to build a brand campaign that will light up the discovery engine on Facebook for travelers to be excited about going on that next cruise.
Or to make sure that you have beautiful imagery that really inspires people on Instagram, to then being able to actively measure, because as people move across device, it is very hard to track that with cookies.
You need to put in place a solution that can allow you to measure the impact of your marketing, regardless of where that traveler is in the funnel, to an end conversion or whatever business value you’re trying to drive.
The last thing that I really focus on is investing and then testing. What I mean by this is, in order for anyone to understand how a shift in the consumer marketplace impacts their business, you have got to put in place an investment in order to be able to understand the impact of your marketing measurement.
That investment is not only about dollars, but it’s also putting aside the resources as far as people’s time and energy. That kind of goes back to the first thing that I said around ensuring that there’s tops down alignment.
Skift: Facebook is in a unique position to connect travelers with brands in ways the TripAdvisor or Google, for example, can’t. Travelers increasingly find inspiration for trips through Instagram especially. How has the company’s role evolved in being this connector?
Warner: A great example of that was the Westin example that I shared, where Westin wanted to ensure that people knew that they could have a really great experience.
Westin did that in a way that would be great for them and also would allow them to take advantage of what Westin is really well known for, which is a late check-in on Sunday.
That’s one example of kind of getting ahead, and making sure that, when somebody’s not sure about where they want to book, they would want to have some kind of message at that point in time, to the point of Dynamic Ads for Travel which we have seen great success with.
And one of our key partners in this has been IHG, and they actually shifted from dynamic product ads, which was a product that allowed partners to be able to dynamically reach audiences with a catalogue of inventory.
IHG made the switch to Dynamic Ads for Travel, and when they did this, they were able to see a 20 percent lower cost per booking compared to regular Facebook Dynamic Ads, and a 50 percent increase in scale.
Skift: With that in mind, something that Facebook’s Vice President of Global Business Marketing, Sarah Personette, said at Skift Global Forum in September that I thought was interesting — about Facebook not wanting to be a middleman when it comes to booking a trip. I’m wondering if there’s anything that you wanted to add to that point? It’s certainly a significant claim to be making.
Warner: Absolutely. So travelers are spending 43 days from the moment that they’re ready to book a trip to the moment that they actually book it.
And travelers are working across devices and you also take with that the fact that we know that one out of every five mobile minutes are spent with Facebook and Instagram, we are in unique position to be able to, throughout that cycle, be a part of that conversation with that traveler to help influence where they may book their next trip. Or where they may plan to go on their next trip.
Because of that, we’ll always be in a position to connect partners with travelers on our platform, because we have their identity and we’re able to understand where it is that they want to go and what it is they want to see. We can help connect those dots for our partners.
Skift: We’re talking about how Facebook fits into the travel planning and booking ecosystem. Something that Facebook has been able to do well is provide advertisers with concrete data and analytics, unlike other social networks such as Snapchat. How do you view Facebook’s role in the Big Data era and how are travel brands using this data that they get from Facebook?
Warner: When you reach a billion people plus every day across Facebook and Instagram, this question comes up quite a bit.
Obviously, anything we do is privacy safe. We build our business on trust, so because of that, we’re very mindful of how and where our data is used.
Many of our travel partners are actually leaning into a tool that we have called Audience Insights, and it allows them to be able to port their first party data to Facebook for them to better understand who may be actively coming to visit their sites.
They can do the same thing with their customer relationship management list as well, and what this allows them to do as they build out their segmentation, etc., and get a better understanding of who these people are, it also can help inform creative. Who do I want to reach? What message do I want to reach them with?
Skift: Switching gears a bit, several travel brands are paying attention to and creating virtual reality content this year. Some have even started produce virtual reality videos in-house themselves. Oculus has played a leading role in this growth and looking back on what you’ve seen this year, do any travel brand virtual reality campaigns stand out?
Warner: Oculus very much operates as a separate company from Facebook and Instagram, and they are very much a future platform that we’re looking towards for growth and innovation.
But if we look at where our partners are today, we recognize that mobile very much is the new reality and we want to be with them to help them build really immersive storytelling today that will build a bridge to the future.
The way that we’re encouraging our partners to do that is to focus on the video formats that one day will port to virtual reality, like 360-video. We saw Delta launch a plane in the Mojave Desert through a 360-video, and we’ve also seen other partners like National Geographic explore with it.
If virtual reality is the future, there is work to be done today to help usher in that future and I would like to encourage all of our travel partners to think about storytelling in more immersive formats, from video to Canvas on our platform, to things like 360-video that then set you up to do really rich storytelling on virtual reality when it is more available.
Skift: And Facebook Live, which lets users and brands post live video to their feeds, has been available for about six months now. Sarah Personette has said that Live was “surprising” to Facebook at first because of how well it was initially received by users. I saw Airbnb was using Facebook Live this week at a Bran Castle in Romania. How have travel brands been using this product?
Warner: Yeah, we’re really excited about Facebook Live. It is just such a massive area of growth for our video platform and when we look to our travel partners, we love that they’re experimenting with this new format for storytelling.
When it comes back to it, we are actively trying to help our partners build their brands and drive bookings, and when they’re experimenting with all of the new platforms that we’re able to roll out in immersive formats, it makes us very excited to see what kind of changes they’ll be able to drive in the industry.
A great example of this is HomeAway. We worked very closely with HomeAway to help them do a live video takeover of an apartment that they put in the Eiffel Tower in Paris. One really great thing that travel partners should know about Live is that people comment 10 times more often on Live feeds than regular posts. It’s a great way to engage your audience with your brand.
We’re also excited to see how Live gets incorporated into broader campaigns. In many ways, we’re working with a lot of our partners to develop Live videos that can tell their brand’s story across Facebook and Instagram, and Live 360-video, even Canvas, are great formats to be able to extend that storytelling.
These are things we encourage all of our partners to do. Tell a story about their brands, connect authentically and personally with the people that you’re trying to reach.
Skift: Looking ahead to 2017, what direction do you anticipate Facebook will move in? Thinking about the travel related products that you’ve launched this year that have already been widely adopted, what comes next?
Warner: That’s a great question. You know, Facebook and Instagram are really two of the most important mobile ad platforms in the world, and this includes for travel. This year, we have taken great strides in helping our partners explore how to drive both brand and storytelling across Facebook and Instagram.
From creating immersive Canvas experiences for Carnival Cruise Lines, where we brought the cruise to the cruiser before they even booked their trip, to Dynamic Ads for Travel, which is a great example of how we’ve been able to drive more bookings at scale for travel brands.
As we look to 2017, we’re going to continue to build on this work. Many of our partners are really leaning in to how brand and direct response work together harder to drive meaningful business results. This is going to be an area of focus for us with many of our partners moving forward. Of course there’s going to be the natural evolution of our business, which I’m very excited about.
And I believe the travel industry, we’ve had a great year in 2016, and I expect 2017 to be even brighter.
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Photo Credit: Skift spoke to Facebook's head of travel this week on what's next for 2017. Pictured is a screenshot from one of Tourism Australia's 360-degree/virtual reality videos showing the 12 Apostles in Australia's Victoria state. Tourism Australia